alt Hacker NewsUS will ban Wall Street investors from buying single-family homes
Comments
It will make very little difference in the end.
Australia's land tax system makes it effectively impossible for large corporations to own large chunks of residential property, but our real estate is amongst the world's most expensive and landlords are still awful - it's just that the landlords are hundreds of thousands of dentists and, yes, software engineers rather than corporate entities.
If you want housing to be cheaper and renters to be better treated, increase supply. Everything else is window-dressing.
Housing prices are rising due to inflation, and specifically inflation on the raw input for houses - lumber, building materials, and labor. Granted, this is not the only reason in all regions, places like California have much more complex, systematic reasons for increased housing prices. But the bulk of the US has housing prices that are somewhat in line with the cost of building, since there's no limit on land to throw cookie cutter subdivisions on.
They don't want to admit that their abhorrent policies are hitting the pocket books of their supporters, so they latch onto popular sentiment instead of solving the problem. Typical of this administration.
I built a house in 2018 for $350k. To build the same house again today would be $650k (and it would probably take twice as long). Surprisingly, the cost of land is not much more than it was 8 years ago. All of that cost increase is in materials and labor.
The problem is, the market value of my house is $550k, at the most. Meaning it's not profitable to build new houses as the market can't sustain them. And who is going to sell their house at less than they can get another one for? Only people who are forced to move, which is probably why the there is such low inventory in the historically cheaper markets.
"Real estate investors, both individual and institutional, bought one-third of all single-family residential properties sold in the second quarter of 2025"
https://www.cnbc.com/2025/10/07/home-sales-investors-make-up...
As long as we have this focus on using homes as investment and rent prices are kept high through collusion, the industry refusing to build "non-luxury" units, and regulation hurdles stopping new entrants, we will be stuck with this problem.
One additional important detail: if this gets implemented at all, hopefully it does not affect the common practice of having a self-owned LLC owning your home. This is common for the purposes of keeping your personal name out of public records; it is far too easy to link someone's name and address, and people at risk of doxing can do this to protect themselves.
This is largely a good move. There are plenty of whales, once those 5% disappeared, price should slowly come down. ( The Hong Kong Housing market is the one worth studying ) Next would be increase supply, and may be if needed, additional tax for individuals owning more than one home or when they buy 2nd home. Largely making housing as an asset not attractive for certain group of investment.
Housing continues to be the biggest problem in modern world and yet it is a problem not resolved.
I'd be fine with a policy of "you can rent housing you build" for American corporations.
If a corporation thinks there is demand in some city, goes and build housing for that demand and then rents that housing, that is good for the world.
Would be a better policy than letting corporations use their access to capital markets to outcompete individuals trying to buy a house.
Actually, not a bad policy idea. But it is not enough to solve the set of problems that arise when you take a basic human need (housing) and subject it to market forces--inexorably the ability to profit from the need drives costs higher than is affordable for some "market participants," leading to death.
Small investor ownership in single-family homes (for both short- and long-term rentals) have been devastating to communities. What is the right number of single-family homes to permit individuals/trusts to own and how do you disincentivize small empires?
Wall Street investor monopoly ownership of dense housing in urban areas remains a major cause of rents outstripping income (see Blackrock's 2020-2025 market takeover and subsequent market manipulation of apartment rental rates in San Diego). Simple policy solution: trust-bust apartment ownership. Harder, more effective policy solution: municipality ownership of apartment blocks a la European cities.
If regulators allow the same behaviors with water, you can expect a similar set of harms.
As others have noted:
- Whether this is needed or helps depends not on percentage of owners or buyer/sellers, but on the effect in the market of such players. REIT's have an outsize effect because they are repeat players, and thus lucrative clients for brokers, who qualify themselves by skewing local markets accordingly.
- Policy-wise, it's hard to distinguish by size: second homes, mom-and-pop with a few rentals, REIT, private equity. (This is how corporations get free-speech rights.)
- Politically, it's a shame that a real problem is addressed via scapegoating
- Practically, it will have little effect since REIT's and home builders are sitting on a lot of inventory that they can't sell, so they've stopped accumulating (and they're resorting to secondary offerings to pay off the original investors). Indeed, to the extent this stimulates buying, they're all for it.
- Ethically, the US has been a magnet for money laundering, much of it via real estate, which has pushed up asset prices and de-conditioned professionals. Scapegoating only delays reform.
This will help out home prices in a lot of lower priced markets, but do little in higher priced markets. In the Bay Area, many houses are bought up by non-occupying internationals. I've been in a couple of such houses. It's bizarre walking into a $5M+ hilltop mansion that's completely bare inside except for a token "student" living out of one room.
It's not going to solve the housing issue and is mostly for press (and it's not even getting into ulterior motives), but it might help with preventing a longer term issue of large investors becoming a major issue. Additionally, I wonder about the choice in properties as properties aren't fungible.
