In his State of the Union address, President Trump highlighted the importance of protecting one of the most treasured parts of the American dream – home ownership. His common-sense efforts to protect individuals and families from mega-investors buying up blocks of single-family homes is admirable.
Trump highlighted the case of Rachel Wiggins, a mother of two from Houston who, Trump said, had “placed bids on 20 homes and lost all of those bids to gigantic investment firms that bypassed inspection, paid all cash and turned all those houses into rentals, stealing away her American dream.”
Trump noted that cases like those are why he signed an executive order in January to prevent large Wall Street investment firms from buying up huge blocks of single-family homes and pricing out average Americans.
“Buying and owning a home has long been considered the pinnacle of the American dream and a way for families to invest and build lifetime wealth,” Trump’s order points out. “But because of the recent high inflation and interest rates caused by the previous administration, that American dream has been increasingly out of reach for too many of our citizens, especially first-time homebuyers.”
Trump’s order pledges that his administration will “take decisive action to stop Wall Street from treating America’s neighborhoods like a trading floor and empower American families to own their homes.”
Trump’s reform of the private equity housing market strikes a good balance. It does not prevent corporate investment which, when done right, actually makes housing more plentiful and affordable. Instead, Trump’s efforts are designed to prevent excessive accumulation of the housing market by a handful of big investors. Trump’s order protects families from being pushed out by bidding wars in which they can’t afford to compete.
Compare Trump’s common-sense approach to Sen. Elizabeth Warren’s (D-Mass.) socialist-style bill, the American Homeownership Act, which she introduced on Tuesday, that would make it nearly impossible for corporate investors to participate in the housing industry – a move that would reduce the housing supply, create punitive tax treatment for rental operators and prevent them from owning nearly anything by weaponizing antitrust regulations.
Anti-capitalists like Warren have a knack for taking good ideas designed to regulate private investors and pushing them to extremes in a way that gives government more control of everything. Again, it’s called socialism.
As someone who made his fortune as a builder and investor, Trump understands the right balance. His executive order reins in big investment firms’ reckless pursuit of huge chunks of the market while simultaneously protecting the ability of average Americans to purchase homes. But it permits corporate investment in housing to the degree that it makes homes more plentiful and affordable for average buyers.
While Trump is right to make sure big corporations do not run amok when it comes to buying up housing, the degree to which that has happened has been greatly exaggerated. Even Trump’s own former senior economic policy advisor points out that “purchases by mega-investors have never even been 4% of total home purchases.”
Additionally, “a significant share of the single-family homes owned by institutional investors are built-to-rent. That means these investors are not converting existing properties that are potentially available for sale to individuals, but creating totally new rental supply.”
Unlike Warren, Trump is only opposed to private equity investment when it leads to unfair outcomes for average consumers. But he does not want to create a marketplace with fewer houses being built, because more homes mean more competition and lower prices. Trump understands that.
Warren, on the other hand, wants to harm big business, period, in typical socialist style. Her legislation would lead to fewer homes and higher prices.
Home ownership has long been one of the primary means by which Americans build equity and wealth. It establishes roots to create a sense of stability and community. Owning a home has long been a source of personal pride and achievement.
A healthy marketplace of single-family homes depends on a combination of plentiful options and achievable pricing, an environment best realized by a smart mix of investments. President Trump’s vision for a healthy housing market featuring crucial protections for homebuyers is forward-looking and productive. Elizabeth Warren’s is socialistic and oppressive.
We need to say yes to the president’s rational and balanced housing plan, and no to Warren’s radical, anti-business socialist agenda.
Tim Huelskamp, Ph.D. is a former U.S. Congressman and Catholic Vote’s Senior Political Advisor.
Editor's Note: With President Trump back in the White House, the state of our Union is strong once again.
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