Offerpad Solutions, Inc. (NYSE:OPAD) shares skyrocketed over 50% on Friday following a bold housing directive from the White House.
The rally, which also saw Opendoor Technologies, Inc. (NASDAQ:OPEN) climb double digits, comes in response to President Donald Trump's proposal to lower mortgage rates and sideline institutional investors in favor of individual homeowners.
Other players like LoanDepot, Inc. (NYSE:LDI) and Rocket Companies, Inc. (NYSE:RKT) were up 17% and 6% respectively, as the market anticipated a massive wave of refinancing if rates dip below 6%.
$200 Billion Liquidity Injection
The centerpiece of Trump's plan is a directive for the federal government to purchase $200 billion in mortgage-backed securities (MBS). By flooding the market with liquidity, the administration aims to lower mortgage rates and make homes more affordable.
Trump suggested tapping the massive cash reserves held by Fannie Mae (OTC:FNMA) and Freddie Mac (OTC:FMCC) to purchase mortgage bonds and break the current housing market gridlock.
High interest rates have created a lock-in effect where homeowners with low rates refuse to sell. Lower rates would directly revitalize Offerpad and Opendoor's iBuyer business models by accelerating transaction speed and reducing inventory carrying costs.
Homes for Main Street, Not Wall Street
Earlier this week, Trump also called for a ban on institutional investors purchasing single-family homes in order to remove a major competitive threat to individual homebuyers.
By targeting Wall Street firms like Blackstone (NYSE:BX), the policy could clear the path for companies that facilitate consumer-to-consumer moves.
For investors, the message from Trump is clear: the country needs a housing reset, and the White House will be actively working to stimulate the residential real estate market.
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