Trump Urges Congress To Transform US Housing Market-What Could Change?

Senior Housing Reporter

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President Donald Trump has called on Congress to pass the 21st ROAD to Housing Act, the Senate's historic housing reform package that has been stalled by disagreement between the chambers of Congress, and restore "the American dream of homeownership."

This dream has slipped out of reach for millions of Americans in recent years because of rising home prices, historically elevated borrowing costs, higher property taxes, homeowners insurance premiums and homeowners association fees. But the president has looked at the affordability crisis and is pointing the finger at a single culprit: Wall Street.

"As I said at my State of the Union Address on February 25th, the American Dream of Homeownership is under attack," the president wrote on Truth Social on Monday.

"For example, Rachel Wiggins, a mom of two, from Houston, placed bids on 20 homes, and lost all of those bids to gigantic Investment Firms that bypassed inspection, paid all cash, and turned those houses into rentals, stealing away her American Dream—She was devastated!" he added.

Trump's Plea to Congress

The stories of people like Wiggins, the president said, are the reason he signed an executive order in January banning large institutional investors from buying single-family homes in the U.S. market. He is now urging Congress to permanently ban these purchases.

"Senators Bernie Moreno and Tim Scott have worked to ensure my call becomes a reality, and have a Bill which has passed the Senate with nearly 90 votes. I am asking Congress to pass that Bill, the 21st Century ROAD to Housing Act, which would ensure that homes are for people, not Corporations," he wrote.

Vice President JD Vance supported the president's plea, writing on X: "The American Dream doesn't belong to the highest bidder on Wall Street. It belongs to the American people, who work hard, save up, and play by the rules. I applaud President Trump's leadership on this issue and urge the House to pass this bill."

Housing experts, however, say large institutional investors, which swept up the U.S. housing market during the pandemic, now play a small role in the country, and that Wall Street is being played as an "easy scapegoat" for a crisis that would require a much more complex set of reforms to be fixed.

What Is in the Senate's Housing Package?

The 21st ROAD to Housing Act, which passed the Senate with bipartisan support in March, is the largest piece of legislation in 30 years that seeks to make housing more affordable for Americans.

It is a complex, lengthy package comprising more than 40 provisions aimed at improving affordability in the market, mostly by making homebuilding faster and cheaper.

Among the reforms proposed are the removal of regulatory barriers and the streamlining of environmental reviews to speed up affordable housing development and construction approval processes—measures that should increase the supply of affordable homes in the country.

Crucially, the package includes restrictions on large institutional investors from buying single-family homes, reflecting the Trump administration's priorities. Specifically, it would prevent investors who own 350 or more single-family rental homes in the country from purchasing additional properties, requiring them to sell newly built units to individual owners after seven years or face hefty fines.

Why Has It Been Stalled?

The Senate's housing package is now in the House awaiting a vote. But the legislation has been stalled as House members look with skepticism at several of its proposals, including the one to curb the role that large institutional investors play in the U.S. housing market.

While the Trump administration and the Senate said the move would allow more Americans to afford and purchase single-family homes, critics are concerned that the ban will make more single-family homes for rental disappear from the market, exacerbating what in many parts of the country is already a shortage by discouraging the build-for-rent industry.

Wall Street's Role in the US Housing Market

Institutional investors, defined typically as entities owning more than 1,000 properties—or more than 350 in recent legislation—play "a very small role in the U.S. housing market," Daryl Fairweather, the chief economist at the real estate brokerage Redfin, told Newsweek.

They own less than 1 percent of the total single-family housing stock in the U.S., she said. And even at their 2021 peak, when they made headlines for snatching away homes from regular Americans during the pandemic homebuying frenzy, they were responsible for a small fraction of total purchases. 

"Most investors are actually small-scale landlords," Fairweather said. "About 92 percent of investor-owned single-family homes are held by people owning 1 to 5 properties."

In the midst of the ongoing housing shortage and affordability crisis, the American public and politicians are looking at Wall Street "as the easy scapegoat," Fairweather said. "But it's the lack of housing that is driving up prices and making homes an attractive asset for investors."

According to a recent report by the real estate analytics company Parcl Labs that mapped every entity captured under the definition of investors with 350 or more properties in the U.S., "the 350+ universe is smaller than most people assume," comprising roughly 140 entities. These companies control about 530,000 single-family homes in the country, or 0.59 percent of total U.S. single-family housing stock.

Moreover, a majority of these homes are concentrated in a handful of metros in two regions: the Midwest and the Sun Belt. Atlanta had the highest concentration of single-family homes owned by large institutional investors, at 71,625 units and 4.16 percent concentration.

"Atlanta has relatively modern housing stock at price points that made sense for rentals. It's easier for an institutional investor to scale operations in just one city compared to across multiple cities or states," Fairweather said. 

"So although institutional investors play a small role in the national housing market, they have been a big player in Atlanta," she added.

Investors with more than 350 properties own more than 3 percent of all single-family homes in only three other metros, according to Parcl Labs. These are Memphis, Tennessee (3.8 percent); Jacksonville, Florida (3.6 percent); and Charlotte, North Carolina (3.4 percent).

What Would Banning Large Investors Do?

Banning large institutional investors, as currently foreseen in the Senate's 21st ROAD to Housing Act, "will have little impact on the national housing market," Fairweather said. 

It could reduce demand for homes a little in Atlanta, where most of the single-family homes owned by large institutional investors are concentrated, "but the large investor buyers would likely be replaced by smaller investor buyers who are under the 350 threshold," she said. 

Fairweather added, "We might also see large investors break themselves up into smaller entities to get around the 350 cap."

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