Bipartisan Homes for American Families Act Aims To Ban Large Investors From Buying Single-Family Homes

Lawmakers started a bipartisan push to codify a ban on large investors in the real estate market Thursday, a move favored by President Donald Trump.

Missouri Republican Sen. Josh Hawley and Oregon Democratic Sen. Jeff Merkley will introduce two bills Thursday that target large investors.

One bill, the "Homes for American Families Act," prohibits large institutional investors from buying single-family homes, townhomes, and condominiums. The bill defines these large entities as real estate investment trusts, insurance companies, investment companies or private funds with at least $150 million in assets under management.

It also allows the Department of Justice's antitrust division to scrutinize those deals, and any "coordinated vacancy, pricing strategies, and other anticompetitive practices by covered entities in local residential real estate markets."

The other bill imposes a 15% excise tax on 'hedge fund taxpayers' with $50 million or more in assets under management, and cutting other tax breaks. This would encourage large investors to divest their holdings, the two senators said in a joint statement.

“Wall Street has exploited the American housing crisis, turning the nation’s housing stock into a portfolio of rental properties,” Hawley said in a statement. “Families deserve to be able to buy their own homes and achieve the American dream without competing with big investment companies that irrevocably drive up housing prices."

Lawmakers are united on making housing accessible

Trump signed an executive order Jan. 20, directing Assistant to the President for Economic Policy Kevin Hassett, in conjunction with Secretary of the Treasury Scott Bessent, to form policies with specifics, though it has not yet released them publicly. Trump says he wants to see major holders of real estate out of the market, in a bid to make housing more affordable.

Trump called on Congress to codify the ban in his Tuesday State of the Union speech. In the past few weeks, he said his goal is to make it easier for people to buy homes without reducing home values.

Until now, lawmakers have taken largely parallel tracks to addressing institutional investors, along party lines.

Rhode Island Sen. Jack Reed introduced a bill with nine other Democratic cosponsors that would tax large real estate investors, at an escalating rate based on their size. Indiana Republican Rep. Marlin Stutzman also introduced a bill aimed at codifying the investor ban, though it has no cosponsors.

Democrats have countered with a proposal that would reduce tax breaks for institutional investors owing 50 homes or more. They also want to bolster antitrust enforcement against large investors.

Georgia state lawmakers introduced an investor ban bill of their own, though theirs is aimed at those owning 500 or more homes.

"Now with bipartisan support, we have wind in our sails to finally crack down on billionaire corporations gobbling up American homes," Merkley said in a statement. "I’m ready to work with the President, Republicans, and Democrats to get this over the finish line.” 

Institutional investors own a relatively small share of homes in the country, but are very concentrated in affordable markets.

Investors seek clarity on new rules

The Wall Street Journal first reported the White House was circulating language for a possible bill that defined institutional investors with those owning more than 100 homes. The move startled some in the industry who worried that number might ensnare small- and mid-sized property owners.

Bryan Smith, CEO of American Homes 4 Rent, said on a Friday earnings call the company is engaging with lawmakers at every level of government, but the potential impact on it remains unclear. The Las Vegas real estate investment trust holds about 61,500 single-family properties according to its last earnings report.

"Active engagement allows us to be at the center of a lot of these discussions and really get our message across that we are a key part of the housing solution, especially as we're addressing the supply shortage with our in-house development program," Smith said.

While the ban carves out an exception for build-to-rent companies, those firms still need clarity, Richard Ross, CEO of Quinn Residences, told Realtor.com®.

Quinn Residences has about 5,100 units of build-for-rent housing in the Southeast, which rents to late-30-somethings and young families. He said he worries the ban will have "unintended consequences" that make it harder to build housing.

"Any time you regulate a market, you create less transactions," Ross said. "Being a supply and demand guy, the real answer to affordability, which is what you're trying to address, is more supply. You need more housing."

Clarifying the market

While not an outright ban, Trump's executive order limits conventional mortgage guarantees for institutional buyers of single-family homes. The move only affects transactions involving government-controlled mortgage giants Fannie Mae and Freddie Mac. Buyers using cash or alternative financing can get around that.

It's hard to quantify how institutional investors stand in the market. A 2024 Government Accountability Office report estimated they owned up to 300,000 homes. By 2022, that may have grown such that 32 investors alone owned 450,000 homes, or 3% of the market.

Trump reportedly pushed for the investor ban to be codified in Congress, which approved bipartisan housing legislation this month aimed at speeding construction and reducing housing laws. But that didn't happen; some members of the House vocalized resistance in part because institutional investors serve as a backstop for homebuilders and sometimes build houses themselves.