Comment by Aurornis
3 days ago
Even if this goes through without a mountain of loopholes and exceptions, I doubt it will have a significant impact. "Wall Street Investors" implies they're targeting large institutional ownership, which is only around 0.5% of housing ownership as cited in the article. That number is also flat-ish or maybe decreasing depending on the chart you look at, from what I recall.
Outside of a few metro areas where institutional ownership is very high, I don't think this would change anything. As long as houses remain an attractive investment, non-institutional smaller investors will happily buy the properties for a few thousand dollars less than the institutions would.
Anyone familiar with basic economics is pulling their hair out reading this, because there's one extremely obvious way to lower the price of building new housing: Reducing or eliminating tariffs on construction equipment and materials and ensuring a robust supply of low-cost labor.
I agree with the first half of what you posted, but immediately jumping to blaming tariffs in your last paragraph seems weak (and a slight attempt at a gotcha).
Concrete, gypsum and steel are primarily domestically produced. Similar goes for wood (although a substantial amount is imported, e.g. from Canada - the tariffs range from 25% to 50%). Labour & Materials may make up say 60% of the cost of a house, but only 50% of this is likely materials, with likely a minority of the materials tariffed.
What is likely to actually reduce rent and house prices is making development permission and laws more lax, as well as preventing rent control.
Tariffs on products like lumber and cabinetry were introduced or raise on January 1st of this year. It's an additional factor that will make a bad situation worse.
You can't tell me that increasing the pricing of construction materials won't have negative pressure on home construction.
> Materials may make up say 60% of the cost of a house, but only 50% of this is likely materials, with likely a minority of the materials tariffed.
And where does the construction equipment come from? The parts to repair that construction equipment? The parts that go into the trucks that the workers drive to the job site?
Focusing on a single input is myopic when the tariffs are so widespread that they touch everything.
I have agreed tariffs will have an effect, but I'm not being myopic.
Lot costs, builder profits, indirect labour (commissioning, financial and legal affairs, advertising) all are far less affected by tariffs. Machine costs could make up 15% of your "labour and material" cost but depreciation and repair purchases are still only 30% of this, with of course not all of this affected by tariffs.
It seems wholly reasonable to believe that the long term effects of a tariff policy like these on housing costs could indeed be in the ballpark of 5%, as I claim, because in fact housing development is less affected by this.
I'm not sure if you trust this for consensus, but you could try asking an AI to give an estimate of the long-term impact for you. Here's what Gemini 3 Pro said to "Estimate the increase Trump's current tariffs, if long term, would have on price of new housing developments."
> Total Home Price Impact: This translates to a roughly 3% to 4% increase in the final purchase price for the consumer.
> Anyone familiar with basic economics is pulling their hair out reading this, because there's one extremely obvious way to lower the price of building new housing: Reducing or eliminating tariffs on construction equipment and materials and ensuring a robust supply of low-cost labor.
And just in general reducing the restrictions on building in places with high rent to income ratios.
> because there's one extremely obvious way to lower the price of building new housing: Reducing or eliminating tariffs on construction equipment and materials and ensuring a robust supply of low-cost labor.
Oh I thought the one extremely obvious way was to fix local policy roadblocks. After all, it's not like a lacking supply of housing is a new issue they suddenly appeared out of nowhere within the last dozen months.
> After all, it's not like a lacking supply of housing is a new issue they suddenly appeared out of nowhere within the last dozen months.
The main lumber and building materials tariffs went into effect January 1st 2026.
If you thought the current situation was bad, it's only going to get worse.
This announcement is a distraction to get people blaming Wall Street. It's a "look over there!" announcement literally days after they raised tariffs to make a bad situation worse.
I think you're getting your facts wrong: https://edition.cnn.com/2026/01/01/business/trump-furniture-...
"President Donald Trump has delayed new tariff increases on upholstered furniture, kitchen cabinets, and vanities for a year, pushing their implementation to 2027, according to a White House statement."
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Making it hard for cities to deny all permission to build new housing through impossible zoning laws should also be on the cards.
Yeah, all the politicians talking housing— the actual net governmental effect on housing is to massively constrain supply (quantity) in service of rather arbitrary qualitative standards. I’m all for “the building shouldn’t spontaneously collapse” standards, but … two acre lots? Restrictions on casting shadows? Accessory dwelling units? Nah. If the government wants to make a difference it should ban Euclidian zoning as it currently is practiced, full stop.
