Although Trump is attempting to respond to legitimate frustrations in the housing market, the proposed ban won’t increase supply, Derek Carlson writes.
Inman Connect
Invest in yourself, grow your business—real estate’s biggest moment is in San Diego!
By the time housing policy hits the headlines, buyers already feel locked out, renters already feel trapped, and sellers are uncertain about their options.
President Trump’s call to ban large institutional investors from buying single-family homes is no exception.
While this is a response to real tension in the market, it also risks mistaking a visible symptom for the underlying disease, which will only make the problem worse in the long term.
The real question is not whether large institutional investors are a threat to the average buyer. In some markets, they absolutely can be, but the real question is, will banning them improve affordability or simply make financially illiterate people feel better without any real change?
When policies and market realities collide
I’ve spent decades in real estate as a broker and operator through multiple cycles, and along the way, I’ve watched policies collide with the reality of the market. I’ve sat with buyers who were exhausted from losing homes and sellers who needed practical answers and certainty.
The proposal focuses on large institutional investors that have deep pockets and can close quickly, often above market prices with all-cash offers. It’s been presented as a way to reduce competition for families and put homeownership within reach for the average American.
That may sound good on the surface, but markets don’t respond to intent.
In my role as an agent, I’ve seen countless first-time buyers lose homes they loved to cash offers from these institutional investors that closed in days without any inspections.
I remember one conversation in particular, when I called a young couple who had already written four offers, explaining that they had been outbid again by an institutional buyer. They were devastated.
That conversation is always difficult because it feels unfair to people who are just trying to buy a place to live.
So in many entry-level neighborhoods, institutional buyers do compete directly with families. They move quickly, often outbidding buyers who are using traditional financing, and in these situations, limiting that unfair competition could provide some relief to homebuyers.
There’s also the fact that owner-occupants tend to invest differently in their homes and neighborhoods than absentee landlords do. They care about schools, maintenance and long-term stability because it impacts them more directly.
Homeownership symbolizes security and opportunity, and when people see that slipping out of reach, they want action, but it can’t come at the cost of real results.
The issue becomes even clearer when you look at it from a national level.
Contrary to popular belief, institutional investors own a relatively small share of single-family homes.
“U.S. investor home purchases, across both mom-and-pop and institutional investors, were only up 1 percent year over year during the third quarter of 2025, according to a study by Redfin. Institutional and mom-and-pop investor-purchased homes made up about 17 percent of all U.S. home sales, or roughly 52,000 sales, that quarter,” Inman’s Lillian Dickerson wrote.
“According to a 2024 study by the Government Accountability Office, as of mid-2022, institutional investors owned about 450,000 (roughly 3 percent) of all single-family rental homes in the country.”
The truth is that even if every institutional investor stopped buying tomorrow, we would still be facing a massive housing shortage. New housing construction has been lagging far behind demand for years, meaning demand continued to grow while supply didn’t.
Not to mention the fact that many institutional investors operate long-term rental housing, and if that capital pulls back without replacement, rental supply tightens, which leads to rents rising. This makes it harder for renters to save for a down payment and eventually buy homes of their own.
For most buyers, the impact of a ban would be minimal and highly local, and for most sellers, very little changes.
What it would take to actually solve affordability
If the goal is to solve housing affordability, the focus has to shift from who is buying homes to why there are not enough homes to buy in the first place. That may not be as politically satisfying, but it is the reality.
This proposal exists because people are frustrated, and if we’re being completely honest, that frustration is justified. Buyers feel locked out, renters feel stuck, and sellers are uncertain about future demand, so ignoring those concerns would be a mistake. Both politically and economically.
Trump’s proposal to ban institutional investors is a response to frustration in the housing market, but it’s not really a solution. Housing affordability can only be fixed by building enough homes to meet demand. Every proposal should be evaluated through a simple lens — does it increase supply?
That’s the lens real estate professionals live by, and it’s also the lens policymakers should use.
Derek Carlson runs Realty ONE Group in Naples, Florida.
Topics: leadership Show Comments Hide Comments Sign up for Inman’s Morning Headlines What you need to know to start your day with all the latest industry developments Sign me up By submitting your email address, you agree to receive marketing emails from Inman. Success! Thank you for subscribing to Morning Headlines. Read Next
How to protect your business during a brokerage merger
5 questions to help you decide what you want in your next job
Zillow lawsuit raises big questions for the real estate industry
7 questions you MUST ask buyers before meeting in person
More in Opinion
The Compass-Anywhere deal has closed. Now the real work begins
The Compass-Anywhere deal is done. This Coldwell Banker agent has lingering questions
‘What’s the worst-case scenario for the industry?’ 2 leaders answer ‘ask me anything’ questions
IDX reform is the real fight no one wants to have
Read next
Read Next
How to protect your business during a brokerage merger
Zillow lawsuit raises big questions for the real estate industry
How this luxury pro became 1 of Elliman's top agents every year
Washington to consider requiring all listings to be marketed publicly
