Economic Aspects of Urban Development

The housing market is shifting. Nearly 15% of U.S. home purchase agreements fell through in June, according to Redfin—up 1% from a year ago and the highest June figure since tracking began in 2017. At first, this stat might seem puzzling. After all, isn't there supposed to be pent-up demand, especially among Millennials and Gen Z? So, what’s behind this? Well, according to the report... • Some buyers are using inspection contingencies to walk away after spotting an issue or discovering a better home • Mortgage rates remain stuck in the upper mid-6% range, and some buyers are hoping for a drop • And in some cases, shoppers are simply more cautious amid economic uncertainty Still, the Redfin data isn’t revealing a sudden change—it’s part of a broader trend I’ve been tracking throughout 2025: the shift to a buyer's market. In my latest Housing Market Predictions piece, I covered how home price growth has been slowing and inventory has been steadily improving since the start of the year. That extra supply, combined with sticky mortgage rates, has given buyers a little more breathing room and negotiating power in a still-pricey housing market. Even so, it's important to remember that housing trends remain deeply regional. For example, affordable markets in parts of the Midwest and Northeast, which didn’t experience the extreme price surges of the pandemic years, are seeing strong buyer demand and competitive conditions. In contrast, areas like Florida and parts of the West, where insurance costs and high home prices are causing concern, and where rapid home building in recent years is now offering buyers more choice, are experiencing more deals falling through. If you’re wondering where the housing market is headed for the rest of 2025, here’s the breakdown of the trends I’m watching: https://lnkd.in/eAfHPdQn Forbes Advisor

This week, I shared insights with Bloomberg Radio and Reuters on what to expect for the housing market in 2026. Below is a quick overview, and you’ll find the full analysis—complete with interactive charts to explore your local market—linked in the comments. 1) Affordability improves—mainly via prices and paychecks. Mortgage rates hover in the low-6% range, helpful but not a game-changer. The bigger lift comes from modest home-price growth paired with steady income gains, nudging affordability higher where active listings are more plentiful. 2) “Life happens” demand pushes sales up, slowly. We’re still missing millions of transactions relative to the pre-pandemic norm, leaving pent-up churn. With ~52 million Americans in their thirties—and millennials projected to add ~10.6 million owner households over time—life events (marriage, kids, caregiving, job moves) keep transactions grinding higher even if rates only edge down. 3) A two-speed map persists. Lean inventory in the Northeast and Midwest keeps conditions tight and price growth steadier. Many Southern and Western metros carry more supply—22 of the 75 largest markets already sit above their 2018–2019 active-listing baseline, concentrated in Florida and Texas—so pricing is more negotiable. 4) Stress pockets, not a foreclosure wave. Measures of strain have risen off the floor, but broad distress typically needs both income loss and no equity. The labor market has cooled—not cracked—and sizable homeowner equity keeps risk contained; weakness is likelier where affordability is stretched, insurance has jumped, or local job growth has softened. 5) Inventory climb as rate-lock loosens at the margins. Inventory has picked up in 2025, even if the pace of growth has slowed recently. Expect a steady rise in 2026—uneven by region, helped by completions and any incremental rate relief. 6) New homes keep the edge. Builders stay cautious on starts and focus on selling standing inventory; incentives like rate buydowns help meet buyers where they are. With many owners still rate-locked, builders retain a relative advantage until competition from resale supply normalizes. Bottom line: 2026 delivers progress without a breakout—modestly better affordability, a gradual rebound in activity, persistent regional divergence, contained risk, rising supply, and a continued new-home edge. Link to Reuters segment: https://lnkd.in/egbjdPJ7

We just completed a two‑part, 40‑page review of rent‑versus‑own dynamics across the country. The core theme is simple: homeownership has never been a purely emotional decision. Even historically, the choice to own or rent has been shaped by relative costs, financing conditions, and expectations around stability and wealth building. What sets this post‑pandemic period apart is how sharply the tradeoff has intensified as the cost of owning has climbed. As a result, more prospective buyers are asking a simple but uncomfortable question: does the math still math? Our latest research digs into exactly that. Three takeaways stood out: 1. The power of buydowns matters. Nationally, owners are paying about 31% more than renters. The largest rent‑versus‑own premiums show up in markets like San Jose, Allentown, LA/OC, Columbus, and Salt Lake City. Our analysis shows that a 4.9% mortgage rate via a buydown cuts the national ownership premium to roughly 14%, materially changing the calculation for many households (graph below). 2. Today’s ownership premium is reshaping behavior. We are seeing delayed purchases even among qualified buyers, a normalization of renting as a deliberate long-term choice, and heightened sensitivity to value. Many would‑be buyers feel they've “missed the boat,” making them far more discerning about what constitutes a good deal versus a bad one. 3. Housing is now competing with alternative investments. For some households, financial markets present a credible near‑term alternative to homeownership as a wealth‑building strategy. That competition for household capital is likely to remain tight until equity markets cool meaningfully or homeownership becomes more affordable. Subscribers to our Zonda National Outlook can log in now to learn more. Sarah Bonnarens Eric Alanis Julia Bunch Tim Sullivan Evan Forrest Peter Dennehy Kimberly Byrum (formerly Fiala) Bryan Glasshagel Susan Heffron

At first glance, falling house prices might suggest that housing affordability is improving. However, this view overlooks the deeper structural forces at play. While demand has softened slightly due to higher interest rates, the fundamental drivers of affordability are moving in the opposite direction. Rising construction costs, ongoing labour shortages, and renewed supply chain pressures are constraining new housing supply, even as population growth sustains demand. The result is a persistent imbalance that is likely to push affordability further out of reach, despite the recent slowdown in price growth.

