It’s homebuilders’ last push, and their business and channel partners operate through friction on every front.
- Scarce, costly capital
- Slow approvals and entitlement drag
- Workforce constraints and generational handoffs
- Climate-driven costs and insurance uncertainty
- Buyer fear, hesitation, and confusion
- Margin compression stretching every variable
- An epic underbuild of new homes to the tune of somewhere between three and five million new ground-up homes, ranging up to a $4 trillion housing deficit weighing on people for the next decade or more.
It’s not a normal market. It’s come to this:
Owning a home – especially a newly built one – in too many markets, for too many of America’s working households, means owning a luxury good, not for people with area-mean incomes and livelihoods.
A fact we know. Modern U.S. housing policy is a product of layered localism, political risk aversion, entrenched homeowner incentives, outdated zoning, fragmented governance, and procedural systems that reward obstruction.
The default setting is delay, deny, or shrink—long before “approve” ever enters the conversation.
It’s structurally easy to stop new housing—and structurally complex to produce it. In 20-plus years of listening, learning, and observing, a dozen reasons for this jump to mind.
Still, this is all in a day’s work for people whose livelihood is making homes and neighborhoods for others.
1. Local political incentives tilt toward delay or denial
How it works:
- Elected officials face far more political risk in saying “yes” to new housing than in blocking or delaying it.
Why it happens:
- Existing residents vote; future residents don’t.
- Opposition groups are loud, organized, and reliable voters.
- Approvals spark criticism; denials rarely do.
- A single contentious proposal can jeopardize a political career.
2. Homeowners have strong incentives to protect their wealth
How it works:
- Most Americans’ net worth is tied up in their home value.
Why it happens:
- Homeowners fear density or new development will soften values.
- Neighborhood groups mobilize around “property value protection.”
- Even small changes in traffic, school crowding, or streetscape spark resistance.
- Financial fear easily gets framed as “community character” concerns.
3. Zoning codes were designed to exclude
How it works:
- Most zoning in the U.S. prioritizes low-density, single-family patterns.
Why it happens:
- Codes originating in the 1920s–1970s still dominate.
- Minimum lot sizes, height restrictions, and parking mandates restrict supply.
- “Downzoning” is politically easier than “upzoning.”
- Local control favors exclusion rather than accommodation.
4. Permitting & entitlement processes are cumbersome by design
How it works:
- Developers face multi-year approval pipelines full of procedural tripwires.
Why it happens:
- Numerous agencies each hold a veto point.
- Reviews are sequential, not parallel.
- Regulations accumulate but rarely sunset.
- Every step creates an opportunity for delay or obstruction.
5. Infrastructure is often inadequate—nobody wants to pay
How it works:
- Many jurisdictions claim they cannot support new homes without new infrastructure—then refuse to fund it.
Why it happens:
- Infrastructure deficits from decades of underinvestment.
- Local governments resist tax increases or bond measures.
- Impact fees escalate to plug funding gaps—raising home prices.
- Easier to block a project than solve infrastructure financing.
6. Environmental & climate review systems empower obstruction
How it works:
- Environmental review laws—well-intentioned—can be weaponized to slow or stop projects.
Why it happens:
- Appeals processes create endless cycle opportunities.
- Vague criteria let opponents challenge anything.
- Climate adaptation requirements increase cost and complexity.
- Environmental review is often the strongest local veto.
7. Fragmented governance creates endless veto points
How it works:
- Cities, counties, regional boards, utilities, school districts, and state agencies each control a piece of the puzzle.
Why it happens:
- No single entity is responsible for the overall housing supply.
- Multiple conflicting jurisdictions create multiple opportunities to say “no.”
- Regional housing goals are seldom enforceable.
- Decision-making frameworks favor caution over production.
8. Community opposition Is organized, loud, and persistent
How it works:
NIMBY groups are highly coordinated, while pro-housing voices are diffuse and less motivated.
Why it happens:
- Opponents have immediate, personal stakes.
- Supporters (future residents) don’t exist yet.
- Public meetings favor those with time and resources.
- Fear-based messaging mobilizes quickly.
9. Developers carry all the risk—making public decisions even easier
How it works:
- Private developers invest years and millions before approvals.
Why it happens:
- Local governments bear little downside for delays.
- Costs accrue only to the developer and eventual consumers.
- If a project dies, the jurisdiction loses nothing politically.
- This creates asymmetric risk: developers risk failure; officials risk nothing.
10. Litigation risk is high—even for approvals
How it works:
- Almost any approved project can be challenged in court.
Why it happens:
- Broad standing makes lawsuits easy to file.
- Neighbors use litigation to run out the clock.
- Judges are reluctant to overrule local decisions.
- Developers face months or years of legal uncertainty.
11. Public misconceptions about housing supply are deeply rooted
How it works:
- Many communities believe more housing worsens affordability or erodes “character.”
Why it happens:
- People conflate new housing with population growth, not vice versa.
- Persistent myths about density, crime, traffic, and schools.
- Local media tends to amplify controversy.
- Narrative wins over data.
12. The fiscal math often works against housing
How it works:
- Cities claim new housing—especially entry-level or rental—costs more in services than it generates in taxes.
Why it happens:
- School funding formulas penalize districts for new students.
- Retail/commercial uses generate more local revenue.