These qualitative standards are subjective. Everyone has something that they deem essential and others not so much. A lot of zoning regulations is the amalgamation of preferences by different people, because they try to satisfy the aesthetic preferences of too many people.
For example in New York City go take a walk in the streets next to hundred-year-old skyscrapers in downtown. It’s miserable to me. Now go walk alongside midcentury skyscrapers in midtown. It’s much better. The difference is entirely because of shadows cast by the skyscrapers. The visceral reaction from shadows is so strong to me that I am wholeheartedly supporting restrictions on casting shadows.
Now on two-acre lots. That’s not something I care about. Even 0.1 acres of land is too much maintenance for me. But it will be non-negotiable for someone else.
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"We expect all states to expand housing supply by 2% per year. States which fail to meet this standard will pay $1000 per unbuilt house per year, as a subtraction from other federal funding. States may trade house building with other states to achieve this.".
Making this decision as a politician in this country is death to your career though; how could we incentivize our leaders to bite the hand that elects them?
If your local mayor decides to allow a tower block to be built next to your house, you might be pissed.
But if the president says 'we're gonna take away mayors powers to restrict housebuilding', you won't be pissed yet.... And when a builder comes along to build later it'll be too late.
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The material costs are high too because of regulations that require specific lumber for framing etc.
It’s more complex than just reducing tariffs and inviting cheap labor. It’s systemic red tape put in by the large builders to prevent anyone but them to be able to build. When they do build, it’s never to code. The code they themselves help write. Ryan Homes for example…
> The material costs are high too because of regulations that require specific lumber for framing etc.
Having done some extensive remodeling and building work in recent years and going to great lengths to follow building codes, this just isn't it. The type of lumber you can use for most framing jobs isn't that special. Having walked through a number of new construction properties and seeing what passes code, I don't think relaxing lumber standards would be a good idea, nor buy us anything.
When lumber, cabinetry, and other building products have tariffs in the range of 10-50%, you can't tell me that tariffs are not the primary problem driving costs up right now. There just isn't a secret stash of lesser grade lumber lying around that would also be perfectly good for building homes.
Single and few number family residential and owner stuff gets all sorts of exemptions in just about every town's zoning code because if not the townsfolk would revolt.
This is why everyone on the internet screeches "well I put up a deck and it wasn't so hard". Try and do a new build of literally any structure and get back to me. Or worse, a construction type that is not the regional default for whatever it is you're doing.
Reality for new construction is way, way, way worse than homeowners think.
Unless you know a guy, in which case it's all open doors and green lights because that's how local politics always is.
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This. They don't want the local septic man and the local roofer partnering up to GC a development of a dozen houses or even worse, an individual doing the bulk of the work of building anything, so they get it all saddled with requirements that amortize away nicely when vertically integrated but absolutely crush anyone else.
It’s a Ponzi scheme disguised as a monopoly. They’ll block everyone and just sit on the lots with a sign that says coming soon rather than let local contractors do the jobs.
Encouraging the creation of new housing is the way to go. One thought— what percentage of new home purchases are made by large investors and is it growing? This seems like the most important metric to look at rather than existing ownership.
There are examples of entire subdivisions being built to order for private investors to rent out. It’s called “built to rent.”
https://www.nar.realtor/magazine/real-estate-news/commercial...
Corporate ownership mapped:
https://www.lincolninst.edu/publications/other/who-owns-amer...
https://storage.pardot.com/153411/17634993251KmjZ4d2/whoa_ma...
Zoning laws are the number one obstacle to building housing. They need to be regulated into oblivion. Then we need to incentivize building dense housing.
The tariffs are a bit of a new phenomenon so I think that may be motivated reasoning. Construction productivity has also been stagnant for about 60 years. I think the most important factor is that housing prices, in the United States at least, are governed by how much a bank will lend. Very small but affordable houses will never be built because a bank will not finance a $10,000 loan over 30 years. In the same vein, it’s technically feasible for automobiles to be built for just a few thousand dollars, but, again, they will not finance $2500 over five years. So cars and houses are just built to the price point which will satisfy the lenders. You may not hate financialization nearly as much as it deserves.
> The tariffs are a bit of a new phenomenon so I think that may be motivated reasoning. Construction productivity has also been stagnant for about 60 years.
If construction was stagnant for 60 years, adding 10-50% tariffs on lumber and building materials would only make it worse. Not motivated reasoning, just basic economics.
