Speaker 1: Bloomberg Audio Studios, podcasts, radio news. President Trump says he
Speaker 1: wants to ban institutional investors from buying single family homes.
Speaker 1: In a truth social post yesterday, he said that housing
Speaker 1: should be for people and not corporations. His proposal sparked
Speaker 1: market reaction, of course, on homebuilder stocks and landlords of
Speaker 1: single family homes. Let's bring in Jonathan Miller. He is president, CEO,
Speaker 1: and co founder of the real estate appraisal and consulting
Speaker 1: firm Miller, Samuel and Jonathan. You and other experts in
Speaker 1: this space have made the point that institutional investors are
Speaker 1: not a big player in the single family rental market,
Speaker 1: yet they make for a convenience gapegoat.
Speaker 2: Why is that, Well, I think that you know, they're
Speaker 2: very much in the public eye, very visible. They only
Speaker 2: account for about one percent of the single family housing stock,
Speaker 2: and it's so banning them from purchasing. I think the
Speaker 2: perception with the public is that they dominate inventory. They basically,
Speaker 2: you know, one of the most challenging aspects of housing
Speaker 2: and why there were in an affordability crisis is because
Speaker 2: there's been inadequate supply. However, there are very tiny a
Speaker 2: one percent sort of number. And then on top of it,
Speaker 2: the highest concentration of institutional investors Wall Street per se
Speaker 2: is in the South, the Sun Belt, which has excess
Speaker 2: supply right now. So I'm having a hard time connecting
Speaker 2: the dots on how this will help improve affordability. I
Speaker 2: think it's a non issue generally. For solving that problem.
Speaker 1: You make a lot of important points, and it's a
Speaker 1: reminder of how at the end of the day, real
Speaker 1: estate is very local. Housing supply and housing demand is
Speaker 1: very local to each specific market. Yet when it comes
Speaker 1: to perceptions, there is this sense that these institutional investors
Speaker 1: Wall Street type of firms like a Blackstone, play this
Speaker 1: outsize role. And part of it is because they came
Speaker 1: in during the financial crisis, or in the week of
Speaker 1: the financial crisis, and did swoop in and buy a
Speaker 1: lot of single family homes at a time when Americans
Speaker 1: were losing their homes, So that looms large in the
Speaker 1: public consciousness.
Speaker 2: Absolutely, the perception perception is value, and so they were
Speaker 2: highly visible coming in and sort of you know, scooping
Speaker 2: up twenty twelve, twenty thirteen, a tremendous volume of foreclosed
Speaker 2: homes after the financial crisis and have made it work,
Speaker 2: and some of the firms have even sold off part
Speaker 2: of their portfolios. As you know, the market has peaked
Speaker 2: in the last couple of years. So I don't see
Speaker 2: I see this as disconnected from what the actual problem is.
Speaker 2: The problem is to enhance affordability, and I don't think
Speaker 2: the institutional aspect of the housing market has much to
Speaker 2: do with it right.
Speaker 1: Well, to be fair, President Trump is not the only
Speaker 1: one who has suggested something like this. Elizabeth Warren, the
Speaker 1: Massachusetts Senator, has also said something similar. So this is
Speaker 1: a bipartisan kind of approach to trying to tackle affordability
Speaker 1: in the housing market. You say the solution is to
Speaker 1: build more housing, but that takes a long time. That's
Speaker 1: not something that happens overnight. What kind of timeline are
Speaker 1: we talking about, even if you could open this figure
Speaker 1: and just allow builders to start building more homes.
Speaker 2: Yeah, and also too, you know, a lot of the
Speaker 2: housing that we're building is skewing to the higher end
Speaker 2: because of land costs, because of product cost because of
Speaker 2: labor costs. All those things make it very difficult. But
Speaker 2: if you create over supply or modest oversupply, you place
Speaker 2: pressure on housing prices and that sort of melts into
Speaker 2: the next layer below that and then below that. It
Speaker 2: is not a surefire solution, but it's just one of
Speaker 2: those things. The other thing is, you know, a lot
Speaker 2: of the challenge of single family affordability has been zoning,
Speaker 2: and cities like Minneapolis have banned single family zoning new
Speaker 2: construction within the municipality and trying to move towards multifamily
Speaker 2: and high density areas. There's many things that can be done.
Speaker 2: I think to your point that both sides of the
Speaker 2: aisle are disconnected from the actual problem in this idea
Speaker 2: that you know, inventory is inventory is very local, very regional,
Speaker 2: and when we look at markets like the Northeast or
Speaker 2: the Midwest very tight in terms of supply. We look
Speaker 2: at Sunbelt very soft because they were able to create
Speaker 2: and build more housing during the migration pattern that we
Speaker 2: saw during COVID, where people left the Northeast and the
Speaker 2: West coast to go to more affordable housing, and that
Speaker 2: soon ended because the demand was so high. You have
Speaker 2: to remember that mortgage rates are double what they were
Speaker 2: and still housing prices are rising, right, so it is
Speaker 2: all about supply