Why Trump’s plan to ban investor home-buying might not help California affordability

Homeownership has become increasingly out of reach for many young families, especially in pricey California. On Wednesday, President Donald Trump said he plans to make housing affordable again by cutting deep-pocketed investors out of the single-family home market.

“I am immediately taking steps to ban large, institutional investors from buying more single-family homes, and I will be calling on Congress to codify it,” Trump said on the social media platform Truth Social. “People live in homes, not corporations.”

But in California, housing policy experts say Trump’s strategy might not move the needle on affordability much. That’s because institutional investors aren’t buying many single-family homes in the Golden State to begin with.

“It's kind of a red herring,” said Richard Green, director of the USC Lusk Center for Real Estate. “Institutional ownership of single-family rentals is a very small share of all single-family rentals, let alone all of the housing stock in the United States.”

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Less than 3% of CA homes 

Trump’s idea is not new. Democratic California lawmakers have also proposed limits on investor home-buying. To inform the legislative process, state researchers have looked into the question of how California homes are getting scooped up by institutional buyers.

The answer: Not many.

Statewide, 2.8% of single-family homes are owned by investors who own 10 properties or more. That’s according to the California Research Bureau, which produces nonpartisan policy research for the Governor’s Office and the state Legislature.

According to the Urban Institute, large investors own a much greater stock of single-family homes in cities including Jacksonville, Charlotte and Atlanta, where institutional investors own nearly 29% of single-family rentals.

Corporate ownership rates are much lower in California. In Los Angeles County, home to more than 10 million people, only about 72,474 homes are owned by large investors, according to the California Research Bureau. That number includes single-family homes as well as condos, townhomes and duplexes.

Would banning corporate owners reduce competition?

Invitation Homes is the largest owner of single-family homes in California, with more than 11,000 properties to its name statewide, including about 3,100 in Los Angeles County. Its business model involves buying single-family homes, updating them and then renting them out to tenants who may not otherwise be able to afford home-ownership.

LAist reached out to Invitation Homes for comment on Trump’s announcement. We were sent a statement from the National Rental Home Council.

“Housing affordability is a critical issue, and we appreciate the administration’s focus on ensuring Americans have access to a diverse mix of housing options,” the statement read.

The statement continued: “Professional single-family housing providers represent a small segment of the overall housing market, and the single-family rental industry remains focused on supporting renters while also supporting pathways to homeownership.”

David Garcia, deputy director of policy at UC Berkeley’s Terner Center for Housing Innovation, said getting rid of institutional investors probably wouldn’t do much to bring down home prices for young Californians.

“The vast, vast majority of homes that are purchased are by people who are generally going to live in them,” Garcia said. “So you're not really reducing the main competition for home buyers, which is other home buyers.”

Lack of supply, lots of demand fuel CA’s high prices

Garcia and USC’s Green both said California’s home prices are high because of lack of supply. Steady demand for California homes coupled with low building rates since the Great Recession have produced a market where the wealthiest buyers out-bid everyone else for the few homes coming up for sale.

Trump’s proposal echoes similar policy explorations from the L.A. City Council, which voted in 2021 to consider banning companies like Zillow and Redfin from buying homes within the city.

Details were scant in Trump’s post, but he said more information about his plans would be forthcoming.

In his Truth Social post, he said: “I will discuss this topic, including further Housing and Affordability proposals, and more, at my speech in Davos in two weeks.”