By Andrew Bary
When President Donald Trump talks, the stock market listens -- creating an opportunity in shares of Invitation Homes.
Trump's populist affordability initiatives found a new target this month when he posted on Truth Social that he would take steps "to ban large institutional investors from buying more single-family homes."
His words hit the already depressed shares of Invitation, a real estate investment trust that, with 86,000 rental houses, is the largest public investor in single-family homes. Its stock has dropped 13% over the past 12 months to a recent $27.
Invitation is in better shape than its fixer-upper stock price suggests. The Sunbelt-focused REIT has a valuable portfolio assembled over more than a decade, trades cheaply on many financial metrics, has a strong balance sheet, carries a safe 4.4% dividend yield and is valued at an estimated 25% discount to its likely liquidation value. The dividend has been lifted annually since Invitation went public at $20 a share in 2017.
"The company is trading at a massive discount," says David Auerbach, the chief investment officer of Hoya Capital Real Estate, which runs the Hoya Capital Housing ETF that holds Invitation stock.
Trump has amped up his efforts to promote affordability since Republican losses in November elections and ahead of this year's midterms -- and he's found a ripe target in institutional buyers of single family homes. The knock is that they are crowding out individual home buyers and driving up prices. Trump is expected to flesh out his plan in a speech at the World Economic Forum in Davos in the coming week.
Invitation hasn't directly commented on the Trump idea, and didn't respond to a request for comment.
The Trump headlines look alarming, but it's unlikely that any ban will take effect. The odds that the president can unilaterally implement such a restriction is low, and it's unclear whether Congress would acquiesce or whether the measure would pass legal challenges.
The company's backers also say big buyers have little impact on the housing market. About 14 million single-family homes are now being rented, out of a total stock of 85 million homes in the U.S. (this doesn't include apartments). Big holders of more than 1,000 homes may account for just 3% of the 14 million available for rent. Invitation makes up less than 1% of the rental market. Most investors are what the industry calls "mom and pop buyers," who own 10 homes or less.
Invitation hasn't bought many houses in the past few years -- and those it is now buying are mostly newly built properties erected by large builders like Pulte Homes. Through the first nine months of 2025, it bought about 2,000 homes and sold around 1,000. So even if there were a ban on new purchases, the impact on Invitation wouldn't be significant.
While it's true that the single-family home rentals have expanded significantly since the 2008 financial crisis, Invitation says it fills an important niche in key markets including Atlanta, Phoenix, South Florida, and Southern California by offering families bigger spaces than apartments. Its houses generally have three to four bedrooms, and average nearly 1,900 square feet. Invitation homes rent for an average of $2,500 a month, which the company says is about $900 cheaper than the monthly cost of homeownership.
"The idea that big guys like Invitation are gobbling up homes and driving up prices is factually not true," says Steve Sakwa, an analyst at Evercore ISI. He has an Outperform rating and a price target of $33 on the stock.
Invitation stock, which is trading at its cheapest valuation since its initial public offering, seems to discount a worst-case scenario. It trades for 16 times projected 2026 adjusted funds from operations of $1.67 a share, a discount to the REIT average of 20. AFFO may be the best REIT financial measure, since it adjusts down funds from operations, the best-known REIT profit metric, for necessary capital expenditures.
Invitation also looks appealing based on an asset-value measure. Investors effectively can buy Invitation's portfolio for an average price of about $280,000 per home, Barron's calculates. That is a discount to the likely portfolio value and where the company has been selling homes over the past three years -- an average price of more than $350,000 per home. Big home builders like Lennar sell new homes for an average of about $400,000 each.
Trump, however, isn't the only issue facing the company. Even before the headlines, Invitation was under pressure because of slowing revenue and profit growth in 2025, a reflection of new rental supply in Sunbelt cities. Invitation sees same-store growth in net operating income of just 2.25% in 2025 -- it has yet to report fourth-quarter results -- down from 4.6% in 2024. Adjusted funds from operations are expected to be up just 1% to about $1.62 a share in 2025, and 3% in 2026 to $1.67 a share.
Better times may be ahead. At the company's investor day in November, CEO and co-founder Dallas Tanner cited four bullish factors for the company and industry: favorable demographics; the cost benefit of home rentals versus buying; a better experience for renters with Invitation versus smaller owners; and improving supply trends.
Sakwa sees AFFO growth rising to 4.5% in 2027, helped by the company's plans to boost AFFO by 14 to 20 cents a share by 2028 from several programs such as bundled internet and smart-home services like doorbell cameras.
As a REIT, the company pays out the bulk of its cash flow in dividends. Beyond that, it has $200 million to $300 million of annual free cash flow that it has mostly used for growth. The company hasn't been a buyer of its stock but that is changing with a $500 million program unveiled in conjunction with its third-quarter earnings. "The stock is really cheap right now," Invitation CEO Tanner said at the company's investor day in November.
Bargain homes may be tough to find in the current housing market but they're available in the shares of Invitation Homes.
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(END) Dow Jones Newswires
January 20, 2026 10:16 ET (15:16 GMT)
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