Nearly three-quarters of Americans say real estate investors are responsible for the lack of affordable housing in the United States, according to a new study from Clever Offers.
President Trump is capitalizing on the high level of anti-investor sentiment with an executive order banning institutional investors from buying single-family homes. The order, however, has been met with skepticism, with some experts pointing out that it’s vague, lacks an enforcement mechanism, and is as much political theater as economic policy.
How Investors Reshaped Housing
In the immediate aftermath of the 2008 financial crash, institutional buyers scooped up homes en masse, enabled by steep declines in price and competition as buyers suddenly found it much more difficult to qualify for a mortgage.
Although widespread investor purchases prevented home prices from declining even more than they eventually did, they also led to a precipitous rise in prices. Americans who didn’t own a home suffered because the higher cost of buying a home overshadowed the positive effects of a cheaper monthly rent, according to a recent analysis by the Philadelphia Federal Reserve.
The analysis suggests that home prices have skyrocketed not because corporate investors have deeper pockets than young buyers, but because their business model has simply extracted more value from American homes — recasting homeownership as a cash-generating investment rather than a place to live.
Widespread Mistrust
Seventy-three percent of Americans say investors are responsible for a lack of affordable housing in the United States, and that sentiment is especially strong among young generations. More than 1 in 10 Gen Z home buyers say investors are most responsible for the affordable housing crisis.
Investors and young buyers are often competing for the same properties, with nearly two-thirds of investors saying they primarily target starter homes.
As prices rise in this segment of the market, antagonism has grown between Gen Z buyers shopping for their first home and investors looking to make a profit. This has raised questions around who the government should serve — corporate buyers or young people looking for a place to live.
Bad Experiences With Investors
Many sellers who’ve dealt with large investors, such as iBuyers and cash-buying companies, have had bad experiences and regret selling their homes to them.
Dissatisfaction is highest among sellers who sold to iBuyers, with 31% saying they had a negative experience, while 23% of those who sold to cash-buying companies said the same. What’s more, 25% of those who sold to an iBuyer and 27% of those who sold to a cash-buying company said they have regrets about the outcome of their sale.
These negative reviews seem to have affected public perception of investors, with well over half of Americans regarding cash-buying companies and iBuyers as untrustworthy. About 59% of Americans go so far as to say cash-buying companies are a scam, and 15% call iBuyers the worst option for sellers.
Today, 44% of Americans say they would not knowingly sell to a real estate investor — up from 38% the previous year.
Searching for Solutions
Faced with skyrocketing home prices, many Americans are desperate for relief. Seventy-nine percent of Americans support regulating the housing market to prevent home prices from climbing even higher.
The most popular way to do this is “lowering home prices,” followed by “lowering mortgage rates” and “preventing investors and corporations from buying homes,” Americans said. In addition, 84% of Americans support expanding programs to help first-time home buyers purchase a home.
It might seem surprising that President Trump’s executive order hasn’t been met with more enthusiasm. But many Americans have already soured on the administration’s housing policy, with 54% disapproving of its handling of the real estate market. What’s more, nearly 1 in 3 homeowners fear they won’t be able to make their mortgage payment in the next six months.
Analysts have also pointed out that it doesn’t actually ban institutional investors from buying homes. It only limits government mortgage guarantees for these purchases. This means that investors who don’t use financing backed by Fannie Mae or Freddie Mac won’t be affected by the executive order. They also point out that there’s no enforcement mechanism, and that, as written, the executive order would only produce a small increase in housing inventory.
Still, some experts say even a tiny increase is a step in the right direction.
“Any addition of supply is a good thing,” said Dowell Myers, a professor of policy, planning, and demography at the University of Southern California. “But best solutions are confusing to many people because supply shortages have accumulated ever since the Great Recession, while demand has steadily mounted for unrecognized demographic reasons.”
Myers sees the present housing crisis as the result of a long period of low construction, which can only be solved with an equally long-term solution. The problem is that the political system rewards immediate results over long-term policy, he said.
“Short-term solutions are virtually impossible,” Myers said. “The problem is so misunderstood, and people are stabbing blindly at solutions. Easy to say ‘yes’ to all of them, but it’s not a viable strategy and realistic solution overall.”