Trump Wants to Ban Wall Street From Buying Homes
Housing affordability in the United States has reached a breaking point, and President Trump is putting institutional investors squarely in the spotlight.
In a recent proposal, Trump called for banning large institutional investors from purchasing single-family homes, arguing that “people live in houses, not corporations.” The statement resonated immediately. Housing stocks dropped, real estate investors took notice, and the idea reignited a debate that’s been simmering for years: who should be allowed to compete for America’s housing supply?
To understand why this proposal gained traction so quickly, you have to look at what’s happened to housing over the last five years.
Why Housing Feels Unaffordable Almost Everywhere
Between 2020 and 2025, the median home price in the U.S. rose from roughly $355,000 to around $500,000 a jump of about 40%. Over the same period, mortgage rates more than doubled. That combination pushed the average monthly mortgage payment from roughly $1,275 to nearly $2,500.
Wages didn’t come close to keeping up. Median household income rose only about 22% during that same window. The result is a math problem most households simply can’t solve.
Today, roughly 75% of homes in the U.S. are considered unaffordable for the average buyer. First-time homebuyers now account for just 21% of purchases, a historic low. That’s the backdrop against which Trump’s proposal landed.
How Institutional Investors Changed the Housing Market
Large institutional investors didn’t create the housing shortage, but they changed how competitive the market became.
In 2025, institutional buyers accounted for roughly one-third of all home purchases in some regions. These buyers often pay cash, close quickly, waive inspections, and don’t rely on mortgage approvals. For a typical family competing with a pre-approved loan, that’s almost impossible to beat.
Investors were drawn in by rising rents, limited housing supply, and the idea that single-family homes could function like long-term income assets. Entire neighborhoods quietly shifted from owner-occupied to rental-heavy, especially in fast-growing Sun Belt markets.
Trump’s proposal aims to remove that layer of demand from the market entirely.
Would Banning Investors Actually Lower Home Prices?
The short answer: not immediately and not evenly.
Housing prices are driven by supply and demand, and the U.S. currently has a supply shortage of more than 4 million homes. Even if institutional investors were removed from the buyer pool tomorrow, the shortage would still exist.
That said, fewer cash buyers would likely reduce bidding pressure in certain markets, particularly starter-home segments where investors are most active. Price growth could slow, and in some areas, prices might stabilize rather than continue climbing.
But a ban wouldn’t suddenly make homes “cheap.” Construction costs remain high, labor is tight, zoning restrictions limit new development, and many homeowners are locked into ultra-low mortgage rates and unwilling to sell.
The Risk of Unintended Consequences
Housing policy rarely moves in straight lines.
One proposal floated alongside the investor ban is a 50-year mortgage, designed to lower monthly payments by spreading costs over a longer term. While that may help buyers qualify, it could also increase demand and push prices higher undoing the intended relief.
Similarly, if institutional investors are blocked from buying homes, some capital could shift into multifamily rentals, potentially driving rents higher instead. Others may find loopholes through smaller entities or partnerships.
Housing is a complex ecosystem. Changing one rule often shifts pressure elsewhere.
What This Means for REITs and Real Estate Investors
Real estate investment trusts (REITs) focused on single-family rentals could face growth constraints if restrictions tighten. Fewer acquisitions mean slower expansion and potentially lower future rent growth.
That doesn’t mean residential REITs disappear, but it does mean investors will need to reassess risk, policy exposure, and geographic concentration. Markets heavily reliant on investor demand may see the biggest shifts.
For everyday investors, this proposal is a reminder that housing policy can move markets quickly and unpredictably.
What Happens Next
Even if the proposal never becomes law, it reflects something important: housing affordability has become a political and economic fault line.
Younger buyers are priced out. Renters are stretched. Older homeowners are sitting on equity they can’t easily access without downsizing. Policymakers are under pressure to act, and institutional investors are an easy target.
Whether banning Wall Street buyers actually fixes housing affordability remains uncertain. But the conversation itself signals a shift. Housing is no longer just a market issue it’s a social and political one.
And that means the rules may not stay the same for long.
Jaspreet Singh is not a licensed financial advisor. He is a licensed attorney, but he is not providing you with legal advice in this article. This article, the topics discussed, and ideas presented are Jaspreet’s opinions and presented for entertainment purposes only. The information presented should not be construed as financial or legal advice. Always do your own due diligence.
