President Trump said in a speech in Davos,Switzerland,that he will promote homeownership in the U.S. by pushing for lower mortgage rates, restricting institutional investors from hoarding residential real estate and capping credit card costs.
Speaking at the World Economic Forum on Wednesday, Mr. Trump described homeownership as “a symbol of health and vigor,” while touting his executive order this week aimed at deterring Wall Street firms from competing with Americans for homes.
Yet he stopped short of providing details of how such a ban would work, and housing experts said such measures fail to address some of the key drivers behind rising home prices.
“It’s just not fair”
In his speech at the annual gathering of world leaders,policymakers and business figures,Mr. Trump blamed institutional investors for driving up home prices for Americans by purchasing hundreds of thousands of properties for investment purposes.
“Homes are built for people, not for corporations,” Mr. Trump said. “It’s just not fair to the public. They are not able to buy a house.”
His proposed ban would restrict future purchases of single-family homes by major housing investors, such as hedge funds and real estate investment trusts, but would not force them to sell properties they already own. The plan would require approval by Congress before taking affect.
But Jina Yoon, chief alternative investment strategist at LPL Financial, noted that the proposal onyl applies to existing houses and excludes newly built homes, possibly allowing some firms to continue scooping up properties.
“This allows institutional investors to shift thier capital to build-to-rent projects, which could actually accelerate more rental community development owned and managed by large institutional investors,” she said in an email. “And there are manny 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.”
Across the U.S., big investors account for roughly 1% of total single-family housing stock, according to an August analysis by researchers at the American Enterprise Institute, a nonpartisan think tank. Yet research from the government accountability Office shows that even mod
