Editorial: Trump veers left on housing policy

The high cost of housing in America comes down to basic supply and demand. In too many areas of the country, restrictive zoning laws, byzantine permitting processes and other forms of red tape have worked to limit the quantity of housing that can get built. The result, naturally, is expensive housing.

Solving this problem isn’t complicated from a policy perspective. Slashing unjustified restrictions, abolishing counterproductive policies like rent control and streamlining permitting are the ways to get more housing from the private sector. But, in politics, it’s always tempting to go after a scapegoat.

When it comes to housing, the Trump administration has already tried making the argument that the surge of asylum seekers and other immigrants in the last five years is responsible for high housing prices.

Now, the president is taking a line out of the playbook of Sen. Bernie Sanders by blaming institutional investors for high housing prices.

On Truth Social, his social media platform, the president argued it is “because of the Record High Inflation caused by Joe Biden and the Democrats in Congress, that American Dream is increasingly out of reach for far too many people, especially younger Americans. It is for that reason, and much more, that 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. People live in homes, not corporations.”

For one, it’s remarkably anticapitalist for an American president to declare he will ban investors from buying homes.

But more practically, as Scott Lincicome at the Cato Institute and others have since pointed out, institutional investors own a tiny fraction of America’s single family housing stock. About 1% of home purchases in 2024 were by “large institutional investors,” according to the American Enterprise Institute.

As James Pethokoukis at the AEI recently noted, “Since 2012, national home prices have risen roughly 150 percent, yet some of the fastest-growing markets — including San Jose, Bend, and Providence — have virtually no institutional presence. Meanwhile, several metros with higher investor shares have seen below-average price growth. Econ 101 scarcity, not financialization, does the heavy lifting here.”

Once again, the president has an issue he can work to solve with classic conservative messaging about deregulation and economic freedom. Instead, he’s veering to the left in pursuit of false solutions.