None of this has anything to do with "affordability", which is not about shifting rentals to owner-occupied properties, but rather reducing the monthly cost of residing in areas with opportunity. The notion of home ownership as an absolute good is a driver of unaffordability.
Speaking as someone who just sold a house in the Bay Area (Dec!), house prices here are very much "buying the payment".
The valuation of the property goes up and down directly with the interest rate.
The ROI of the house (we bought in 2016) was ~8% on the down payment over the past 10 years, excluding maintenance and interest charges. As an investment, property is not a very good one.
To get that 8% on the down payment, I spent 4% on the remainder. It really doesn't net positive after the mortgage interest (with a 20% down payment). It's about "forced savings" and having control over your environment.
As an aside, since people are stuck in houses (mortgage rates and prop-13), there is a definite lack of starter homes. Everyone adds the second bathroom, meaning there aren't any single bathroom homes to be found. That increases the market floor.
It seems like the root cause is to increase the supply by all means possible. Ban NIMBY instead, support more building, both with already existing infrastructure and with creation of the new one.
Pure populism.
If you believe that banning investors from buying SFHs will decrease the price of SFHs, why not also ban investors from buying apartments/condos?
What about the many, many thousands of homes that have already been bought up?
Churchill was right!
We’ll try everything except for a land value tax, so that we can eventually prove once and for all that LVT is the right thing to do! :)
But actually, it’s good to see movement on the underlying problem (affordability of home ownership). This is The Domestic American Problem of our times, and it deserves to be closer to the center of the Overton window of our politics and policy-making.
Even if we think this step is kind of meaningless, it draws more attention to the problem, which is a good thing.
Aren't they just fixing the symptom rather than the cause? I.e, people buy hard assets because holding dollars loses value. Make dollar hold its value instead, thus will individuals and companies stop buying up property they don't actually need.
It is going to be fascinating to see how the impacts of this will ripple through the housing market.
Two areas I'm particularly curious about are a) the financing of new construction, and b) the sale prices of SFHs.
Interesting to see that he did not issue an executive order to ban this but called on congress to do so. This is just pandering to the base and election signaling and nothing else, at least for now.
This will absolutely help. It’s easy for these institutional players to downplay their involvement with select stats, to play PR defense, but platforms like Zillow work with institutional funds to sell them an information advantage that means they are at the end of the market that does the most upward impact on pricing.
People don’t have a natural feel for how little you need to alter flow to cause liquidity in a system to collapse.
Ban predatory private equity altogether.
If I were renting a house, I would much rather deal with a business than an individual landlord.
On another note, it’s amazing that in only a year, we accept a dictatorship where we are okay with the President setting policy that should require a law to be passed.
How about we stop companies from buying up properties to turn into airbnb/short term rentals, unless its a company that flips homes. Those we need.
idk how this would work effectively. There's lots of affordable homes they're just located where no one wants to live. You'd have to focus on HCOL locations and make them not so high cost which seems something that should be done at the local level.
You can increase supply but investors would just snatch them up. Maybe the feds could put a cap on the value of a single-family home that an institution can own and then make ownership very tedious. For example, no institution can own a home valued at more than $500k and for each home owned a quarterly filing must be made in person at the county the home is located. I'm sure these organizations would rather own very high value homes than lots of low value ones out in BFE.
So close to realizing the issues with the 2018 tax bill.
- 20% maximum corporate tax
- Personal Salt cap
Made it less expensive for an llc to buy a home than for most individuals.
To make individual ownership on par with corporate, individuals need to be in a lower tax bracket, be able to deduct taxes , interest, and insurance. And the $10k cap really hurt the ability for local property taxes to make it better for the individual. The new $40k cap may put it slightly towards the individual in some jurisdictions.
But raising corporate rates or reducing corporate deductible expense re real estate is the most efficient policy to encourage individual ownership.
They will continue trading the ones they have as LLC holding companies.
What about investors from other stock exchanges and locales? I don't understand why the phrase "Wall Street" is being included in this.
I wonder if this would include the real estate investment startup that Jared Kushner co-founded.
There's a service called Arrived (I believe Jeff Bezos invested) that lets people buy fractional shares of single-family homes and earn a proportional share of the rent. If you sell, you're effectively selling your percentage of the property.
As a renter, I was drawn to this as a way to get some exposure to real estate, and I ended up investing in a vacation rental. At the same time, I'm pretty conflicted about it. Profiting from vacation housing feels different to me than profiting from people’s primary shelter, which is a basic necessity.
More broadly, I think as long as the incentives of property owners and renters are fundamentally misaligned, it will remain extremely difficult for middle-class folks who don't already own property to break into the market. The system optimizes for extracting rent, not for creating new owners.
This mentioning of 'Wall Street' with investors if typical for the kind of populist argument that is used to argue that banning investors from buying houses is a good thing. What would this 'Wall Street' even mean? Would it mean that companies listed on the stock exchange are banned but privately owned companies not?
