Rental REITs Slump as Trump Vows Ban on Institutional Homebuyers
Shares of Invitation Homes and American Homes 4 Rent fell sharply after the former president unveiled a plan targeting corporate housing investors, introducing significant policy risk to the sector.
Shares of the largest single-family rental landlords in the U.S. tumbled after former President Donald Trump announced a proposal to bar large institutional investors from purchasing single-family homes, striking at the heart of the sector's business model.
In the immediate aftermath of the announcement, shares of Invitation Homes (INVH), the nation's largest owner of single-family rentals, fell more than 7%. Its primary competitor, American Homes 4 Rent (AMH), saw its stock drop 6.3%, reflecting immediate investor anxiety over a potential regulatory crackdown. The sell-off highlighted the new layer of political risk for an industry that has grown to control tens of thousands of homes across the country.
Trump's proposal, framed as a move to combat the housing affordability crisis and restore the "American Dream," would seek to prevent what he termed a practice of "corporations buying up entire neighborhoods." Details of the plan are expected to be elaborated on, but the initial announcement promised to "immediately take steps" to implement the ban, while urging Congress to pass it into law, according to CBS News.
The market’s swift, negative reaction underscores the perceived threat to the single-family rental (SFR) model, which relies on acquiring and managing vast portfolios of homes. Invitation Homes, which was spun out of investment giant Blackstone, owns roughly 80,000 rental homes, while American Homes 4 Rent holds a portfolio of nearly 60,000 properties. For these companies, a federal ban on acquisitions would represent a direct and material threat to their growth strategy.
While the political rhetoric was potent, some analysts expressed skepticism about the proposal's potential impact on overall housing affordability. Critics of the plan argue that institutional investors own a relatively small portion of the country's housing stock. According to an analysis from Fast Company, corporate landlords own less than 3% of all single-family rentals nationally. Many experts contend the primary driver of high housing costs is a fundamental shortage of new home construction, a complex issue a purchasing ban alone is unlikely to solve.
“Simply restricting investor purchases might not significantly ‘move the needle’ on affordability,” noted a report from the Los Angeles Times, which pointed to the systemic lack of housing supply.
Despite the debate over its efficacy, the proposal introduces a significant headwind for the sector. The practical and legal hurdles to implementing such a ban are substantial, including defining a "large institutional investor" and addressing potential constitutional challenges over property rights. However, the issue of corporate homeownership has drawn criticism from across the political spectrum, and a Republican senator has already signaled intent to introduce legislation to codify the plan.
For investors in single-family rental REITs, the announcement has fundamentally altered the risk landscape. Until now, market focus has been on interest rates, rent growth, and operating costs. Now, a significant regulatory threat, contingent on electoral outcomes, must be priced in, creating a cloud of uncertainty over the future of Wall Street's landlords.