Max Bocken
Associate Editor
Loyola University Chicago School of Law, JD 2027
“To preserve the supply of single-family homes for American families and increase the paths to homeownership,” President Donald Trump signed an executive order on January 20th, 2026, preventing “large institutional investors” from buying “single-family home[’s].” The definitions of “large institutional investor” and “single-family home” are to be determined by the Secretary of the Treasury, Scott Bessent, by February 19th. However, even with an expansive definition of what constitutes a “large institutional investor,” this executive order seems likely to fall short of its intended goal. Large institutional investors account for too small of a share of single-family homeowners in the United States for this executive order to have any significant impact on housing affordability. Instead, to support housing affordability President Trump’s administration should focus on loosening credit standards, incentivizing home builders, and adopting economic policies to curb inflation, which in turn will lead to mortgage rate reductions.
Large institutional investors impact on America’s single-family housing market
There are many varying definitions of what constitutes a large institutional investor. In its most basic interpretation, a large institutional investor is defined as a company owning 100 or more homes. However, the Urban Institute Housing Finance Policy Center (UIHFPC) expands the definition, defining a large institutional investor as a company who owns over 1,000 homes in at least three different locations. According to the American Enterprise Institutes Housing Center (AEIHC), large institutional investors own only roughly one percent of single-family homes for sale in the United States, while the UIHFPC believes this number to be closer to three percent. While these percentages can differ depending on definition and location, there is not a single area in the United States where institutional investors own more than five percent of the area’s single-family homes. Given the relatively small percentage of single-homes owned by large institutional investors, many critics have come to the consensus that the executive order’s ban will have little effect on housing affordability, and could potentially worsen it.
Large institutional investors can be beneficial to the housing market for many reasons. First, investment in the housing market helps provides liquidity to the market and can decrease the industries cyclical nature. Additionally, through rental properties, large institutional investors can provide access to housing in desirable neighborhoods to those who would otherwise be unable to afford to live there. Lastly, given scale of their business, large institutional investors are able to upgrade houses at a fraction of the cost of an ordinary homeowner, thus increasing the value and quality of a home without needing to dramatically increase prices. In many cases these investors help provide liquidity and support affordability in the housing market through buy-to-rent plans – plans in which investors acquire whole or partial housing developments with the intention of renting them out for profit. Buy-to-rent plans from large institutional investors often lead to higher supply of homes, and correspondingly, lower home prices. Fortunately, under the executive order passed by President Trump, an exception to the ban allows large institutional investors to still invest in build-to-rent development plans. While they do not currently contribute to the growing housing affordability crisis in a substantial manner, the ban on large institutional investors, without this exception, could exacerbate the crisis.
The real causes of the home affordability crisis in the United States
A notable tracker of housing affordability in the United States is the Federal Reserve Bank of Atlanta’s Home Ownership Affordability Monitor, which tracks a median-income household’s ability to cover the annual costs associated with owning a median priced home. Based on the monitor, if the annual costs associated with the average home exceeds 30% of the average households annual income than homeownership is considered unaffordable. As of November 2025, it is at 43%. In July 2025, it was 47%, which exceeds the latest peak that occurred just before the 2008 financial crisis. Some factors that have contributed to this astronomic rise in the cost of homeownership include rises in inflation, property insurance premiums, and mortgage rates.
Additionally, one of the most significant factors is the housing supply shortfall. Today, the United States has between 1.5 million and 5.5 million less homes than are demanded to reach market equilibrium. Reasons for this shortfall are largely results of overburdensome land use restrictions and local zoning. Furthermore, economic policy in response to the COVID-19 pandemic and consumer constraints as a result of the Dodd-Frank Act and similar forms of legislation have also led to the home affordability crisis. These economic policies have led to increased home prices and have limited the pool of applicants eligible for mortgage loans with reasonable terms.
To fix the housing affordability crisis in the United States, the government should stop attacking large institutional investors. Instead, the government should focus on ways to incentivize homebuilders to supply more single-family homes, reasonably loosening credit standards to increase the pool of applicants eligible for a mortgage loan, and establish economic policy to curb inflation and halt the exorbitant expenses related to owning a home.