Why did Blackstone Group lose 17 billion in one day? Trump's ban on purchases triggers a major earthquake in the housing market

Blackstone Group’s stock price plummeted 9% in a single day, evaporating $17 billion in market value. Trump announced a ban on institutional investors purchasing single-family homes, and within 5 minutes of the announcement, Blackstone’s stock price plunged sharply. The median age of first-time homebuyers in the US surged to a record 40 years old. Although institutions account for only 3% of the homebuying market, the housing affordability crisis has become a core political issue.

Market panic: $17 billion evaporated in 5 minutes

At 9:30 AM Eastern Time today, when the US markets opened, Blackstone Group’s stock $BX started to decline. Just as the S&P 500 index hit a record high at market open, this abnormal movement drew market attention. By 10:35 AM Eastern Time, Blackstone’s stock had fallen 4%, despite no major news, leaving traders puzzled by the decline without clear negative catalysts.

The real shock occurred at 12:45 PM Eastern Time. President Trump announced a ban on institutional purchases of single-family homes. Just 5 minutes later, Blackstone’s stock price dropped 9%, with $17 billion in market value wiped out that day. Such a lightning-fast crash is extremely rare among blue-chip stocks and reflects intense market panic over this policy. By 2:30 PM Eastern Time, the stock had rebounded 5% from its lows as bargain hunters entered, but it still closed the day down about 4%.

Why was the market reaction so intense? Blackstone is the world’s largest alternative asset manager, managing over $1 trillion, with a significant portion in real estate investments. Although institutional investors currently account for only 2-3% of US single-family home purchases, Blackstone has a substantial presence in this sector. Trump’s ban not only impacts future investments but also fundamentally alters market expectations regarding Blackstone’s business model sustainability.

Blackstone’s REITs and private equity funds hold large portfolios of single-family rental assets. This “buy-to-rent” business model boomed during the pandemic, as low interest rates enabled institutions to finance home purchases at very low costs and profit from higher rental yields. If future purchases are restricted, these funds’ growth stories will be disrupted, prompting investors to reassess their valuations.

Structural issues behind the housing crisis

Why did Trump suddenly act? The answer lies in startling data on the US housing affordability crisis. The median age of first-time homebuyers has surged to a record 40 years, up from 33 in 2021 and 29 in 1981. The delay in homeownership among younger generations has become a serious social and political issue.

Three core data points of the housing crisis

Price-to-income ratio exceeds 4.5: the highest since the 1950s, making homeownership a luxury

Investor share of home purchases reaches 27%: up from 14% in 2020, nearly 30% of homes are not going to owner-occupiers

First-time buyer age delayed by 11 years: from 29 in 1981 to 40, pushing a whole generation out of the market

The fundamental problem is supply shortage. The average mortgage rate for existing homeowners is about 4.2%, which is 200 basis points lower than the current 30-year fixed mortgage rate (~6.2%). The gap has never been so large, making selling homes economically unattractive. Why sell if you lose the 2% mortgage advantage? This “interest rate lock-in effect” has led to a historic shortage of existing home inventory.

Data shows an astonishing phenomenon: for the first time since 2005, existing home prices have surpassed new homes. In other words, older homes are more expensive than new ones because no one wants to sell. Many American households’ real assets are now the 2.5% mortgage loans they hold during the pandemic, rather than the homes themselves. This distorted market structure reveals that the problem is far more complex than surface-level issues.

Nevertheless, Trump chose to target institutional investors. Although data shows that large institutions account for only about 3% of the US homebuying market and their activity has significantly declined in 2023-2024, this decision carries strong political symbolism. Blaming “Wall Street greed” for the housing crisis is easier to garner voter support than explaining the complex interest rate lock-in effects.

Can the ban solve the housing crisis?

Data segmented by investor size shows that large and mega-investors currently account for about 20% of investor home purchases. This means these large funds make up only about 3% of total US homebuying transactions. We believe that reducing demand by about 3% will have a smaller impact on home prices than most expect, because demand itself is not the core issue.

In fact, according to Reventure data, sales demand has fallen to its lowest level in 40 years, accounting for only 4.7% of occupied homes. A 3% demand reduction would not have a significant impact. Even if all investor purchases are excluded, individual investors still make up over 70% of current demand. We are currently facing historically low demand levels, with the real problem being a sharp decline in supply.

The real solution is to lower interest rates and increase supply. Only when mortgage rates fall close to the average rates of existing homeowners will the interest rate lock-in effect disappear, and normal housing supply will resume. However, given inflation pressures and Federal Reserve tightening policies, a significant drop in interest rates in the short term is unlikely. Trump’s ban appears more as a political gesture than a substantive solution.

For the market, this event reveals the power of policy uncertainty. Blackstone’s $17 billion market value evaporated in 5 minutes, demonstrating how policy risks can instantly destroy investor confidence. Crypto investors should learn from this: when governments target specific industries or business models, the volatility of related assets will spike dramatically.