What the Executive Order Does
President Donald Trump’s recent executive order targeting large institutional homebuyers could open new doors for California homebuyers—especially those relying on mortgage financing. At LBC Mortgage, we’ve seen firsthand how institutional investors create a challenging environment for individuals and families trying to buy a home. By limiting the influence of big companies in the single-family housing market, this policy may help more people secure financing and compete more fairly in California’s tight real estate market.
Trump’s new policy doesn’t ban corporations from buying homes outright. Instead, it restricts access to federal support for institutional investors that buy large quantities of single-family properties. These restrictions target advantages that have allowed corporations to compete more easily than individuals—such as federally backed financing, insurance, and loan guarantees. This includes directing agencies like the Federal Housing Administration and the Federal Housing Finance Agency to reduce assistance that supports bulk purchases by investors.
The order also instructs federal agencies to prioritize the sale of government-owned properties to individuals and families before investors. This “first-look” policy ensures that regular buyers, particularly first-time buyers, have a fair shot at purchasing homes before institutional investors step in.
These changes may address growing concerns that Wall Street-backed companies are worsening the affordability crisis in high-demand states like California.
Why California Buyers Could Benefit
California’s housing market is among the most competitive in the country. With limited supply and high demand, prices have continued to rise, making it harder for average buyers to enter the market. In many neighborhoods, institutional investors purchase large numbers of single-family homes to convert into rental properties. This practice reduces the availability of homes for buyers who plan to live in them and often drives up prices.
Reduced Competition From Cash Buyers
Institutional buyers typically make cash offers, allowing them to close deals quickly and appeal to sellers looking for fast, risk-free transactions. This puts traditional buyers—who rely on mortgage financing—at a disadvantage. Many sellers prefer cash offers over financed ones due to the uncertainty that can come with mortgage approval, appraisals, and closing timelines.
With fewer institutional buyers in the market, California homebuyers who need a mortgage may find it easier to have their offers accepted. At LBC Mortgage, we often help clients navigate the complexities of financing in competitive environments. With this rule in place, more of those buyers may be able to compete on a level playing field.
More Homes Available for Owner-Occupants
When big companies buy homes in bulk, they’re typically not interested in living in the properties. They use them as investments, usually converting them into rentals. This takes owner-occupied housing off the market and limits opportunities for families looking to put down roots in California communities.
By limiting federal support for these purchases, the new rule may lead to higher homes' availability for individuals rather than corporations. This shift could improve the overall balance in the market and make it easier for mortgage buyers to find properties that fit their needs and budgets.
Greater Influence for Mortgage-Dependent Buyers
Buyers who rely on mortgage loans often face additional scrutiny during the offer process. Financing contingencies, appraisal requirements, and longer closing timelines can make mortgage-backed offers less attractive to sellers. When investors are competing in the same market—especially with cash—mortgage buyers often lose out.
If institutional investors pull back from the market due to the lack of federal support, sellers may become more willing to work with buyers using financing. This is good news for those who need a mortgage to purchase a home—particularly in California, where property prices make cash offers unrealistic for most buyers.
Potential Challenges and Limitations
While the executive order could help level the playing field, it’s important to understand what it doesn’t do. It doesn’t ban all investor activity. The rule targets large institutional investors, not small or independent landlords. In many California markets, smaller investors also contribute significantly to the competition for homes. These buyers will not feel the impact of new restrictions.
Unclear Definitions and Enforcement
As of now, key details—such as what qualifies as a “large institutional investor”—have not been fully defined. Agencies are expected to provide guidance on how the rules will be enforced. Until that happens, the full impact remains uncertain. Buyers should stay informed as new regulations take shape over the coming months.
Limited Market Share of Institutional Buyers
Some housing experts note that institutional investors own a relatively small share of the housing market—often estimated between 2% and 4% of single-family homes nationwide. However, their impact can be larger in local markets. In certain California cities, institutional activity is more concentrated, which means the new rule could have a noticeable effect in those areas.
Still, buyers should not assume that the rule alone will dramatically increase affordability or inventory. Other factors—such as interest rates, local zoning laws, and housing supply—will continue to shape the market in California.
What This Means for Mortgage Access in California
Despite the limitations, the executive order sends a strong signal that federal policy is shifting toward supporting homeownership over institutional investing. For buyers in California, that could be a turning point in how homes are sold and who has access to them.
A Smoother Path to Financing
At LBC Mortgage, we specialize in helping clients secure home loans in complex and fast-moving markets. With potentially fewer cash investors in the mix, financed buyers may find it easier to close deals. This could reduce stress during the buying process and lead to better results for those relying on loans.
More Competitive Loan Options
As demand shifts back toward owner-occupied homes, lenders may respond by expanding programs or offering more competitive terms to buyers. Increased demand for mortgages can also create opportunities for better rates, lower down payment requirements, and more flexible underwriting.
We’re committed to helping California buyers take advantage of these shifts. Whether you’re a first-time buyer or moving into a new neighborhood, our team at LBC Mortgage is here to guide you through every step of the mortgage process.
What Buyers Should Do Next
Although the full implementation of Trump’s executive order is still unfolding, California buyers should prepare now. Understanding how these changes could affect your ability to compete in the market is key to taking advantage of new opportunities.
Get pre-approved early, work with a lender who understands the California market, and pay attention to federal housing policy. As new rules and definitions emerge, we’ll be ready to help you navigate them and adjust your strategy.
At LBC Mortgage, we stay ahead of industry and policy trends to ensure our clients are always informed and well-positioned to succeed. If you’re considering buying a home in California, now is a great time to learn how these changes could work in your favor.
