Below is commentary by Jina Yoon, Chief Alternative Investment Strategist at LPL Financial, on whether limiting institutional buyers could improve housing affordability.
What Was Announced
On January 7, 2026, President Trump announced a proposal aimed at limiting large institutional investors from buying additional single-family homes. The goal, according to the administration, is simple — make it easier for American families to buy homes by limiting competition from large institutional buyers.
According to what has been announced so far, the government plans to restrict future purchases of single-family homes by large institutional investors. It would not force them to sell homes they already own, nor would it affect individual buyers or small landlords. That's the framework the administration is working under. But details are sparse. No enforcement mechanism has been discussed, and Congress will need to "codify it," as the President wrote.
What Can We Expect
First, a lot needs to be done before the proposal could actually become law. So far, only the broad outlines have been shared, with few concrete details. It will have to go through a lengthy legislative process from formally introducing the bill, signing it into law, and having involved agencies enforce it. The World Economic Forum at Davos has kicked off and President Trump is expected to share more details in his speech at the event.
Second, even if the proposal were to become law, its impact on the housing market would be more complex than what the proposal suggests.
It is partially true that investor purchases have been increasing, possibly increasing the competition between owner buyers and investors. According to the St. Louis Federal Reserve, a record-high 30% of single-family home purchases in the first half of 2025 were made by investors. However, the data also shows close to 80% of those purchases were made by mom-and-pop investors, not large institutions. In terms of existing ownership, large institutional investors represent only 2–3% of the total single-family houses nationwide, with a higher percentage of ownership seen only in a limited set of cities, such as Atlanta, Phoenix, and Charlotte. This means the potential nationwide impact would be limited, with only selected areas where large institutions are active possibly feeling the hit.
It's also worth noting that the proposal only covers existing houses, not new construction. This allows institutional investors to shift their capital to build-to-rent projects, which could actually accelerate more rental community development owned and managed by large institutional investors.
And there are many more structural factors that drive home prices and affordability issues than the share of homes owned by institutional investors, such as chronic supply shortages, zoning constraints, income, and mortgage costs.
The administration is certainly aware of the complexity of the matter and is using additional measures such as directing Fannie Mae and Freddie Mac to purchase mortgage-backed securities (MBS), although the impact could be temporary, and proposing to allow buyers to draw their down payment from their 401(k) accounts penalty-free.
While we wait for further details, publicly traded REITs and real estate investment firms could experience increased volatility, reflecting uncertainties and investors' concerns.
