Yale finance expert warns investor crackdown could tighten, not ease, affordability
The Trump administration’s move to curb Wall Street’s role in housing has landed squarely in the middle of a long‑running affordability debate – but new academic analysis suggests the crackdown on corporate buyers is unlikely to deliver the relief many first‑time buyers have hoped for.
Under an executive order signed January 20, large institutional investors face new limits on buying single‑family homes, even as the White House floated ideas such as penalty‑free 401(k) withdrawals for down payments, renewed mortgage bond purchases by Fannie Mae and Freddie Mac, and portable mortgages to ease the rate “lock‑in” gripping existing owners.
In an interview with Yale Insights, Cameron LaPoint, assistant professor of finance at Yale School of Management, said the political focus on big landlords has overshadowed their relatively modest footprint.
“Most estimates put the share of big institutional investors’ homeownership at under 5% of all U.S. [single‑family homes],” he said. “Outside a small handful of cities, institutional ownership is less than 1%.”
Small investors, big impact
LaPoint said a ban on large buyers risks clearing the way for smaller landlords rather than owner‑occupiers.
“Around one‑fifth of [single‑family home] purchases made since the pandemic has been by these smaller investors,” he said, pointing to tax advantages ranging from mortgage interest deductions to 1031 exchanges and favorable property tax treatment in nearly half of US states.
“One unintended consequence is that a ban might make it easier for mom‑and‑pop investors to buy starter homes, further limiting inventory of homes for sale and leading to higher prices paid by first‑time homebuyers,” he said.
Policy fixes carry their own risks
LaPoint also warned that tapping retirement savings for down payments would “subsidize purchases for current buyers at the cost of higher house prices in the near future” and could leave some with “reduced resources in retirement” if home values underperformed equities.
On mortgage bonds, he noted that renewed GSE buying would likely deliver only “a one‑time cut to rates” given the existing cap on purchases – and at the expense of financial stability if another 2008‑style shock hit.
Portable mortgages, championed by incoming FHFA director Bill Pulte and now under study alongside broader rate‑lock concerns, could ease frictions but “make investors less willing to buy [mortgage‑backed securities]” and even fuel “a pricing boom – the opposite of what is intended.”
For brokers and lenders, LaPoint’s bottom line was blunt: “In short, there is simply no better solution to the affordability problem than to build more housing.”
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