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President Trump wants to ban large investors from buying more single-family homes. It's a popular idea, but NPR's Jennifer Ludden reports that turning it into law has proven hard.
JENNIFER LUDDEN, BYLINE: Back in 2020, Ashley Maxwell and her husband were looking to buy their first home near Indianapolis.
ASHLEY MAXWELL: We looked at over 80 homes in probably a span of two months.
LUDDEN: They had to move because their landlord was selling their rental.
MAXWELL: And we would pull up to a house. Our agent would get out and be like, there's 10 additional offers - sight-unseen cash offers. Typically, that means that it's an investor.
LUDDEN: It turned out they were caught in a surge of institutional investors across the country snapping up single-family homes to rent out.
SCOTT FADNESS: We have neighborhoods today that are now creeping up to 35-, 38% of the homes have been purchased for investment purposes.
LUDDEN: Scott Fadness, a Republican, is mayor of Fishers, an Indianapolis suburb. Last year, he proposed capping rentals at 10% per neighborhood to protect local homeownership.
FADNESS: It's been a source of generational wealth in our country for a very long time, particularly in the middle class, and I hate to see that go away.
LUDDEN: Realtor groups opposed a cap, saying it infringed on private property rights and could deprive sellers of the highest bid. But the city council backed it unanimously, and the new law just took effect January 1. It is a rare win. Cities and states across the country have debated restricting investor homebuyers, yet most failed to pass such measures. California Governor Gavin Newsom is the latest to say he's determined to do something. But housing experts say it's too easy to blame corporate landlords for skyrocketing prices.
LAURIE GOODMAN: People see the connection, but they don't necessarily separate out the cause and effect.
LUDDEN: Economist Laurie Goodman at the Urban Institute says, sure, prices go up where investors buy. But that's because they pick places that are already growing, and they often buy serious fixer-uppers.
GOODMAN: Most of us don't have the knowledge to do the repairs. If we did, we couldn't get the financing.
LUDDEN: Nationally, the biggest companies own only 3% of the market. The main thing driving up prices is a housing shortage, Goodman says, and investors are actually helping that now. As higher interest rates have made it more pricey to buy single-family homes, some have shifted to building their own homes to rent.
GOODMAN: The best way to make housing affordable is to simply build more of it to increase supply.
LUDDEN: In Las Vegas, Democratic state Senator Dina Neal hears that and still worries it's undercutting people's shot at homeownership. One corporate investor there has built an entire neighborhood of houses to rent.
DINA NEAL: They didn't build the whole entire neighborhood to give it up. They wanted to make sure they were going to secure rental income from 200 different families and keep it.
LUDDEN: And those rents are so high, she says, it's impossible for many to save up for a down payment. Neal has proposed a cap on corporate landlords three times. Nevada's Republican governor, Joe Lombardo, has blocked it, most recently last month. So what does she make of President Trump now taking up her cause?
NEAL: I am trying to figure out how I entered into a universe where I became aligned with a president who is a nemesis to the Democratic Party.
LUDDEN: But if it persuades more Republicans, she'll take it.
Jennifer Ludden, NPR News. Transcript provided by NPR, Copyright NPR.
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