Can Trump make buying a home more affordable?

What It Covers

Planet Money examines Trump administration housing affordability initiatives targeting institutional investors and mortgage rates. The episode analyzes research showing Wall Street firms own just 0.3% of all US housing units, concentrated in sunbelt suburbs, and evaluates whether new policies directing Fannie Mae and Freddie Mac to purchase mortgage-backed securities will meaningfully reduce costs for first-time buyers.

Key Questions Answered

• •Institutional investor market share: Large Wall Street firms own only 0.3% of all US housing units nationwide as of 2022, though concentration reaches 12% in specific census tracts in sunbelt cities like San Antonio, Atlanta, Charlotte, Houston, and Phoenix. These investors purchase homes with cash 83% of the time, making them largely independent of mortgage financing and less vulnerable to policy changes targeting government-backed loans.
• •Geographic concentration patterns: Institutional investors focus purchases in sunbelt suburbs with growth potential, accounting for 5% of single family and townhome purchases nationwide from 2010-2022, but nearly one-third of rentals in concentrated areas. The executive order directing agencies to deny government mortgage backing to large investors likely produces minimal impact since these firms already use alternative funding sources and rarely depend on traditional mortgage products.
• •Price impact varies by period: Research shows institutional investor activity lowered rents after the 2008 housing crisis by converting foreclosed properties to rentals, increasing supply. During COVID, these same investors raised both rents and sale prices using sophisticated pricing algorithms. The effect depends on timing, location, and whether investors increase rental supply or compete with individual buyers, making blanket policies less effective than targeted interventions.
• •Mortgage rate intervention mechanics: The Trump administration directive for Fannie Mae and Freddie Mac to purchase 200 billion dollars in mortgage-backed securities already reduced rates by 0.2 percentage points through announcement effect alone. However, this transfers interest rate risk to taxpayers and creates potential for future bailouts similar to 2008. Geopolitical events like tariff threats immediately reverse rate decreases, limiting sustained affordability gains.
• •Supply versus demand mismatch: Both Trump policies address demand-side factors rather than the fundamental supply shortage housing economists identify as the root cause. Maintaining home values for current owners while simultaneously lowering prices for first-time buyers creates inherent tension. Building more starter homes keeps prices stable without crashing the market, but Americans expect both affordable housing when young and significant housing wealth accumulation for retirement, which remain fundamentally incompatible goals.