The Red Folder

Lindsey Zhao — January 27, 2026

Last Tuesday, January 20th, President Donald Trump signed an executive order titled Stopping Wall Street From Competing With Main Street Homebuyers, a move aimed at limiting the expansion of large institutional investors in homeownership. Generally speaking, the order will direct federal agencies to restrict government support from large institutional investors (LIIs) attempting to buy single-family homes. Critics argue the move will be ineffective at truly combating housing affordability, while others applaud the move as a rare step towards progress.  

The lack of affordable housing in the United States has become one of the most defining issues of modern-day politics. As of last year, there is a shortage of 4.7 million affordable homes due to a complicated combination of the supply side of restrictive zoning laws, corporate buyouts, construction labor shortages and more. As a result, it’s estimated that nearly 600,000 people experience homelessness on any given night, and a recent survey found that just over half of Americans (about 54%) can’t afford housing. 

Thus, it’s no surprise that housing affordability has become a top priority for both Democrats and Republicans, but they tend to support different methods of fixing affordability. In October, the Senate passed a bipartisan bill sponsored by Senator Elizabeth Warren (D-MA) that would incentivize local governments to streamline zoning rules, but it is stuck in the Republican-led House. 

Trump’s latest move is aimed at incentivizing private companies to change their behavior, which he argues has systemically pushed out traditional buyers through their so-called bulk purchases. They are successful at doing so because, as large companies, they can offer a sum much higher than the typical American family can buy a home, then jack up the rent for potential renters. By discouraging large investors from buying single-family homes, Trump aims to increase the supply of homes available for traditional buyers, decreasing prices. 

The order directs federal agencies to “withdraw federally backed financing, guarantees, insurance, securitization and asset-disposition pathways when large institutional investors seek to acquire single-family homes that could otherwise be purchased by owner-occupants.” It will encourage agencies to promote sales to individual owner-occupants first. One exception to the policy: build-to-rent communities that are planned, permitted and constructed as rental homes are allowed to be controlled by institutional investors. Notably, this is not a ban on investors buying single-family homes at all—it simply eliminates federal assistance for large investors that do so. 

Enforcement of the policy will also depend on how the Trump administration defines “large institutional investor.” Typically, they are defined as entities that own over 1000 homes, but Secretary of the Treasury Scott Bessent has suggested thresholds as low as owning a few dozen. If they go forward with this lowered threshold, small- and mid-sized landlords—making up 4-6% of all home sales—would likely be hit harder by this policy than the largest, Wall Street-backed companies. 

Even if the government stays with the generally accepted definition of over 1000 homes, the impact on housing may not be as straightforward as it seems. Housing experts explain that while big investors do contribute to the problem by pushing smaller buyers aside with more competitive offers, their influence on housing prices is dramatically overstated—they own a miniscule 0.55% of single-family homes and just 3% of single-family rentals. Interestingly, a VOX article even argues their influence increases housing affordability by financing the construction of new homes, increasing the rental sector’s productivity through economies of scale, and redistributing homes from the for-sale market to the rental market. 

If homebuilders work with investors, they probably won’t see a huge financial impact due to the exception for build-to-rent properties. In areas with large concentrations of big investors, however, we could see a limited reduction in the supply of single-family rental homes if big investors are no longer buying properties, and that could theoretically push rents higher. 

For now, the impact is still unclear due to confusion over enforcement mechanisms and the true influence of large investors on the housing market. Nevertheless, even a motivated plan appears to be a step in the right direction for the Americans who have been seeking homes for far too long.