Trump threatens to ban institutional investments in single-family homes
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- U.S. President Trump intends to ban institutional investors from purchasing single-family homes.
- We think this is a negative as historically any regulatory intervention has been a negative for housing affordability. The only exception is removing barriers to supply.
- The impact to our portfolio is limited as we are underweight SFR as a sector. We own Invitation Homes (INVH) in the sector which has only been acquiring 0.7-1.7% of its portfolio per annum.
In early January, U.S. President Trump indicated he would like to ban large institutional investors from buying single-family homes. This appears to be in response to frustration around elevated house prices and the perception that large investment platforms have been a major contributor to the issue. Further details have been scant so we can only speculate on the details, including timing and extent of what might yet prove to be a thought bubble. The fact that there is no certainty about the potential terms of any legislation, and about whether it would be passed by both Houses, suggests investors should not overreact.
As an aside, it is curious that Trump’s statement “People live in homes, not corporations” has some parallels with comments from China’s Xi Jinping in 2017 that “houses are for living not for speculating”[1]. The difference is that China’s comments were in response to signs of a bubble manifesting in excessive speculation and elevated home building. By contrast, U.S. residential is experiencing muted housing investment activity and historically modest construction levels.
Trump’s intention appears to be aimed at making purchasing a home more affordable by reducing competition from large professional/institutional house purchasers. As we will discuss, evidence to support this policy is not on his side. Furthermore, based on past history of government intervention in under-supplied residential markets, it has often been the case that anything other than encouraging supply has exacerbated residential affordability issues. Key risks if this policy were to be enacted, in our view, include:
- A negative signal to the broader investment community that returns from residential investment will be capped, thereby limiting future investment in the sector, including new supply.
- U.S. rental housing (and Commercial Real Estate more broadly) is experiencing a period of heightened regulation, ultimately reducing the appeal of U.S. property more broadly.
- Increased pricing and availability of debt to institutional owners.
Background on institutional participation in the U.S. Single Family Residential (SFR) market
Prior to the GFC, large scale investors were not a feature of the single-family housing market. Interest in residential property by REITs and institutional investors had been focused on multi-family apartment rental properties for many decades. Larger investors initially became active in purchasing free-standing single-family houses in the aftermath of the GFC, as consolidated wholesale portfolios of loan default properties were divested by lenders. This afforded investors the opportunity to amass scale/critical mass in a relatively short period of time for what had hitherto been a market dominated by small players including owner occupiers and “mom and pop” investors who enjoyed superior returns thanks to preferential tax treatment and lower cost property management structures.
By acquiring large volumes of impaired properties, large investors, including what would become listed SFR REITs such as Invitation Homes (INVH) (originally created by Blackstone) and American Homes 4 Rent (AMH), were able to stabilise the market when there were very few individuals actively buying, thereby limiting further fallout and an otherwise elongated recovery period. A number of these large platforms are shown in the table below.
Many of the properties acquired out of the GFC had been neglected and required significant capital expenditure, thus the entry of well capitalised institutional investors arguably helped rehabilitate inventory that might otherwise have been un-inhabitable and remain out of the rental pool, at least for a considerable period. Furthermore, the arrival of the scaled players has brought improved property management standards and service offerings including discounts for residents purchasing internet, insurance and maintenance services as well as greater investment in technology packages such as digital inspections and digital leasing/contracts.
The scale of these institutional players needs to be put in the context of a total U.S. housing market of 149 million homes. Today their overall share is relatively low at 0.5% of total home ownership in the U.S. (according to John Burns Consulting), or 2% of the total single family home rental market of 15 million homes. The majority of SFR continues to be owned by individuals owning less than 10 properties.
Source: Company data, Census, Resolution Capital. January 2026
After the initial wholesale acquisition phase following the GFC, these larger platforms have not been particularly active in acquiring additional homes – particularly in the traditional individual existing homes market (via what the U.S. describes as Multiple Listing Service channels) in competition with smaller investors. This is evidenced by the fact that the portfolio size of listed SFR REITs in recent years has been relatively stable.
For example, INVH has been a net acquiror of ~600-1,500 homes per annum since 2022.
Source: Company data, Resolution Capital. 2025 has been annualised based on 3Q25 YTD.
AMH also has not been particularly acquisitive of existing homes. Indeed, it has pursued a path of expanding its portfolio via its in-house development business which now represents one of the top 20 home builders in the U.S. Whilst AMH retains the developed houses for the purpose of rental – it is adding to the overall housing pool.
Further, these large investors have not had a disproportionate impact on home ownership dynamics. Even with the arrival of larger investors, home ownership has been relatively unchanged from the long-term average of 66%, albeit lower than the abnormal levels evident in the lead up to the sub-prime crisis (2007-09).
Source: Census Bureau, Federal Reserve Bank of St. Louis. June 2025
To reiterate, it does not seem the “normal” market dynamics have drastically altered with the arrival of large institutional/corporate/REIT platforms.
House prices appear to have been more influenced by the lack of new home building supply in recent years with some estimates suggesting the U.S. is undersupplied to the tune of 3-4 million homes. Hence Trump’s policies should be designed to stimulate supply.
Source: Census, Resolution Capital. September 2025
Potential impact of the proposed ban
Given the listed REITs have not been particularly active in the secondary acquisition market – the immediate near-term impact on the investment case is not expected to be as meaningful. We also note aquisition activity equates to 0.7-1.7% per annum of INVH’s portfolio, with a similar impact to earnings if they ceased this activity. Admittedly – this could be partly due to their cost of capital or the lack of inventory as banks had largely reclaimed a lot of inventory after the GFC. However, the point is that INVH has not been driving its business model through large scale acquisitions for several years.
At the sector level, we believe that removing a potential buyer category from the market could act as a deterrent to supply in the medium term as home builders, which could have sold part of their inventory to these well-capitalised buyers, may pull back on development. A reduction in supply typically corresponds with higher rents – the opposite of improving housing affordability. Lowering interest rates and the U.S. government’s efforts to curb immigration, which stifles a component of demand, are more important factors which have the potential to improve affordability in our view.
Restricting growth and new entrants to the market could increase the scarcity value of these existing platforms (i.e. it is hard to replicate platforms of similar scale). Furthermore, the value of SFR REITs are “cheap” compared to the underlying home values and these portfolios are highly fungible (i.e. the properties can be sold individually to a range of buyers including owner occupiers or to smaller investors).
INVH, for example, is currently priced with an implied home value of US$290,000[2]. This compares favourably to the market value of ~$390,000 per home[3] or replacement cost of ~$370,000 per home (25% and 20% discount respectively). Accordingly – we have not changed our positioning in INVH on the back of this announcement given: i) the limited detail to determine the full impact to the market; ii) execution probability of Trump’s political statements is far from certain; and iii) the relative valuation support remains for INVH.
[2] Average
[3] Average
Further information
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