Former U.S. President Donald Trump announced his administration’s plans to restrict Wall Street firms from investing in single-family homes, aiming to lower housing prices. Trump communicated his intention via Truth Social, stating he would request Congress to codify the measure. He also mentioned discussing further housing affordability proposals in a speech at the Davos World Economic Forum.
The move follows criticism of Wall Street institutions, such as Blackstone, for purchasing a significant number of single-family homes since the 2008 financial crisis. Blackstone is a global investment business investing capital on behalf of pension funds, large institutions, and individuals. They manage investments across a broad range of asset classes, including private equity, real estate, credit and hedge funds. These investments have drawn scrutiny from housing advocacy groups and lawmakers concerned about reduced housing supply and increased rent inflation.
News of the potential ban impacted homebuilder shares. American Homes 4 Rent, a company focused on acquiring and managing single-family homes, experienced a sharp drop to a near three-year low, triggering a trading halt due to volatility. Blackstone’s shares also declined, hitting a one-month low. The PHLX housing index also saw a significant decrease following Trump’s announcement.
While Wall Street landlords argue their investments haven’t fueled inflation or harmed housing supply, critics maintain their presence in the market exacerbates affordability issues. The specifics of Trump’s proposed policy, its legal basis, and the necessary congressional changes remain unclear. The market awaits further details on the executive orders expected to be signed and any subsequent announcements.
