President Donald Trump announced on Wednesday that he plans to stop big investment firms from purchasing houses, arguing that this move would help young families get their first homes.
Facing pressure to deal with voter worries about high costs before the November midterms, Trump is playing into the common fear that companies buying up properties are squeezing out regular people and turning them into forever-renters. However, his idea doesn’t really fix the main problems in the housing market: not enough new houses being built and prices rising way faster than paychecks.
“Houses are for people, not businesses,” Trump wrote on social media, urging lawmakers to turn his proposed ban into law.
In a major evening broadcast last month, Trump promised to reveal the most intense housing shake-up the country has ever witnessed. He added that he would dive into the specifics of affordability in two weeks at the World Economic Forum in Davos, Switzerland, a gathering famous for hosting wealthy investors, CEOs, and global thinkers whose views often clash with the President’s populist style.
A new 5-decade-old mortgage for “easy payments”
The President previously suggested stretching the standard 30-year home loan to 50 years to bring down monthly bills, though critics attacked the plan because it would slow down how fast families can build equity and grow their wealth.
The trouble with Trump’s proposed ban is that corporate investors make up a very small fraction of homeowners, holding just 1% of all single-family houses, according to an August study by the American Enterprise Institute, a center-right policy group in Washington. The researchers defined these investors as anyone owning 100 or more properties.
The report points out that ownership levels differ across the country, hitting 4.2% in Atlanta, 2.6% in Dallas, and 2.2% in Houston. Yet even though these companies focus more on working-class areas, they typically don’t take over entire neighborhoods.
Democrats going against the grain—again
While some Democrats have pushed for cracking down on corporate home ownership, Senator Elizabeth Warren told the press on Wednesday that the Trump administration might actually drive prices up by letting real estate giants Compass and Anywhere join forces.
“He is under pressure because Americans want to see housing costs go down, and Democrats are the ones dedicated to making that happen,” Warren stated.
Last October, the Senate approved a bipartisan bill led by Warren to encourage local governments to simplify zoning rules and boost housing supply, but the Republican-controlled House has blocked the legislation.
The bigger issue is simply a lack of building; back in October, Goldman Sachs estimated that the U.S. needs 3 to 4 million extra homes above normal construction rates to ease the price crunch. On top of that, mortgage rates spiked with post-pandemic inflation, causing monthly loan payments to rise much faster than wages.
Even so, Trump pointed out last month that a construction boom brings a catch-22: it could drive down property values, which would hit the net worth of current homeowners.
“I don’t want to tank those numbers because I want owners to maintain significant value in their homes,” President Trump remarked. “But I also want to make it doable for young folks and others to get into the market. In a sense, those goals are at odds.”
FAQs
What is President Trump trying to do with US houses?
President Trump wants to create a new rule that bans big investment companies from buying single-family houses. The idea is that “houses are for people,” not businesses. He hopes this will make it easier for young families to buy their starter home (just like in The Sims) so they can build up their life and have some prosperity.
Will this make homes cheaper?
While it sounds good, experts point out that these companies only own a tiny slice of all houses (about 1%). The bigger reason homes are expensive is that there simply aren’t enough of them…and imported construction materials have insanely huge prices due to the tariffs. The US housing market would need to get flooded with three or four million houses for prices to finally drop.
What is a “50-year mortgage”?
Usually, people take a loan for 30 years to pay off a house. The President suggested stretching that to 50 years. This would make your monthly payment lower, but it would take you much longer to actually own the house, and you would pay a lot more interest over time—over 100% in interests alone.