Trump Targets Institutional Investors in Affordable Push

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00:00You have this column out this morning. You argue that this is not the right way for the president

00:04to approach housing affordability. Why is that? I think the first thing you want to do if you want

00:10to make affordability better is you want to make sure that at least we're not building fewer homes

00:14as a result of any policy change. And my concern, at least if you're talking about preventing

00:19institutions from buying new homes, build to rent, things like that, is you're just taking away a

00:23source of demand from home builders. And rather than them selling homes to individual homebuyers

00:27instead, they might just produce fewer homes because right now they're really struggling

00:31with profitability and weak demand. And I don't think you want to remove a source of demand. So I

00:35think you want to find other ways of facilitating transactions and improving affordability without

00:40really going after the home builders. I always feel like, Connor, when we talk to folks in the

00:43home building market, a lot of it has to do with available land, buying land, and then dealing with

00:50local markets. We know real estate is such a local marketplace. I feel like it always comes down to

00:56more of that versus whether or not institutional investors are buying, especially when they're

01:01such a small part of the market.

01:04Right. John Byrne's research and consulting has data that says that among the new home builders,

01:09new home market, institutions are only about 4% of the market. And they're really buying

01:13communities custom built for them. They're not competing with a 33-year-old about to have a kid

01:18to buy one-off homes. It's really, we're going to allocate a certain number of homes for institutions.

01:23Or in some cases, when the market's weak, like it was in 2022, if home builders are really struggling

01:28to offload inventory, it's like, here's a buyer of last resort, so to speak. And that just helps

01:33de-risk the industry, where they can keep producing homes, knowing that even if market conditions turn

01:38rockier, there is a buyer out there, you're going to have households walk away.

01:43Yeah, I think the data is really interesting. I think there's a lot of politics in this too,

01:48Connor. I mean, you've written about the politics of rising prices, especially in your home area

01:53around Atlanta and the way that power costs have increased. Maybe this is a way for Republicans

01:58to say, we are addressing ahead of the elections, we are addressing the affordability issue.

02:03It seems populist and political at its core.

02:05And I get how a lot of people in both parties see a headline like, you know, keep Blackstone from

02:12buying your home. And that sounds compelling. But the facts just don't really back up that they're a

02:17major player. Like in Atlanta, they do own a fair number of homes. I think we're the number one market

02:21in the country for institutional ownership. But most of these homes were bought in the early 2010s

02:25in the wake of the foreclosure crisis. And at that time, there really wasn't much home buying

02:29demand at all. And so institutions stepped in to really prevent the foreclosure crisis from getting

02:34worse, prevent home values from falling even further, prevent banks from failing. And I think

02:39in 2026, we lose sight of that. But they haven't really been a big player in the market in recent

02:43years. These are just homes they bought 15 years ago in a very different environment.

02:47I thought Jonathan Miller of Miller Samuel, he was on with Scarlett a little earlier today.

02:52He said that part of the issue is that the highest concentration of investment is in the South,

02:57where there's already excess supply of homes right now. So even though and that's where these

03:02institutional institutional owners of single family homes have a high concentration, as Carol

03:08mentioned, so much of this is local. This all has to do with local. The issue it comes down to,

03:14Connor, is zoning and making sure that people are saying yes in my backyard to upzoning, yes in my

03:20backyard to building more dense housing. Is that the only solution here? I think that's a big part of

03:27the solution. And the other one that I've written about recently is that in a normal housing market

03:32where we're selling maybe five to five and a half millions homes a year, people tend to move from

03:36north to south, maybe retirees in Connecticut moving to Florida, people in California moving to

03:40Austin. And because resale transactions are down about 25% from normalized levels, that migration flow

03:46isn't happening. And that's why the tightest housing market in the country right now is Hartford.

03:51And I've got a lot of love for Connecticut. I've got a cousin who lives up there. But I don't think that

03:55Connecticut all of a sudden became the hottest housing market in the country. I think just this

03:59decline in mobility and migration means that a lot of retirees who might want to leave Connecticut

04:03are kind of stuck there. And therefore, their homes aren't hitting the market that keeps younger people

04:08in Connecticut from buying homes that maybe would have been available if people could move to Florida

04:12the way they could in the 2010s. So Connor, is it more not about an affordability issue? I mean,

04:17I was trying to look at some numbers. And I think it's about 66 to 67% of Americans actually own

04:24some kind of property or home ownership. I think it's 85 to 90 million Americans. I mean,

04:30so is it not an affordability issue? Is it more about people not moving around that the houses are

04:36there? It's just maybe not where they need to be. And you can understand why home builders might be

04:42hesitant to build homes, because at some point, all the baby boomers, forgive me, a lot of them in my

04:47family, you know, they're not going to be around anymore. And there's going to be home supply.

04:51I think your point is a really regional issue right now. There are plenty of homes to buy

04:57in Florida and Texas and a real shortage in the Northeast and the Midwest. And so you have this

05:02two-tier market where the places where builders build have plenty of homes, the places where

05:06builders typically don't, where zoning is harder to your point, have a real shortage. And so I think

05:10you want to address both sides. To me, the elegant way is to try to find policies that will get

05:15transactions back to normalized levels, which that won't lead to more building in Connecticut,

05:19but that'll make it easier for homeowners in Connecticut who want to retire to the South

05:23to move out and free up that inventory for people in the North. And then your point,

05:27people in the North just have to create zoning policies to allow for more homes to be built.

05:31And that's a hard fight that'll take time, but that's just part of the solution as well.

05:35Yeah. And that's a local fight, as everybody knows who's been to the ballot box or followed

05:40local politics. Hey, Connor, before we let you go, when the actual publicly traded home builders

05:46that do the home building in this country, how much of it is on them versus the smaller

05:52developers? Like the guy on my block, for example, who's bought three different homes and rehabbed

05:58them and flipped those homes. How much is about that supply versus those institutional home builders?

06:07I think the publicly traded builders that, again, are predominantly in the South and West,

06:11they're doing their job. They're trying to build homes. They're operating at profit margins that they

06:14don't want to be operating at. And that's the smaller builders that are dominating the Northeast

06:19that have a harder time accessing capital. They're struggling with cost and things like that. So

06:24again, I do think it's different issues. And so it's probably more of a local regional issue to

06:29address the true shortage of where it currently exists rather than a national solution where,

06:33again, publicly traded builders already are doing their best and they're struggling.

06:38And so they're not the bad guys here.

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