As the nationwide housing inventory and affordability crisis persists, a trio of experts sit down with HousingWire to detail proposed solutions. The solve? It’s multi-faceted and it comes down to fixing supply issues, changing zoning and updating regulation.
Kent Colton, president of the Colton Housing Group and former CEO of the Национальная ассоциация домостроителей; Laurie Goodman, institute fellow and founder of the Housing Finance Policy Center at the Urban Institute; and Glenn Sturtevant, a Virginia State Senator behind new legislation that would limit инвестор home purchases, all agree that solving the housing shortage demands fundamental changes in at least one area: supply, zoning, or regulation.
“This is a serious problem, especially for those at the lower end of the market,” Colton said. “We’ve never had something like this, where we are short of houses.”
Goodman noted that investor ownership of дома на одну семью — often viewed as a major driver of scarcity — is currently limited at the national level.
“Institutional investors own a very small percentage of the total single-family market. They own about 4%, so let’s just start there,” said Goodman. “They own a lot more in some markets. I believe it’s 27% in Atlanta or something like that. But overall, nationwide, it’s 4%.”
Sturtevant — a Republican representing Richmond, Virginia — has reintroduced legislation in the General Assembly that would block investment firms with $50 million or more in assets from buying up homes in his state.
His bill — SB 693 — follows years of increasing investor activity in markets such as Richmond, where nearly one in five recent purchases involved investor-driven buyers.
“This idea for this bill kind of originated from that meme that you see online where it’s a guy smiling and it says, ‘BlackRock associate just outbid a single mother of two,’” Sturtevant said. “The young people who are trying to save up for a down payment and then having to compete against private equity to get a house have no lobbyists representing them.”
How we got here
Colton traced the shortage back to the 2008 financial crisis.
“Just before the Great Recession, we built 2 million houses a year, but we were building more houses than we needed, and there was a great deal of speculation,” Colton said. Then, as the Great Recession hit, building was halted. “We built around 500,000 units a year when the demand was between a million to 1.5 million, so we really got behind.”
That underbuilding — compounded by the pandemic, инфляция and supply chain shocks — created years of pent-up demand.
“Once you get behind, then you get a situation where you’ve got too little supply, and then supply and demand takes over,” Colton said. “Prices shot up 5%, 6%, 7%, some communities 10%, 15%, 20% a year.”
Goodman added that цены на жилье have outpaced wage growth, with the land component driving much of the escalation.
“Wages have basically, on average, overgeneralized, kept up with inflation, but home prices have gone up way more than inflation,” she said. “Within home values, you have the cost of land and the cost of the structures, and cost of the land has gone up more than the cost of the structures.”
Colton said legislation like what Sturtevant has proposed, which blocks investment firms with $50 million or more in assets from buying up homes, could provide short-term relief for покупатели впервые.
“Generally, I think free markets are better, but you can get to a point where equity investors can crowd out the market,” said Colton. “But doing something like this, especially if you did it for a limited period of time, there probably really is a benefit to try to protect somebody that’s a first-time homebuyer, or [in the] the lower end of the market.”
But Goodman rejected such proposals outright.
“I think that’s a very counterproductive way to keep institutional investors out of the market,” she said. “Perhaps you’re going to have institutional investors in the market. In any case, having a landlord who’s an institutional investor versus a mom and pop investor probably does not matter through the homeownership rate at all.”
She also argued that much investor activity, particularly in build-to-rent developments, is actually increasing supply.
Zoning and housing supply shortgage
All three experts agreed zoning reform is essential — though they framed its impact differently.
“You know, the United States is really unique with respect to the regulation that we have,” Colton said. “We don’t just have national regulation to impact housing, there’s all the state and local regulations. Every community has a different set of rules. And 78,000 different local jurisdictions around the country makes it a real challenge.”
Goodman emphasized that the benefits of zoning reform should be seen broadly.
“You don’t zone for homeownership, per say. You zone for homes,” she said. “And I think of home prices as being determined by new supply, versus demand, which is household formation. I’m going to need one unit of housing whether I’m a homeowner or a renter.”
She pointed to California’s accessory dwelling unit (ADU) reforms as a model.
“Every year there’s been two or three pieces of legislation that have gone through,” Goodman said. “So, the last set of numbers I looked at were from 2023. ADU production contributed nearly 21% of new units in California in 2023, and that was up from 5% in 2018. Twenty-one percent is a huge number.
“You could do the same thing for (2-4-unit properties). You could do the same thing for single family. You could basically eliminate lot size restrictions. You could do a lot of things.”
Sturtevant said his legislation is about ensuring fairness for buyers who are being outmatched by firms with deep pockets.
“It’s not a free market, it’s not a level playing field for the 25-year-old young couple to be bidding against a hedge fund,” he said. “In reality, a lot of these properties probably never go on the market, per se. They’re bought up by the hedge funds before they ever can make it to the MLS, and that reduces supply and drives up cost.
“It results in younger generations not being able to buy homes, not starting families, not having kids, not being able to do the things that their parents and grandparents were able to do.”
Affordability for younger buyers
Colton acknowledged that wage stagnation has worsened affordability for younger generations.
“People’s capacity to buy a house hasn’t kept up because house prices have been rising,” he said. “When you talk over a five-year period that house prices have gone up by between 25% and 40% in a number of communities around the country, then obviously it’s going to take some doing on a lot of fronts to try to try to deal with that.”
Sturtevant said Wall Street’s involvement in housing has distorted the market before — and risks doing so again.
“From a 10,000-foot view, the last time that Wall Street was involved in the Рынок жилья, treating it like a commodity and part of a stock portfolio, we had the financial crisis,” he said. “Everybody said, ‘Oh my gosh, how could anybody have ever predicted any of this?’”
He said the concentrated purchase of thousands of single-family homes in Virginia’s major metro areas illustrates the urgency.
“There are about 4,000 or so single-family homes that private equity owns and that are used as rental properties. So they’re taken out of the normal housing market,” Sturtevant said. “That’s just one piece of it. It’s great to be talking about zoning and getting more supply out there. But this is also, I think, a critical piece.”
Policy priorities, looking ahead
Asked what steps policymakers should take immediately, Goodman was blunt.
“If you build more, you get lower prices, simple supply and demand,” Goodman said. “And by trying to favor particular actors or disfavor particular actors, you distort the system, and you end up with less housing in the end.”
Colton said solutions must continue to focus on multiple areas.
“You’ve got the construction and design and the way you build a house,” he said. “Number two is the way that you finance the house. And number three is the regulations and the policies that impact the building of that house. We have to work at all three levels in a concerted way to make a difference.”
Sturtevant said his fight in Virginia is meant to ensure younger families are not permanently locked out of ownership — and that Americans nationwide on the cusp of homeownership need more help.
“The industry folks are all about getting more shovels in the ground,” he said. “That’s great. But we also need to look at all sides of the problem. This is a real one that a lot of people don’t want to address, because there’s a lot of money behind it.”
English