As President Donald Trump navigates the challenges of his second term marked by falling poll numbers and a looming midterm election, he has introduced two new housing policy proposals aimed at improving affordability—a central economic concern for many Americans. These initiatives place Wall Street actors at the heart of the housing crisis, casting large institutional investors as the antagonists responsible for inflated prices and limited access to homeownership.
In a social media announcement on Wednesday, Trump indicated plans to prohibit sizable institutional investors from acquiring additional single-family homes. This approach parallels tactics previously favored by progressive Democrats, who have criticized Wall Street's role in housing markets. The following day, Trump proposed instructing government representatives to purchase $200 billion worth of mortgage-backed securities to lower mortgage interest rates and monthly payments. Details on the implementation of these strategies are anticipated later in the month.
Despite these headline-grabbing proposals, economists and housing market analysts warn that such measures fail to tackle the root cause behind the persistent rise in home prices: an insufficient supply of available homes. Research from Goldman Sachs suggests that the United States would require approximately four million more houses to return to affordable levels.
Institutional Investors: A Limited Force?
Trump’s notion of barring large-scale institutional buyers targets entities like Blackstone, a firm owned by some of the president’s billionaire associates, which holds extensive real estate assets including apartments, mobile home parks, and single-family houses nationwide. Following the 2008 housing market collapse, institutional investment in real estate surged as these financial players acquired properties at reduced prices, subsequently generating rental income.
A Brookings Institution study estimates that from 2012 through 2019, institutional investors owned roughly 240,000 single-family homes across the country. This fairly modest figure has made Wall Street a popular figure to blame, especially for Democrats who argue these investments lock out prospective first-time buyers and inflate market prices.
However, Jake Krimmel, senior economist at Realtor.com, clarifies that large institutional investors—defined as those owning over 1,000 properties—comprised only about 1% to 3% of single-family home purchases in 2025, and this share has been shrinking as mortgage interest rates increased. The majority of investment in real estate comes from smaller-scale "mom-and-pop" landlords who own one or two homes as rental properties, rather than from massive financial entities.
In specific markets such as Sun Belt cities, institutional investors have gained a larger foothold. A 2024 study by the Government Accountability Office showed that in Atlanta, Charlotte, and Phoenix, investors controlled 25%, 18%, and 14% respectively of rental units. Nonetheless, according to Krimmel, even eliminating all institutional ownership in these areas is unlikely to generate a significant impact since housing inventory is already increasing, thus tempering price growth.
The Mortgage Bond Initiative
Trump’s second measure involves directing government-backed entities like Fannie Mae and Freddie Mac to purchase $200 billion in mortgage-backed securities, an approach traditionally utilized by the Federal Reserve during economic crises to prevent mortgage rates from rising sharply. These entities retreated from the mortgage bond market in 2008 amid the subprime mortgage crisis and subsequent federal takeover to avoid insolvency.
Economists acknowledge that increased government purchasing of mortgage bonds could lower borrowing costs, potentially easing monthly payments for buyers. However, the strategy does not expand housing availability and is unlikely to encourage current homeowners to sell and seek alternative properties due to the so-called "lock-in effect," where homeowners remain in place to avoid higher borrowing costs.
Daryl Fairweather, chief economist at Redfin, described the plan as a short-term fix that does not resolve fundamental issues. She noted mortgage rates near six percent are historically normal and emphasized that it is the ongoing scarcity of housing that has driven median home prices to roughly $410,000, marking a 30% increase since 2020.
A Complex Affordability Challenge
Tackling housing affordability is a multifaceted problem. Krimmel pointed out that successfully addressing it requires nuanced and sustained federal efforts geared toward increasing supply rather than simply penalizing investors or manipulating interest costs.
The federal government can play a role by incentivizing state and local governments to boost housing construction where demand exists. This might include standardizing and streamlining permitting processes or revising zoning laws to permit denser housing developments. However, these solutions lack the populist appeal of blaming Wall Street but they hold greater potential to alleviate the housing supply constraints driving high prices.
Ultimately, while the White House policies may aim to resonate with voters by identifying tangible adversaries, housing affordability remains tethered to structural factors that cannot be swiftly or easily undone by targeting institutional players or tweaking financing mechanisms alone.