Trump Bid to Ban Corporate Homebuying Blindsides Wall Street

The time of the corporate landlord as America’s housing villain was supposed to be over.

Money managers like Blackstone Inc. and Pretium who binged on single-family rentals in the wake of the financial crisis took blow after blow as housing prices shot up. But the cohort has since cooled its buying, and the attacks slowed.  Bloomberg's Jeffrey Langbaum joins to discuss.

President Donald Trump said he would move to ban institutional investors from buying single-family homes, the latest proposal from the administration to address housing affordability ahead of this year’s midterm elections.

“People live in homes, not corporations,” Trump said in a social media post Wednesday announcing the effort, adding that he would expound on the plan and other “Housing and Affordability proposals” at the World Economic Forum in Davos, Switzerland, later this month.

The news sent the S&P 1500 Homebuilding Index down almost 2.6%, with shares of homebuilders including Toll Brothers Inc., Invitation Homes Inc., KB Home and PulteGroup Inc. all down. Blackstone Inc. — a major investor in single-family homes in the US — fell by as much as 9.3% before paring some losses.

The initiative comes after Trump’s allies have repeatedly raised alarms that affordability has become a political albatross for the GOP heading into the November elections. Trump urged Republican lawmakers Tuesday to avoid losing control of the House this year, saying it would lead to his impeachment.

There’s reason for the White House’s concern: Just 36% of Americans said they approved of Trump’s job performance in a Gallup poll released in December, about 2 percentage points higher than his personal low before his first term ended in January 2021. Nearly half of adults described current economic conditions as “poor.”

The president has struck a defensive posture on cost of living, especially since Democrats notched several high-profile state and local election victories in November that many analysts chalked up to their focus on affordability. Trump has called the issue a “hoax” and a “con job by the Democrats.”

The Trump administration in recent months has struggled to find the right tool to tackle high housing costs. At one point, officials floated the possibility of declaring a national housing emergency. A 50-year mortgage proposal lost momentum after industry analysts noted that borrowers would ultimately pay more in interest and build equity in their homes more slowly.

Trump officials have also said they are considering portable mortgages – an idea that would be tricky to implement. And Trump has trained his fire on homebuilders, urging them to build more homes.

It’s not clear how much of an impact an institutional-investor ban could have on housing prices. Larger institutional investors own only about 2% of the nation’s single-family rental housing stock.

Still, Trump’s post earned early support from some GOP lawmakers. Republican Senator Bernie Moreno of Ohio announced he would introduce legislation to codify Trump’s proposal into law. Senator Josh Hawley, a Republican from Missouri, also expressed support for the idea.

Representative Bryan Steil, a Wisconsin Republican and member of the House Financial Services Committee, said he welcomed the focus on housing policy and wanted to learn more details about the proposal.

“Far too many people can’t afford the homes that they could have a generation ago,” Steil said in a Wednesday interview on Bloomberg Television.

Democratic Senator Elizabeth Warren of Massachusetts said on Wednesday that she’d been advocating for such a ban for years, but cast skepticism on Trump’s announcement.

“What the evidence shows is Donald Trump is not serious about lowering the cost of housing,” Warren said.

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