The Guru Is In
Planting a STOP Sign on the Homeowner’s Lawn
By David A. Smith
7 min read
If a curmudgeonly old man angry at traffic speeding past his house plants a red octagonal STOP sign on his front lawn, what is its impact?
On January 20, the President issued an Executive Order entitled, Stopping Wall Street from competing with Main Street homebuyers.
If this had happened in 2022, it would have been hailed as bold leadership to stabilize neighborhoods and reduce evictions; if in 2024, it would have been lauded as pledge of deep principle, bandied about on the campaign trail, and then forgotten after the election; but this one happened in 2026, and amid everything else going on in American politics, it slipped by largely unremarked.
Nevertheless, I think it extremely significant both in its statement of intent and its potential for downstream consequences in American housing policy, and I think the President does too, because three days later he laid out the case from the podium of his speech at Davos:
Homeownership has always been a symbol of health and vigor of American society. But that goal fell out of reach for millions and millions of people. Today, I’m taking action to bring back this bedrock of the American dream. In recent years, Wall Street giants and institutional investment firms [have] driven up housing prices by purchasing hundreds of thousands of single family homes, and it’s been a great investment. Often as much as ten percent of houses on the market. They buy hundreds of thousands of houses. They can take depreciation. A person sweats and works and buys one house, they can’t.
But homes are built for people, not for corporations, and America will not become a nation of renters. We’re not going to do that. That’s why I have signed an executive order banning large institutional investors from buying single family homes. It’s just not fair to the public.
Why was it issued?
The Executive Order was issued because, in the President’s view, the playing field for buying homes became unleveled to the detriment of family and communities. As Section 1 of the Order states:
My Administration will take decisive action to stop Wall Street from treating America’s neighborhoods like a trading floor and [to] empower American families to own their homes.
To preserve the supply of single-family homes for American families and increase the paths to homeownership, it is the policy of my Administration that large institutional investors should not buy single-family homes that could otherwise be purchased by families.
As analysis, this is spot on. Though private-equity investor first bought properties at scale after the 2007 subprime asset-value collapse and ensuring 2008 global credit crunch, the crisis for homeowners in marginal neighborhoods started in the immediate aftermath of Covid-19. I saw this first-hand: from September, 2020 through December, 2022, the non-profit I founded, the Affordable Housing Institute, worked in Milwaukee’s Black neighborhoods closely with local non-profits to help Black homeowners get financing to improve and preserve the homes they lived in. Too many of them had lost their homes to real estate tax foreclosures or sales under duress to outside investors or were in imminent danger of doing so. It was immensely frustrating work because the capital was stacked against us. As the Order says:
Hardworking young families cannot effectively compete for starter homes with Wall Street firms and their vast resources. Neighborhoods and communities once controlled by middle-class American families are now run by faraway corporate interests.
What does it order?
Legislatively, Executive Orders (and this President issues a lot of them) are curious things, as they cannot make or modify law, but they can interpret the law (subject, of course, to legal challenge) and direct regulatory or administrative action to implement new or revised policy. They can also, perhaps most importantly, spotlight an issue and plant the Administration’s flag on a particular position.
This one does that: It states a policy goal (“Stopping Wall Street from competing with Main Street homebuyers”), and then directs Federal entities to act in ways consistent with that policy goal, within the limits of the statutory authority.
These are more limited than you would think. Nothing in housing law that I know of enables the Federal government simply to ban outright certain types of buyers from owning property (even assuming that “large institutional investor” can be properly defined, which the Order directs the Secretary of the Treasury to do by February 20). Instead, the Order directs that by March 20, 2026, the chief executives of Agriculture, Housing and Urban Development (HUD), Veterans Affairs, General Services Administration and Federal Housing Finance Agency (which owns and directs Fannie Mae and Freddie Mac), are to stop helping Wall Street (even if inadvertently) and start helping homeowners (more than they already are) in two specific ways:
- Prevent, to the maximum extent permitted by law, federal agencies (including Fannie and Freddie) from funding, guaranteeing, securitizing or facilitating single-family homes that could otherwise be owned by people;
- Promote “sales to individual owner-occupants, including through anti-circumvention provisions, first-look policies, and disclosure requirements.”
Both of these make sense. If Wall Street has capital aggregation or pricing advantages over people by virtue of its scale, the federal government shouldn’t be in the position of increasing that advantage, and each affected entity needs to look inside itself and determine that it isn’t. Nor should Wall Street be able to recruit nominee buyers as front men for itself: hence “anti-circumvention provisions.” Likewise, if people are at speed or information disadvantages, the sales process can be gently slowed down (“first-look policies”) and homeowners and homebuyers can be supported (“disclosure requirements”).
The Order isn’t done yet, as it sets three more rabbits running:
- Treasury is told to study “rules and guidance that relate to large institutional investors acquiring or holding single-family homes” to see if they can be tightened;
- The Federal Trade Commission is sent hunting for any bulk buying in local markets “for anti-competitive effects and prioritize enforcement of the antitrust laws, as appropriate, against coordinated vacancy and pricing strategies by large institutional investors in local single-family home rental markets”;
- HUD is ordered to have single-family owners and managers of federal housing assistance programs (e.g. Housing Choice Vouchers) to report any “direct or indirect owners, managers, or affiliates, including changes in ownership or control of single-family rentals, to the extent necessary to determine any involvement of large institutional investors.”
Where is this going?
Nobody knows what will come of all this study, reporting, and sunshine, but if I were a senior executive of a “large institutional investor,” I’d be feeling there was a bulls-eye on my shirt front, especially as Section 5 of the Order directs the preparation of “a legislative recommendation to codify [this] policy so that large institutional investors do not acquire single-family homes that could otherwise be purchased by families.”
Before readers dismiss all this as a staff-driven measure, or an Oval Office political throwaway, in Davos President Trump interpolated a shout-out to Wall Street of the kind nobody wants to hear in public, much less when sitting in the audience:
Many of you are here, many of you are good friends of mine, many of you are supporters — sorry to do this to you, I’m so sorry — but you’ve driven up housing prices. And I’m calling on Congress to pass that ban into permanent law. And I think they will.
