Trump proposes ban on institutional home buying, sending real estate stocks down

Investing.com -- Shares of major institutional landlords and asset managers tumbled Wednesday after President Donald Trump announced plans to "immediately" ban large corporations from purchasing single-family homes. The move, aimed at restoring the "American Dream" of homeownership for individuals, sent shockwaves through a real estate sector that has become increasingly dominated by Wall Street capital.

The President’s Truth Social post triggered an immediate sell-off across firms with heavy exposure to the single-family rental (SFR) market. Invitation Homes Inc (NYSE:INVH), the nation’s largest owner of single-family rentals, saw its shares slide 6.1%. American Homes 4 Rent (NYSE:AMH) followed closely, dropping 6.3%.

Financial giants that have pioneered the "financialization" of housing were also hit hard. Blackstone Inc (NYSE:BX), which founded Invitation Homes and recently re-entered the space with a $10 billion acquisition of AIR Communities, fell 5.1%. BlackRock Inc (NYSE:BLK) and JPMorgan Chase & Co (NYSE:JPM), both frequently targeted by populist rhetoric regarding their influence on the housing market, declined 2.6% and 2.2% respectively.

"People live in homes, not corporations," Trump wrote, citing record-high inflation as a barrier for younger Americans. He pledged to call on Congress to codify the ban and promised more details during his upcoming address at the World Economic Forum in Davos.

While institutional landlords bled, the mortgage industry saw a rare spark of optimism. Speculation suggests that if large-scale investors are sidelined, the resulting vacuum could be filled by individual homebuyers, leading to a surge in traditional mortgage originations.

Loandepot Inc (NYSE:LDI) surged 7.2%, while Rocket Companies Inc (NYSE:RKT) gained 2.7%. Investors are betting that a "leveling of the playing field" will force inventory back into the hands of families who require financing, unlike the all-cash offers typically deployed by private equity firms.

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