Here's what will actually move the needle on housing affordability

"Falling interest rates, off-site construction, government subsidies and value engineering all play a role. None of them individually or even together as they are currently being pursued, will move the needle enough. Rates are unlikely to return to game-changing levels. Off-site construction has struggled to deliver the flexibility and cost savings its proponents promise."

"Clearly, game-changing affordability improvements would come from significant land-use reform. But while we can advocate for that, we don't control it (and won't hold our breath waiting for it). So, what can we control?"

"A couple of decades ago, public builders accounted for only about 25% of the market and were largely focused on entry-level and first move-up housing. Many private builders thrived by focusing on second move-up and luxury production housing segments that, while shallower than entry-level, were still broad and deep enough to support strong businesses."

Housing affordability solutions commonly proposed—falling interest rates, off-site construction, government subsidies, and value engineering—are insufficient individually or collectively. Interest rates are unlikely to reach game-changing levels, off-site construction has failed to deliver promised flexibility and savings, subsidies cannot address structural supply shortages, and value engineering provides only marginal price reductions. Significant land-use reform would transform affordability, but builders cannot control this outcome. The housing market has fundamentally shifted from decades past when private builders thrived in second move-up and luxury segments with creative designs. Buyers previously had discretionary income for exceptional housing, enabling strong sales rates and profitable production.

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