President Trump is trying to respond to legitimate complaints in the housing market, but the proposed ban would not increase supply, writes Derek Carlson.
By the time housing policy hits the headlines, buyers already feel locked out, renters already feel trapped, and sellers are unsure about their options.
President Trump’s call to ban large institutional investors from purchasing single-family homes is no exception.
While this is a response to real market tensions, it also risks mistaking visible symptoms for underlying illness, which will only make the problem worse in the long run.
The real question isn’t whether large institutional investors are a threat to the average buyer. While that absolutely could be the case in some markets, the real question is: Will banning them improve affordability, or will it make no real difference and just make economically ignorant people feel better?
When policy and market realities collide
I’ve been through multiple cycles as a real estate broker and operator for decades, and along the way I’ve seen policy collide with market reality. I’ve sat with exhausted buyers who lost their homes and sellers who needed real answers and certainty.
The proposal focuses on large institutional investors with deep pockets and the ability to quickly close above market prices with all-cash offers. It is presented as a way to reduce competition among families and put homeownership within reach for average Americans.
It may sound good on the surface, but the market doesn’t respond to intent.
In my role as an agent, I’ve seen countless first-time buyers lose homes they loved because they were cashing in on offers from institutional buyers that closed within days without an inspection.
In particular, I remember a conversation when I called a young couple who had already written four offers and explained that they had been bid again by an institutional investor. they were devastated.
This conversation is always difficult because it feels unfair to someone who is just trying to buy a place to live.
Therefore, in many entry-level areas, institutional investors are in direct competition with families. They act quickly and often outbid buyers with traditional financing. In these situations, limiting unfair competition can provide some peace of mind to homebuyers.
There’s also the fact that owner-occupiers tend to invest in their homes and neighborhoods differently than absentee landlords. They value schools, maintenance, and long-term stability. Because it has a more direct impact.
Homeownership represents security and opportunity, and when it disappears out of reach people want to take action, but it doesn’t come at the cost of real results.
This problem becomes even clearer at the national level.
Contrary to popular belief, institutional investors own a relatively small percentage of single-family homes.
“According to Redfin research, home purchases by U.S. mom and dad investors combined grew just 1% year-over-year in the third quarter of 2025. Homes bought by institutional and mom investors accounted for about 17% of all U.S. home sales in the quarter, or about 52,000 units,” wrote Inman’s Lillian Dickerson.
“According to a 2024 study by the Government Accountability Office, as of mid-2022, institutional investors owned about 450,000 units (about 3 percent) of the country’s single-family rental homes.”
The truth is that even if all institutional investors stopped buying tomorrow, we would still be facing a massive housing shortage. Construction of new homes has lagged far behind demand for many years, meaning demand continues to grow while supply remains stagnant.
Needless to say, many institutional investors operate long-term rental housing, and if their capital is withdrawn without replacement, rental supply will become tight and rents will rise. This makes it difficult for renters to save up for a down payment and ultimately buy their own home.
For most buyers, the impact of the ban will be minimal and very localized, and for most sellers there will be little change.
What does it take to actually solve affordability?
If the goal is to solve the housing affordability problem, the focus must shift from who is buying the homes to why there aren’t enough homes to buy in the first place. That may not be very politically satisfying, but that’s the reality.
This proposal exists because people are dissatisfied, and if we’re being completely honest, their dissatisfaction is justified. It would be a mistake to ignore these concerns, as buyers feel shut out, borrowers feel shut out, and sellers are uncertain about future demand. Both politically and economically.
President Trump’s proposal to ban institutional investors is a response to housing market discontent, but it’s not an actual solution. Housing affordability can only be determined by building enough housing to meet demand. All proposals should be evaluated through a simple lens – will it increase supply?
It’s the lens by which real estate professionals should look, and it’s also the lens that policymakers should use.
