Can Trump make buying a home more affordable? - Planet Money Recap

Podcast: Planet Money

Published: 2026-01-31

Duration: 28 minutes

Guests: Caitlin Gorbach

Summary

The episode explores two initiatives by the Trump administration aimed at addressing housing affordability: discouraging institutional investors and manipulating mortgage-backed securities markets. Experts discuss the likely impacts and whether these moves will truly benefit potential homebuyers.

What Happened

James Lawrence, a National Guard officer, faced extreme housing challenges, leading him to live out of a car and eventually deploy abroad to save for a home down payment. His story highlights the broader issue of housing affordability in the U.S., a concern recognized by both political parties.

The Trump administration has introduced two initiatives to address housing costs. The first aims to curb institutional investors from buying single-family homes by restricting federal backing for their mortgages. Experts doubt this will significantly impact the market, as these investors often buy properties outright.

The second initiative involves Fannie Mae and Freddie Mac purchasing mortgage-backed securities to lower interest rates. This move initially brought rates down slightly but is subject to broader economic influences, such as geopolitical events and trade tensions.

Economist Caitlin Gorbach's research provides insight into the impact of institutional investors on housing prices. Her study shows these investors own a small share of housing units, with concentrated effects in Sunbelt cities where they own a higher percentage of properties.

Gorbach's data suggests that in certain periods, institutional investors may have helped lower housing prices by increasing rental supply. However, during the COVID-19 pandemic, their presence may have contributed to rising prices due to sophisticated pricing strategies.

The episode questions whether limiting institutional investors will significantly affect housing affordability. While Trump's executive order could deter some investors, experts believe it's unlikely to have a major impact on home prices for most Americans.

The discussion underscores the complexity of the housing market, where both demand-side and supply-side factors must be addressed. Experts argue that increasing the supply of affordable homes is crucial, a point not directly tackled by the current administration's policies.

Key Insights

• The Trump administration's initiative to restrict federal backing for mortgages to institutional investors aims to curb their influence in the housing market, but experts believe it will have minimal impact since these investors typically purchase properties outright.
• Fannie Mae and Freddie Mac's strategy of buying mortgage-backed securities has slightly lowered interest rates, though these rates remain susceptible to external economic factors like geopolitical events and trade tensions.
• Research indicates that institutional investors own a small share of U.S. housing units, but their impact is more pronounced in Sunbelt cities where they hold a higher percentage of properties.
• During the COVID-19 pandemic, institutional investors may have contributed to rising housing prices through sophisticated pricing strategies, despite previously helping to lower prices by increasing rental supply.