- Cities chase sales tax, not homes.
- Housing becomes a “net cost,” making “no” the easier answer.
It’s easier for local officials who take all the political risk and none of the upside. Easier for neighbors afraid of change. Easier for stretched municipal staff, for fatigued lenders, and for buyers second-guessing every decision in an economy that shifts week to week.
And yet, through that noise, a set of patterns emerged in 2025—patterns that show which builders, developers, land strategists, and capital partners are figuring out how to create conditions where “yes” becomes possible again.
Here are the 10 lessons that rose to the top this year.
1. The real friction isn’t the economy—it’s the local operating environment
Whether the Fed paused or cut or stood pat, most of the performance story came down to the same stubborn points of failure: misaligned zoning, extended entitlements, jammed inspection queues, unpredictable off-site requirements, and ballooning impact fees.
The leaders who made gains in 2025 weren’t those with the rosiest macro read—they were the ones who precisely diagnosed the local barriers that were making the math break. They treated local friction as a solvable operating challenge, not a fate.
2. Policy can be redesigned—and builders who show up with specifics are shaping it
Quiet but meaningful openings appeared this year: modernization of permitting workflows in several metros, bipartisan support for zoning flexibility, and active federal conversations around AD&C liquidity, NEPA modernization, and Davis-Bacon guardrails.
The builders and developers who came with data, operational clarity, and implementation-minded proposals are now embedded in those policy conversations. They’re securing predictability because they’re helping rewrite the rules.
3. Labor is today’s most consequential constraint—and tomorrow’s competitive differentiator
If 2025 reinforced anything, it’s this: labor scarcity is not a passing nuisance; it’s structural. Skilled workers are aging out faster than they’re replaced, and the volatility of starts makes consistent work hard to guarantee.
The firms that treated trades as business partners—not cost centers—protected velocity, tightened construction cycles, and preserved customer trust. Workforce investment became strategy, not charity.
4. Culture separated the organizations that executed from the ones that endure
Culture stopped being a “soft” concept this year. It became the clearest marker of which organizations could maintain discipline through margin compression, softening demand, and rising period costs.
The leaders who centered team member empowerment, cross-functional clarity, accountability, and purpose didn’t just weather turbulence—they outperformed. Culture became the operating system that kept promises made in sales centers actually delivered in the field.
5. The builders who won approvals also won the narrative by showing who the homes are for
A persistent approval challenge this year was narrative mismatch. Too many proposals couldn’t articulate—credibly—who the future residents would be and why a community needed them.
The organizations that used real, current buyer data—singles, downsizers, multigenerational households, long-commute essential workers—cut through skepticism. When the people behind the project become visible, approvals become more attainable.
6. Connected digital tools transformed hesitancy into commitment
Where buyers hesitated, digital pre-sales often closed the gap. Tools that linked interactive design, real-time pricing, connected estimating, permitting, and field execution didn’t just modernize the customer experience—they reduced cancellations, cut construction errors, and accelerated cycle times.
In a year defined by buyer caution, the builders who eliminated operational friction created customer confidence.
7. Capital became more selective—and more clarifying
With regional banks still constrained, private capital stepped deeper into the AD&C space. But this wasn’t 2019’s capital cycle. It was more disciplined, more scenario-tested, more velocity-dependent.
Builders who documented—clearly—how they manage pace, profitability, cash conversion, and downside scenarios kept deals alive. Those without that clarity struggled.
Capital said “yes” where operators proved they could perform through volatility—not around it.
8. Land strategy shifted from accumulation to optionality
2025 rewarded land teams who behaved like portfolio managers, not collectors. Asset-light players won with disciplined project-level underwriting. Land-heavy operators won by securing long-duration positions that could flex into changing use cases—housing, mixed-use, logistics, data-adjacent, or phased alternatives.
The common thread: a land strategy that explains why a position exists, how it performs under multiple futures, and who benefits at each turn.
9. Consolidation isn’t just reshaping the map—it’s raising the bar
Global capital, Japan-based platforms, and large public builders continued to absorb regional operators. But beneath the market-share headlines was a deeper shift: consolidation is creating new expectations around operational discipline, systems integration, customer experience, and sustainable cost structures.
Private and regional builders that leaned into specialization, digital operations, and partnership models held their ground. Those relying on old formulas found the walls closing in.
10. The industry’s winners treated housing as a systems problem—and built systems to solve it
The most successful organizations in 2025 didn’t rely on timing luck or market tailwinds. They integrated the full stack—policy engagement, land discipline, culture, digital workflows, buyer insights, capital transparency, and field execution—into an operating model that converts resistance into progress.
They recognized that America’s default posture toward new housing is still “no,” and responded by building the capability to turn ambiguity into action and complexity into advantage.
A hopeful barometer for 2026
If 2025 taught anything, it’s this: the obstacles aren’t going away. In many markets, they’re multiplying. But the positive signal is unmistakable. Across every region, we saw teams—large and small—prove that it’s still possible to deliver housing at scale with discipline, creativity, and courage.
When leaders diagnose precisely, partner intentionally, invest in people, deploy technology with purpose, and operate with transparency, the “no” that defines today’s system becomes far less durable.
2026 will not be easier. But it can be more productive. The playbook is taking shape as solutions seekers apply brilliance, all in a day’s work..
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