
The housing industry enters 2025 with significant questions about its future. How do we meet the growing need for housing while keeping it affordable? How do we address labor shortages and regulatory barriers? And what role will policymakers play in solving these challenges?
To explore these issues, I recently hosted Ivy Zelman, one of the sharpest minds in the business, on the Walker Webcast. Her decades of expertise and ability to dissect housing trends offered a fascinating roadmap for what lies ahead.
Reframing the affordability problem
The narrative in the housing market often focuses on supply. But as Ivy pointed out, supply alone won’t solve the deeper issue—affordability. Homeownership remains out of reach for many Americans due to high mortgage rates, surging home prices, and a lack of options at reasonable price points.
Homebuilders are working to bridge the gap, but the numbers tell a sobering story. New inventory is growing at a modest pace, and much of what’s being built is priced beyond what most buyers can afford. Even the rental market isn’t immune, with rising costs pricing out many would-be tenants.
To Ivy, the affordability crisis is more complex than raw data. It’s about rethinking how the industry delivers housing at all levels—affordable, workforce, and market-rate. The challenge is producing homes that match incomes. Without that alignment, we’re building inventory that sits unsold or unleased.
Public builders rise while independents face headwinds
Another striking trend Ivy discussed is the consolidation within the homebuilding sector. Public builders now account for more than half of all new construction, thanks to their access to cheaper capital and economies of scale.
Smaller independent builders, once dominant, are increasingly pressured by rising costs, labor shortages, and regulatory hurdles. For these independents, the path forward may involve focusing on niche markets or partnering with larger players to remain competitive.
The role of labor and policy in shaping housing’s future
Labor shortages remain a critical hurdle for the industry. An aging workforce, limited immigration pathways, and a lack of skilled trades constrain homebuilding capacity. Ivy noted that while public builders are better equipped to weather these challenges, smaller firms often struggle to secure reliable labor.
Policy changes could provide much-needed relief. During our conversation, Ivy proposed two actionable solutions:
- Reducing impact fees: Local governments often pass along infrastructure costs—such as schools and fire stations—to developers, adding 5-15 percent to home prices in some markets. Lowering these fees could significantly ease the financial burden for builders and buyers.
- Reevaluating FHA loan limits: By tailoring loan limits to reflect regional price differences, policymakers could expand financing options for buyers in high-cost areas.
While not silver bullets, these interventions could help stabilize the market and make housing more accessible.
Beyond affordability: innovation and opportunity
As the conversation shifted to innovation, Ivy expressed cautious optimism. Technologies like modular construction and 3D printing have potential but remain in their infancy. For now, builders must navigate today’s constraints with creativity and collaboration.
One area of opportunity lies in manufactured housing, which could address affordability gaps with shorter build times and lower costs. However, this segment faces significant headwinds, from outdated perceptions to zoning resistance.
Where do we go from here?
The 2025 housing market is at a pivotal moment. Tackling the affordability crisis will require bold policy changes, innovative construction methods, and an industry-wide commitment to collaboration.
Despite these challenges, I remain optimistic. The resilience and ingenuity of housing professionals like Ivy Zelman inspire confidence that we can navigate this complex landscape and deliver solutions that work for everyone.
For more in-depth conversations with industry leaders, subscribe to the Walker Webcast. Let’s build a future where housing isn’t just a dream—it’s a reality for all.
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