President Trump said he wanted Congress to take immediate steps to stop private equity firms and other large investors from buying more single-family homes, embracing a position with populist appeal that has long failed to gain broader traction.
Mr. Trump’s announcement, which he made in a social media post on Wednesday, is aimed at Wall Street-backed firms that for years have bought up homes and rented them out. Critics say this business has driven up prices in some markets and made it hard for first-time buyers to purchase homes.
His post contained few details, though Mr. Trump promised to say more about his plans during a speech later this month at the World Economic Forum, where some of the world’s richest and most powerful gather for policy discussions. But if the plan that emerges has teeth, it would face stiff resistance from Wall Street and its allies in Congress.
The proposed ban is Mr. Trump’s latest attempt to try to address housing affordability for average Americans, and it comes as he faces mounting political pressure to address cost of living issues, from home prices to grocery bills. Voters’ unhappiness with pocketbook issues is likely to be a major force in the upcoming midterm elections.
The effect of such a restriction on the broader housing market, however, could be limited. Small investors make up the vast majority of owners of single-family rental properties. It’s estimated that institutional firms own only about 4 percent of the single-family home rental properties in the country.
The president’s call for legislative action is similar to measures introduced in Congress in recent years that would have limited hedge funds and other institutional investors from buying a large number of homes to operate as rentals.
Those measures stalled, but with Mr. Trump throwing his muscle behind the idea, the move to limit institutional buying of single-family homes could gain bipartisan momentum.
Buying up single-family homes to operate them as rentals became a big business for private equity and other Wall Street-backed firms after the financial crisis because of the ready supply of cheap, foreclosed houses.
But in recent years, as the stockpile of foreclosed homes has dwindled, firms have moved to acquire newly built single-family homes to rent.
Mr. Trump’s proposal could have consequences for some of the biggest operators of single-family rental homes such as Blackstone, Invitation Homes, American Homes for Rent, Cerberus and Pretium Partners.
The publicly traded stocks of Blackstone, Invitation Homes and American Homes for Rent fell sharply after Mr. Trump’s post on Wednesday, closing down between 4 and 6 percent. Blackstone, the giant private equity firm, recently resumed investing in single-family homes after spinning off Invitation Homes several years ago. In his post, Mr. Trump said he wanted a ban on large investors from purchasing “more single family homes,” suggesting that the companies could continue operating the rentals they currently own.
The White House did not immediately respond to a request for comment.
Maite Solis, a spokeswoman for the National Rental Home Council, a trade association representing the single-family rental home industry, said, “we appreciate the administration’s focus on ensuring Americans have access to a diverse mix of housing options,” and that the organization looked “forward to engaging with the White House and other policymakers in this important discussion.”
The proposal by Mr. Trump to ban big investors from buying homes is his latest attempt to improve housing affordability. He came into office trying to pressure the Federal Reserve into lowering interest rates to drive down mortgage costs.
Mr. Trump also endorsed a heavily criticized proposal to create a 50-year mortgage as an alternative to the standard 30-year mortgage. The idea was brought to Mr. Trump’s attention by Bill Pulte, the director of the Federal Housing Finance Agency. But the idea was scorned by critics from both parties, because a 50-year mortgage would have home buyers making interest payments to a bank for a much longer period of time than they do under 30-year mortgages, further delaying payment of the principal.
Some Democrats in Congress reacted skeptically to Mr. Trump’s announcement.
“Donald Trump has not yet lifted a finger to bring down housing costs for Americans. I’ve been advocating for years to limit Wall Street from buying up America’s homes,” Senator Elizabeth Warren of Massachusetts said in a statement.
Tony Romm contributed reporting.
Maureen Farrell writes about Wall Street for The Times, focusing on private equity, hedge funds and billionaires and how they influence the world of investing.
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