WASHINGTON (AP) — President Donald Trump said on Wednesday that he wants to block large institutional investors from buying houses, saying that a ban would make it easier for younger families to buy their first homes.

Trump — who has been under pressure to address voters’ concerns about affordability ahead of November midterm elections — is tapping into long-standing fears that corporate ownership of homes has pushed out traditional buyers, forcing more people to rent. But his plan does little to address the overarching challenge for the housing market: a national shortage of home construction and prices that have climbed faster than incomes.

“People live in homes, not corporations,” Trump said in a social media post as he called on Congress to codify his ban.

Last month, Trump pledged in a prime-time address that he would roll out “some of the most aggressive housing reform plans in American history” this year. The president said he would discuss housing and affordability in more detail in two weeks at the World Economic Forum in Davos, Switzerland, an event known for attracting CEOs, wealthy financiers and academics with a global focus who often run contrary to Trump’s populist rhetoric.

The president has in the past floated extending the 30-year mortgage to 50 years in order to lower monthly payments, an idea that has been criticized because it would reduce people’s ability to create housing equity and increase their own wealth.

With Trump’s proposed ban, the challenge is that institutional investors are only a tiny sliver of homebuyers, accounting for just 1% of total single-family housing stock, according to an August analysis by researchers at the American Enterprise Institute, a center-right think tank based in Washington, D.C. The analysis defined these investors as owning 100 or more properties.

The analysis notes that institutional ownership varies nationwide, reaching 4.2% in Atlanta, 2.6% in Dallas and 2.2% in Houston. But these investors tend not to dominate neighborhoods, even if they’re generally more concentrated in lower and middle-income communities.

The larger challenge has been a shortage of new construction, such that Goldman Sachs in October estimated in October that 3 million to 4 million additional homes beyond the normal construction levels would need to be built to relieve cost pressures. Mortgage rates also climbed in the inflation that followed the coronavirus pandemic, causing monthly payments on home loans to increase dramatically faster than incomes.

Still, Trump said last month that an increase in new construction would create a dilemma as it could cause existing home values to drop and that would come at the expense of many existing homeowners’ net worth.

“I don’t want to knock those numbers down because I want them to continue to have a big value for their house,” Trump said. “At the same time, I want to make it possible for young people out there and other people to buy housing. In a way, they’re at conflict.”

Jooish News

Jooish News