The new tariffs went into effect January 1st, by the way. If you thought things were bad now, they're about to get worse.
This announcement is just another distraction. They want you mad at Wall St, not tariffs.
> In the same vein, it’s technically feasible for automobiles to be built for just a few thousand dollars,
No it's not.
If this was true you'd see it in some other countries. It's not happening anywhere in the world. Unless you redefine automobile to mean a tiny cart with a 5HP motor and some seats.
> If this was true you'd see it in some other countries
The closest thing you have are Japanese Kei cars - you can get a brand-new Suzuki Alto for $6,600 before sales tax, but it would not pass crash US safety standards, it's built for slow city streets of Japan and not highway driving.
The claim they went into effect January 1 simply does not seem true.
The finished products tariff was delayed: https://edition.cnn.com/2026/01/01/business/trump-furniture-... For unfinished lumber, I don't think there was any tariff going into effect January 1.
Sure, these tariffs may further increase the house of prices (e.g. be relevant to 15% of the cost of the house, with tariffs ranging from 20% to 50% and sources of materials adjusting to these tariffs), but the say 4% future effect of these tariffs is likely less than the effect of zoning laws, other development restrictions, and rent freezing.
> governed by how much a bank will lend [...] Very small but affordable houses will never be built because a bank will not finance a $10,000 loan over 30 years.
Banks typically won't hold onto to your loan for 30 years. Mortgages in the US have been thoroughly fiscalized: your typical bank/mortgage lender bundles up a bunch of loans and sells them to another servicing party as soon as the ink dries on the closing documents. The specialized servicer package them, and offer them as securities to investors who in turn will get a monthly return based on aggregate mortgage installments.
All this to say: lending banks would be happy to finance thousands upon thousands of 5-digit mortgages, and sell those to securitization specialists.
New houses aren't built in existing neighborhoods because dense housing is unpopular, as is a distaste of having "poorer" people as neighbors. Static zoning, terrible transport networks and no funding for new public infrastructure tag-team to discourage new developments on undeveloped farmland.
Not sure about $10,000 houses (that would be pretty spartan, even Tiny Homes usually cost more than that), but the $2500 car thing being due to lenders is completely off base. The reason there are no $2500 cars is that it's impossible to make one and meet current US safety regulations. Once you meet all of those, then you're already well beyond $2500, but it's still a pretty crappy car. Might as well add a few extra creature comforts that most consumers demand (power locks, power windows, bluetooth/stereo, disc brakes, more than 100HP engine, etc.) and you're never going to be below ~$15K with current parts and labor pricing.
$2,500 cars? $10,000 houses? I found the time traveler from 1960!
Source that cars are buildable for a few thousand dollars to the existing laws?
Even the Slate truck is $25,000 because safety features are required.
Those "few metro areas" are on the scale of 10s of millions of houses. Remember that the top 10 largest cities have a third of the US population in it.
>because there's one extremely obvious way to lower the price of building new housing:
Cheaper housing doesn't mean that institutions won't still try to buy it up.
It seems like in some areas (the good ones) its much higher (12%): https://econofact.org/factbrief/do-private-equity-firms-own-...
It also seems like it might be important to determine what share of _new_ development is being created for investment. The share of existing homes being owned isn't as important.
There's also the 2nd order effect. The price of property might go down if there weren't investors with tons of money to spend on a property.
All housing is investment due to the way it's owned, regardless of who owns it. For most people, it's by far their biggest investment, resulting in extreme political activity.
We must confront that fact, or negate it, for example by taxing away the investment opportunity.
Investors buy housing to rent it out to others, that's the investment. People who own their own home implicitly pay themselves rent, by choosing to live in what they own versus renting instead.
Getting non-resident owners out of housing only means that renters have been banned from an area.
Isn't that circular reasoning? Charging rent means its an investment, but also just living in a home is "paying yourself". Is there any way to live on a property that isn't an investment (I suppose just staying there while the government owns it?).
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Even if it is only 0.5% I would prefer that large institutional investment firms not be allowed into the housing market.
actually, they are actively beneficial owners. They can do things more efficiently than small time owners.
More efficiently extract cash from renters
Only if you consider their more efficient ability of pumping the renter for cash and dumping the renter with an arbitrary rent increase.
Everything you stated is speculation.
Well as soon as you find someone who can speak about the future of the housing market without speculating, let me know.
they don't even have affordable housing in the country all those tarriffed materials and equipment come from.