Anyhow, I argue that investors are positive for the the house market. They shouldn't be banned. Investors provide enough liquidity to the market so that the building companies have enough certainty to invest in large housing projects, because they know that their properties will be sold quickly. If investors would be banned they would sell their houses eventually as well but it would take much longer.
Similarly, investors improve mobility and throughput. An individual putting his house for sale will find a buyer much faster when investors are in the buying market, who are willing to buy up a house when nobody else takes it and sell it for a better price later. So: sellers sell faster, so they can move out and buy a new home faster as well: mobility in the house market increases.
In IT terms: investors function as a buffer.
The root cause for the low affordability seems to be that most people don't want to sell a house purchased at 3% interest and have to pay for a new one at 6%. That and zoning restrictions too contribute for the lack of supply.
The title change here is editorializing. It’s not a given that this will be implemented and the original title reflects that: “Trump threatens to ban Wall Street investments in single-family homes”.
So if you aren't staying long enough to want to deal with a mortgage, you'll be stuck with an apartment only?
Don't hold your breath.
It needs to be illegal for anyone to buy a single-family home that already owns one, and who won't agree to live in it, full-time and exclusively for at least one year. They must also agree to sell it ONLY to someone who also accepts the same terms. The penalty should be a criminal fraud charge with minimum jailtime -and- a hefty penalty.
I wonder if we will one day look back and wonder at the morality of a society that considered homes suitable targets for investors of any stripe.
I don't actually know anything, but I've been wondering lately: is higher house prices simply a consequence of Baumol's cost disease? If so, then there is kinda nothing we can do about it, right?. Higher house prices is simply a consequence of improved productivity elsewhere, and thus it is necessary to spend a larger fraction of one's income on housing.
How is Wall Street defined? How would they enforce it? What is preventing a large corporation from registering a new company to buy every house? Also this is just a call to action, nothing written up in a law yet. We will see how it goes, if at all it's implemented.
This is a good thing, the next step however is to block the guys that use sites like BiggerPockets.com from buying up more then 5 single family homes. I know a whole bunch of guys who own 10 or more houses. That is excessive. We need to limit all investment of single family housing. Apartment complexes? Be my guest buy all you want, build all you want. But lets keep our neighborhoods full of people who can actually live in them.
One of rare instances I'll say it: make owning a second home a major tax liability and 0 takes breaks for building or ownership.
Not that because "we have a right to housing" or other catchphrases, but because getting rid of the government sponsored local monopolies is impossible.
More like the housing bubble peaked and with this fund managers have a way to save face while fleecing investors.
Well that's going to do nothing.
But at least people eating the chaff of property owners will celebrate it, I guess.
Wow this is exciting. I tend liberal, but I think this sounds like a bad policy lol. My understanding of the existing research is that rent control tends to decreases the motivation to increase supply, and I think this should do the same
"Houses are for living, not for speculation" spreads to the Imperial Core
Sounds like federal outreach over what is probably within states' jurisdiction.
Um… banned by what authority? I fail to see how this is legal. Same as banning obese people from buying cookies
Crowd pleasing policy that will not make any difference to the problem.
Even if this goes through without a mountain of loopholes and exceptions, I doubt it will have a significant impact. "Wall Street Investors" implies they're targeting large institutional ownership, which is only around 0.5% of housing ownership as cited in the article. That number is also flat-ish or maybe decreasing depending on the chart you look at, from what I recall.
Outside of a few metro areas where institutional ownership is very high, I don't think this would change anything. As long as houses remain an attractive investment, non-institutional smaller investors will happily buy the properties for a few thousand dollars less than the institutions would.
Anyone familiar with basic economics is pulling their hair out reading this, because there's one extremely obvious way to lower the price of building new housing: Reducing or eliminating tariffs on construction equipment and materials and ensuring a robust supply of low-cost labor.
"Trump says" is not the same as "US will"
Trump says a ton of things that he never ends up doing.
The actual headline is “Trump says he will ban Wall Street investments in single-family homes,” which is a more accurate description of what happened: one social media post by the president, asking Congress to do something. Nothing has actually changed yet.
The key word here is "Wall Street". And this statement is playing off a popular misconception around corporate investors buying up American houses.
There has been a bit of a panic around "Investors buying up all the property!!!" With people often citing Black Rock and Blackstone as the main culprits. But most of the "investors" buying up property are individuals purchasing investment properties.
Here's an article on the topic from 2023[0], a bit old but my understanding is large institutional investment in residential real estate was already starting to cool down.
Black rock isn't buying up all the housing, your neighbors are.
I suspect this statement, and even if it becomes an actual ban, is largely to gain wider popular support around a largely imaginary concern people have.
0. https://www.housingwire.com/articles/no-wall-street-investor...