It’s Time to Take a Deep Breath
by Suzanne Andresen
Following President Trump’s announcement in early January 2026 about pending limitations facing our REITs and SFR investors, many folks’ initial response was, “Uh-oh.”
Take a deep breath.
While the message was not what the industry was expecting to hear, let’s peel back some of the layers and see how this can be optimized to have a positive impact. The element we need to focus on is that the proposed plan limits the acquisition of additional assets. It is not a forced off-selling of portfolios. Many of the larger REITs have already been offloading assets anyway for various reasons.
Truthfully, the crux of the message is that we have a national housing shortage. No one denies that. So how best to manage a shortage? Build more.
Our industry already has a division focused on this engagement: build-to-rent and ground-up construction. Many of the REITs and larger investors are already doing this so that they can build to their buy box. This has been in play for a while and is growing in popularity. Recently, Invitation Homes purchased ResiBuilt. This was to assist with building more housing. This acquisition had to be in the works way before Trump’s announcement for the potential housing regulations.
The question is: How can we use this transitional strategy to buoy investor portfolios? We have seen shifts in market penetration due to falling rental prices. How can we best manage this strategy? It is imperative that these assets trickle into the market to avoid flooding the current inventory and, ultimately, creating lower listing prices.
Can we evaluate this situation differently? What if we created a purchase strategy for current residents to become homeowners? We had oodles of first-time-homebuyer credits a few years back. Maybe we can get the administration to create these transitional purchase plans again so that everyone wins.
Since there are no moving expenses and the property is most likely in move-in ready condition with the current resident and soon to be owner occupant, we will also need a mortgage product that has an expedited closing strategy. At the time this article was written, mortgage rates had fallen to 6.10%. Let’s see if we can get below 5% to entice renters to own their current rental property. That’s getting close to a doable engagement.
Trump’s plan does not clearly define the term, “large portfolio.” What stipulations apply to these large portfolios? More than 1,000 assets? More than 5,000? More than that? Maybe a sliding scale strategy would remove the initial sting of the housing regulation proposal. Creating a plan like “build-10-buy -1” could help create an accrual process so investors can still purchase single assets while they build more. Additionally, if they sell a home to its resident occupant, they get a bonus buy credit, maybe a 2:1 ratio.
We are also seeing a rise in manufactured housing, which certainly expedites the ground-up construction timeframe. These properties can support the entry level home buyer with a brand-new home. Perhaps we could provide a home warranty with that transaction to provide a safety net for this transaction.
The hardest thing new homebuyers face is saving their down payment. If these first-time homebuyers decide to pursue an asset in need of renovation, are they fully prepared to manage this rehab? If they only get 92% completed and run out of money, what happens? It is best to leave the assets with sizable renovation budgets to the professionals.
Finally, we have investors that build to sell. These portfolios should be managed accordingly, without negative consequence and maybe with a minimal accrual benefit — “buy 20 get 1 credit.” This strategy will encourage the continued building of neighborhoods while supporting the scattered site strategy as well.
Regardless of how we get there, the ultimate answer is building. We need significant assets to hit the market as quickly as possible. It is the only way to ease the housing shortage. I do not believe the intent of Trump’s policy was to penalize the investor market. He himself is a real estate investor.
Creativity is the foundation of production. We simply need to help design a housing proposal that encourages the growth of units while bridging the gap to homeownership. This message has become the mantra to the American Dream.
While these innovations address the housing shortage concerns, we cannot forget the intentional renters, of which there are many. The younger generation lives in the moment, which includes the opportunity to up and move to another state at any given time. Rental units are necessary to fill this pursuit. We also need to serve their grandparents, who are selling their houses and choosing to live closer to their family, another intentional renter audience.
The largest hurdle to rental initiatives is the severely limited supply of housing to support entry level employees like CNAs, recent college grads with tuition debt, blue collar workers supporting our construction, manufacturing and maintenance industries. We need a significant supply of lower market rents to accommodate these individuals, and I believe this is truly the biggest housing barrier.
So, again, take a deep breath.
Let’s all take a deep breath and connect with our elected officials to share what we believe will address the housing crises as a whole.
Let’s all look for an alternative resolution as a unified team.
I truly believe there is an acceptable solution once we look around the corner of the initial proposal. Let’s take a deep breath, and let’s build this strategy together.