Anyone familiar with basic economics is pulling their hair out reading this, because there's one extremely obvious way to lower the price of building new housing: Reducing or eliminating tariffs on construction equipment and materials and ensuring a robust supply of low-cost labor.
That's quite an extreme political take.
A more humble basic economic theory question would be:
If you ban large institutional investors from buying homes, and then you ban small institutional investors from buying homes. And only owners directly can buy homes, no renting. Would that be good? Sure homes would be cheap, but very shortly after that the supply of new housing would drop dramatically, as there's no one to finance building homes, maybe the ultra rich will just invest in their own mansions or yachts?
Just very basic economics is the discussion here, not tariffs and china politics, but just a variant of the highschool/red-scare question of, "will anti-wealth laws have a positive effect on the economy"? in the past it was determined that no, and that you were a communist for suggesting it, but maybe there's a nuanced take like making a difference between some type of "institutional" investors and other types of investors?
> That's quite an extreme political take.
We're in a weird timeline when pointing out that dramatic tax increases on the inputs to home building will increase the price of homes.
> A more humble basic economic theory question would be:
> If you ban large institutional investors from buying homes, and then you ban small institutional investors from buying homes. And only owners directly can buy homes, no renting. Would that be good?
There's nothing humble or basic about this question because it's so unrealistic that it could never possibly happen. Ban renting? What?
It's a gedankedankexperiment man
Why would you need institutions to finance building new homes? You think the cost of building a home is more than the cost of buying a home? (Obviously not.) Normal people have been building their own homes using their own money for thousands of years.
> You think the cost of building a home is more than the cost of buying a home? (Obviously not.)
Common misconception, I used to have this as well.
Building is more expensive than buying for 2 reasons:
1- People can build custom houses to their taste, they pay a premium for that. 2- House prices fluctuate, most of the time house prices are below maximums, it's only during brief periods of time that building houses is suddenly bottlenecked by capital.
Yes, there is an industry behind building houses. Sure people can build homes themselves, that's cheaper than both buying a home, and building a commercial home, but for homes that are both a commoditized asset with general appeal and a house to live in, it's a different type of asset.
A house you build by yourself will never be worth much, but you'll live in it for sure. You can even spend a lot in improvements, but you end up with YOUR house, not with a resellable asset.
FWIW, building your house is quite independent of market conditions, so if that's your game you shouldn't care about the macroeconomics of industrial residential construction or tariffs on China's iron.
This is pretty far down in the list of consequences we should be thinking about but building more housing in desirable, coastal areas of the US will only serve to exacerbate the political and cultural divide between the two Americas.
I know we all hate on the electoral college, but it exists and it isn't going away anytime soon.
I'm not saying the answer is to force folks to move to "flyover country", but that's what you'd do if you wanted to avoid another presidential victory by a trump-like character.
“Built to rent” lately occurs in the sun belt and Midwest, in which fall most of the swing states.
It's also what you'd do if you wanted to buy an inexpensive house and have a low cost of living.
Not sure. But I’ve been hearing of this being an issue from both progressives, leftists as well as conservatives and rightists. Maybe they’re all misinformed by their bubbles, but there seems to be some smoke…
It's a populist issue because it sounds vaguely correct and being angry at Wall Street is ever popular. That's also why this idea is being floated before the mid terms.
That doesn't make it correct.
Left-populists and right-populists like to frame issues as being a conflict between the elites and the common man. Banning big banks from owning homes is a perfect example of this.
It's fine to ban big banks from buying homes and wont do damage to the nation, but don't expect it to solve the problem.
High housing prices are due to zoning-based supply restrictions. These are entrenched due to politically active NIMBY voters.
Actually fixing the housing crisis means addressing zoning, but that doesn't fit the elite vs common man narrative so gets ignored by the populists.
> It's fine to ban big banks from buying homes and wont do damage to the nation
It makes things slightly worse for people who want a non-apartment house but think they might move soon.
It's because of emotionally charged response. Leftists largely don't want corporations owning houses, because it's "impure" and capitalist. Rightists largely don't want renters to live in homes that used to be exclusionary on the basis of being able to buy a home. Though there's crossover on the reasons, of course.
Honestly, the argument on the other side seems like emotionally charged arguments due to TDS and not wanting to give Trump any credit.
It seems obvious to most people that institutional investors should not be allowed near single family homes and you would need quite a strong argument to persuade otherwise.
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