Democrat Khanna refloats bill to block investors from buying up homes after Trump proposal

• Khanna's Stop Wall Street Landlords Act would eliminate tax breaks for large institutional investors (those with assets exceeding $100 million) and impose a 100% real estate transfer tax on home sales occurring more than 18 months after enactment
• The bill would prohibit Fannie Mae and Freddie Mac from allowing large institutional investors to purchase mortgages on single-family homes
• Trump's 57% disapproval rating on economic handling creates potential for bipartisan cooperation, with Khanna expressing willingness to work with the president on legislation to help the working class

Market Summary: Democrat Khanna Reintroduces Bill to Block Institutional Investors from Buying Homes

Key Developments

California Democratic Rep. Ro Khanna reintroduced legislation Friday aimed at preventing large institutional investors from purchasing single-family homes, capitalizing on similar comments made by President Donald Trump on January 7. Trump announced plans to "immediately" ban large institutional investors from buying more single-family homes via Truth Social.

Legislative Details

The Stop Wall Street Landlords Act would:

• Prohibit large institutional investors (defined as entities with assets exceeding $100 million) from accessing home-related tax breaks, including mortgage interest, insurance, and depreciation deductions
• Require Fannie Mae and Freddie Mac to ban large institutional investors from purchasing mortgages on single-family homes
• Impose a 100% real estate transfer tax on homes sold by large institutional investors more than 18 months after enactment

The bill currently has 13 Democratic cosponsors, though potential bipartisan support may emerge given Trump's backing of similar measures.

Political Context

Trump's populist economic pivot comes amid declining approval ratings, with a recent Marist poll showing just 36% of Americans approve of his economic handling while 57% disapprove. These numbers pose significant challenges for Republicans defending narrow House and Senate majorities ahead of 2026 midterms.

Market Implications

The legislation could significantly impact institutional real estate investors and REITs focused on single-family rentals. Trump is scheduled to discuss housing affordability proposals at the World Economic Forum in Davos on Wednesday, potentially providing further policy clarity.