Trump’s home investment crackdown is all about the suburbs – Financial Times
Adam Almeida is a writer who researches housing, gentrification and the financialisation of cities.
You would be forgiven for feeling like you may have missed something important from Donald Trump’s sprawling keynote speech at Davos last month. Between talk of Venezuela, Greenland and Washington DC’s thriving restaurant scene, the US president announced the country’s most monumental housing policy shake-up since the subprime mortgage crisis.
He told the overflowing audience that he had signed an executive order banning institutional investors from acquiring single-family homes as rental properties.
He spoke of the injustice at hand — that hardworking American families have been caught in a rental trap and are unable to build wealth through home ownership. “Homes are built for people, not for corporations,” he stated solemnly from the lectern while gazing upon a room full of business execs.
I had to rub my eyes. How did we arrive at this moment?
Devil in the details
The language in Trump’s executive order — published mere hours before he set off for Switzerland — goes further than his Davos speech: he called on Wall Street to stop “treating America’s neighbourhoods like a trading floor” and that “communities once controlled by middle-class American families are now run by faraway corporate interests”.
Trump named a wide array of federal departments to review their policies and practices with respect to this proposed ban. Scott Bessent, the Treasury secretary, was given 30 days to define what is a ‘large institutional investor’ and ‘single-family home’.
Pam Bondi, the attorney-general, will work with the chair of the FTC to investigate major housing acquisitions for anti-competitive effects. This is clearly a continuation of her role in prosecuting corporate landlords for their use of RealPage, a proptech software which recommends rent prices based on the ‘anti-competitive’ sharing of sensitive data by users.
Trump also laid out the sharp tools at the government’s disposal to show this proposed ban is not just window dressing. He includes anti-circumvention provisions, first-look policies for individual homebuyers and enhanced disclosure requirements for institutional investors in residential real estate.
Tightening the Bible Belt
There has been growing pushback across the US political spectrum against the capture of single-family homes by institutional investors. I knew something drastic had shifted when I saw alt-right darling Marjorie Taylor Greene decrying the private-equity firms that were hoovering up homes across her native state of Georgia.
This widespread backlash has prompted major SFR investor Blackstone to publish several factsheets in recent years, the most recent of which, released last year, showed the incredibly marginal nature of institutional ownership of single-family homes:
A report published in 2023 by the Brookings Institution found similar figures. It is true that only three per cent of single-family rentals (SFRs) are owned by mega-investors (defined as owning more than 1,000 rental homes). But the Brookings report points out that the pattern of institutional ownership is highly concentrated. Nearly 80 per cent of SFRs owned by megafirms are in the 20 largest single-family rental markets. Here, via Business Insider, is a map of that concentration:
As you can see, these markets are highly concentrated in the South and more specifically, Trump’s base across the evangelical Bible Belt in the Southeast. Interestingly, nearly every major SFR market happens to be in states Trump carried in 2024 (the Seattle metropolitan area being the only outlier). Markets like Atlanta, Las Vegas, Charlotte and Raleigh are all located in states Trump won with razor-thin margins of less than 3 per cent.
Trump knows that the electorate is fed up with sticky inflation and expects them to be punishing come November’s midterm elections. The Bureau of Labor Statistics released the latest figures for consumer inflation in mid-January, showing rents and food costs as the primary items pushing up headline inflation. Against this backdrop, summoning up a house-price bogeyman in order to push back against them seems politically astute.
Everything’s bigger in Texas
To better understand what may have led the administration to take this position, I wanted to zero in on America’s largest SFR market — the Dallas-Fort Worth metroplex. More than 375,000 households live in single-family rental properties, representing more than a quarter of the metropolitan area’s 1.3 million rental units.
The 2024 presidential election results show that the densely-populated inner city opted for Kamala Harris, while the exurbs and rural townships went solidly for Trump. The real toss-up is over the suburban ring that separates these two zones, which both candidates campaigned valiantly for:
Renter households in Dallas’s suburbs grew by 18 per cent between 2018 and 2023. That was more than double the renter-growth rate of Dallas’s urban neighbourhoods, which rose by eight per cent over the same period.
Rents are driving consumer inflation; suburbs are driving rental sector growth. Trump must understand that the graves of electoral defeat are filled with those who didn’t address this consequential dynamic.
Old friends
Trump must also realise that there may be serious consequences for him from his Wall Street donors and real-estate industry cheerleaders. He acknowledged this during his Davos speech, but remained steadfast in his delivery: “Many of you are here, many of you are good friends of mine, many of you are supporters. I’m sorry to do this. I’m so sorry.”
The upshot for the sector is that there appears to be a carve out in the executive order for investment in multifamily housing. This means private capital can continue to pour into high-rise apartment buildings in urban areas where the President knows his draw on voters is very limited.
More pertinently, Trump may be crowding out Wall Street capital from single-family homes to crowd them in someplace else. If he pairs this stick with carrots for real estate investment in data centres, he could be killing two birds with one stone: securing his dream of achieving global AI hegemony and keeping suburbanites in his good graces.
Trump may be incredibly unpredictable, but I wouldn’t doubt his willingness to use any means necessary to remain in power — even if that means squaring up to Wall Street.
