Stephen Slivinski
President Trump thinks he knows best what housing choices you and others should make and he’s not afraid to use the power of the federal government to impose them.
In a social media post on January 7, President Trump stated he wants to “ban large institutional investors from buying more homes.”
In Davos this week, Treasury Secretary Bessent re-stated the goal but provided a bit more nuance. He noted that the policy goal would be to “push out” the “big” institutional investors, not the mom-and-pop operators that make up most of that market. (The president is expected to talk more about this as the World Economic Forum proceeds throughout this week.)
For a variety of reasons, these justifications lack empirical support. For an excellent debunking of these rationales, see this blogpost by housing expert Jay Parsons.
Yet, there remains an implicit moral case against this proposed quasi-ban, and it would hold true even if banning large corporations actually had a positive effect: the federal government simply should not be in the business of telling a homeowner to whom and when they can sell their house.
Isn’t the Trump ban aimed at those big, scary corporations buying the homes? Yes. But where are the homes they are buying coming from? They might be newly built, but those are harder to come by these days due to onerous state and local zoning restrictions. The White House’s proposals will do nothing to change those laws, nor should they, because those laws are fundamentally local.
The most likely source of these homes is current homeowners. A ban on who can buy them, by definition, negatively impacts the seller on the other side of the transaction, too.
These home purchases by these supposed bogeyman institutional investors are completely consensual on both sides of the transaction. The investors aren’t breaking down the door with weapons and taking your stuff. (That’s what governments do when they assume powers of eminent domain or civil asset forfeiture.) They are providing an offer to a homeowner, and the homeowner is accepting it.
Imagine you are a current homeowner who wants or needs to sell. Maybe the mortgage payment has become untenable. Maybe you need more mobility because you have lost your job and the employment market has dried up in your town. Or maybe you need to move across the country to care for a sick or dying relative. You want as many options as possible to sell your home. A ban on institutional investors buying any home by definition reduces the potential buyers for your home.
Mutual transactions have two sides. Government shouldn’t be allowed to justify banning an otherwise legal and voluntary transaction just because a politician dislikes who or what is on the buy side. It hurts the person on the sell-side, too. And sometimes that person is the one who needs it most.