Curbs on Wall Street landlords could stoke house prices, say investors

• U.S. home prices have risen roughly 75% since Trump's 2016 electoral victory, more than double the overall CPI increase, though price growth has recently slowed to just 1.7% year-over-year as of October.
• Investors emphasize housing affordability is primarily a supply problem controlled by local governments, not a demand issue, warning that policies boosting demand without increasing supply will drive prices higher.
• Curbs on institutional investors could slow construction in the build-to-rent sector, as Wall Street landlords account for a large portion of demand for homes built explicitly for rental purposes.

Summary: Trump's Curbs on Wall Street Landlords May Paradoxically Increase House Prices

President Trump issued an executive order restricting Wall Street investors from purchasing single-family homes, aiming to reduce competition and improve affordability for individual buyers. However, investors warn these measures could worsen housing price inflation by boosting demand without addressing supply constraints.

Key Measures:

• Directs regulators to prevent federal programs from facilitating single-family home sales to institutional investors
• Requires antitrust scrutiny of institutional home purchases
• Plans to allow 401(k) funds for down payments (details forthcoming)

Market Context:

• Wall Street institutions (Blackstone, American Homes 4 Rent, Progress Residential) own approximately 3% of single-family rental homes
• U.S. home prices have surged 75% since Trump's 2016 victory, outpacing overall CPI inflation by more than double
• Recent data shows cooling: home prices rose just 1.7% year-over-year in October 2024—the lowest increase in 13+ years
• Housing stocks (.HGX) are up 8.15% year-to-date

Investor Concerns:

Financial experts emphasize housing affordability stems from supply shortages, not excess demand. David Wagner of Aptus Capital Advisors notes that "fueling more demand will only increase asset prices." The federal government has limited ability to boost supply, as housing regulations are primarily controlled by local governments.

Critics warn that curbing institutional investors—who drive demand for build-to-rent properties—could actually slow new home construction. However, the National Association of Home Builders argues corporate investment has been essential for new construction.

The administration is pursuing additional policies including government mortgage bond purchases and 50-year mortgages to address voter affordability concerns ahead of congressional elections.