"Industry watchers on both sides of the aisle say President Donald Trump's recently announced goal of banning "large institutional investors" from buying single-family homes won't address the root cause of high home prices: a shortage of homes. Major investors, including hedge funds and private equity firms, own hundreds of thousands of single-family homes around the US, which has raised concerns that Wall Street-backed groups are outcompeting individual homebuyers, especially first-time buyers, and driving up home prices."
"In the aftermath of the 2008 financial crisis, large investors bought thousands of distressed properties, particularly in Southeastern cities. They correctly predicted that home values and rents in many of the targeted areas would rise over time with population growth. When the pandemic hit in 2020, and interest rates dropped, investors again snapped up thousands of homes, particularly in cities across the South and Sun Belt. This sparked alarm in communities where individual homebuyers struggled to compete with all-cash offers from major investors."
Large institutional investors, including hedge funds and private equity firms, purchased hundreds of thousands of single-family homes after the 2008 crisis and again during the 2020 pandemic, focusing on the South and Sun Belt. They have outcompeted individual and first-time homebuyers with all-cash offers in some markets and likely contributed to localized increases in home prices and rents. Nonetheless, large investors own only about 2% of the single-family rental stock nationally, and they have slowed purchases since 2022 as interest rates and debt costs rose. Some investors now buy homes in bulk from builders rather than individual resale purchases.
Read at Business Insider
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