Trump’s Housing Executive Order Creates Unexpected Victor

Donald Trump’s executive order against institutional investors in the housing market isn’t binding. But that’s not stopping players in one sector from celebrating.

The build-to-rent business stands to benefit from the way Trump’s efforts have been framed, the Wall Street Journal reported. Whether or not they actually make gains in the coming years will depend on how Congress acts on Trump’s recent order.

This month, the president announced his plan to ban large institutional investors from purchasing more single-family homes. The industry had mixed reactions, as the data is inconclusive on the impact of institutional investors, who account for a small fraction of the single-family housing stock.

But notably, the executive order exempts the build-to-rent business, which involves the construction of single-family homes specifically geared towards rentals.

Each of the past three years has seen the delivery of more than 40,000 such units across the country, according to John Burns Research and Consulting, as the sector experiences a boom. More than 321,000 units have been built in the sector since 2012.

One analyst predicted the mix of owners versus renters in neighborhoods could change as build-to-rent communities often emerge in suburbs with plentiful available land, rather than cities.

Build-to-rent communities already benefit from demand by homebuyers priced out of the housing market, but seeking a place larger than an apartment. Builders in the segment can also save money by managing rentals built close together.

Beyond the lack of a Congressional act, there’s still much to be determined, since the exemption is said to be “narrowly tailored.” That isn’t stopping executives in the sector from expressing excitement about what the future holds, though.

“We are part of the solution,” Richard Ross, chief executive of build-to-rent developer Quinn Residences, told the Journal. “We are building entire communities from the ground up.”

— Holden Walter-Warner