Investor ban: Will it actually help first-time buyers?

Mortgage rates dipped to around 5.99% in early January, the lowest level in nearly 3 years, after a federal move to purchase $200 billion in mortgage-backed securities. The decline has meaningfully improved affordability, with buyers gaining roughly $14,000 in purchasing power since last month and about $30,000 compared to last summer. Monthly payments on a typical $433,000 home have fallen to around $2,750¹, easing budget pressure. While economists don’t expect rates to fall much further, the shift gives buyers more leverage in a market that is favoring sellers less and less.

Newly built homes in the U.S. have recently dropped below the price of many existing homes, reversing a long-standing trend where a new construction would cost more. Aggressive price cuts by builders to stimulate sales have pushed a meaningful share of new homes under the $300,000 mark. In October 2025, about 1 in 4 new homes sold were priced under that threshold, up sharply from the previous year. Builders are also offering smaller, lower-priced models and deeper discounts than sellers of existing homes, making new homes a compelling option for budget-conscious buyers amid ongoing affordability challenges.

As we outlined last week, the current administration made an announcement around plans to ban large investors from gobbling up single-family homes. While details about any type of implementation strategy have yet to be released, many experts have been offering their thoughts on the potential impact of this move. Below, we’ll take a look at both sides of the argument and what this could mean for the American home buyer.

When this news initially broke, there was support around the industry on the way this would change the housing market. While the trend has worked its way down from its height, institutional buyer market share reached a high of nearly 5% post-COVID and still makes up over 1% of the entire market. The argument was made that because of this, an American family looking to purchase a home was now competing with multibillion-dollar companies. With home affordability remaining a large barrier to entry, investors with deeper pockets may be less risk-averse than an individual household. The administration believes that banning these larger investors will allow more first-time home buyers to enter the market.

On the flip side, others are skeptical that this proposal will work as anticipated. While investment activity in homeownership saw slight growth in 2025, analyses point to more than 90% of investor-owned, single-family homes being owned by small investors rather than institutional ones. Small investors are defined as owning less than 11 properties. While this policy change could reduce demand, economists argue that institutional investors don’t comprise enough of the market to ensure this has an impact on home affordability issues. With fewer buyers in the market, builders could also reduce activity, limiting supply within the market as a whole. That being said, critics concede that there won’t be a one-time fix when it comes to solving the housing crisis. We will continue to monitor the potential impact as more details are released around any implementation plan.