A few years ago, a ₹1 crore home in India still felt like a “luxury” purchase. Today, in cities like Bengaluru, Mumbai, and Pune, it increasingly feels like the new benchmark. And the data reflects that shift. According to JLL, homes priced above ₹1 crore accounted for 62% of total housing sales in H1 2025, even as overall residential sales declined 13% YoY. What’s interesting is that this growth is no longer being driven only by ultra-wealthy buyers. It’s increasingly being driven by aspirational urban households. The reason becomes clearer when you break down what it actually takes to buy a ₹1 crore home today. 👉 Property value: ₹1 crore 👉 Typical upfront costs: • ₹10–15 lakh down payment • ₹6–8 lakh registration & taxes • ₹3–5 lakh interiors & setup 👉 Total upfront liquidity required: ₹20–25 lakh 👉 Then comes the loan. Assume: • ₹80 lakh home loan • 8.5% interest rate • 20-year tenure 👉 EMI: ₹70,000/month Now here’s the important part. Ten years ago, this income threshold would have excluded a large section of urban India. Today, a growing number of dual-income households in sectors like tech, finance, startups, consulting, GCCs, and entrepreneurship are crossing combined annual incomes of ₹25–40 lakh. Which means a ₹70,000 EMI is increasingly becoming financially manageable for a rising urban middle and upper-middle class. That’s exactly why more Indians are entering the ₹1 Crore Club. Not because ₹1 crore homes suddenly became “cheap”. But because: • Household incomes have risen sharply in metros • Dual-income families are becoming more common • Home loans are more accessible and structured • Buyers are prioritising lifestyle upgrades • Real estate is increasingly seen as long-term wealth creation The aspiration itself has changed. Today’s buyer is not just purchasing a home. They are buying: → Better locations → Amenities & gated communities → Hybrid-work-friendly living → Lifestyle infrastructure → Long-term financial security The ₹1 Crore Club is no longer just a luxury signal. It is increasingly becoming a middle-class aspiration benchmark across urban India. Could the ₹1 Crore Club become for housing what SUVs became for automobiles: once aspirational, now increasingly mainstream?

𝗪𝗵𝗲𝗻 ‘𝗕𝘂𝗶𝗹𝗱, 𝗯𝗮𝗯𝘆, 𝗯𝘂𝗶𝗹𝗱’ 𝗺𝗲𝗲𝘁𝘀 𝘁𝗵𝗲 𝗮𝗿𝗶𝘁𝗵𝗺𝗲𝘁𝗶𝗰 𝗼𝗳 𝗶𝗻𝗲𝗾𝘂𝗮𝗹𝗶𝘁𝘆 US urban housing policy is being swept by a simple idea: deregulate, build more, and affordability will follow. From the Bipartisan Policy Center to the ‘Abundance’ movement, the story is that the crisis is a supply problem, solvable by cutting red tape. Yet, as Julie Zauzmer Weil notes in The Washington Post (https://lnkd.in/ef9txjzX), a growing group of ‘supply sceptics’ (including Michael Storper & me) argues the logic is only partly right. In Urban Studies Journal (2020), Storper and I already warned that the ‘housing-as-opportunity’ narrative overpromises. It assumes people move without friction, #homes are interchangeable, and #zoning is the main dial on affordability. This despite mixed evidence on #regulation, #supply & prices, and the crude reality of unequal skills, segmented labour markets and ‘spatial traps’. The #YIMBY promise is that #upzoning will deliver broad price relief. So far, results have been limited, and blanket deregulation risks accelerating #gentrification in prosperous metro cores while leaving structural inequality untouched. A more recent analysis by Storper (with Maximilian Buchholz, Tom Kemeny & Gregory Randolph) argues that #inequality, not regulation, is the main driver. Prices may track average 3incomes, but the average hides polarisation. In ‘superstar’ #cities, non-graduates are bidding against high earners and, increasingly, investors and global buyers treating housing as an asset. Their simulations suggest that even with aggressive building, it could take decades —in some scenarios more than a century— for market-rate homes to ‘filter down’ to typical workers. If #affordability is the goal, why start by incentivising luxury construction at the top, in the most desirable locations, and hope for trickle-down? Financialisation weakens the chain further: new units often end up as speculative holdings, vacant investments or short-term rentals. Instead of chasing market equilibrium through deregulation alone, we should target the problem directly. European experience points to alternatives —social housing, cost-rental sectors and non-market cooperatives— supported by public land banks and direct investment. That can house people now, rather than waiting for a distant correction. #USA #housing unaffordability mirrors an unequal economy. When incomes pull apart —especially in dense, opportunity-rich places— prices can follow ‘demand’ and still create crisis for everyone below the mean. You can upzone a street; you cannot upzone the wage structure. Further reading Rodríguez-Pose, A., & Storper, M. (2020). Urban Studies, 57(2), 223–248. https://lnkd.in/dTSs9Wvx Buchholz, M., Kemeny, T., Randolph, G. F., & Storper, M. (2026). Inequality, not regulation, drives America's housing affordability. https://lnkd.in/eXypNCY7

The narrative is changing fast: The housing market has moved from scarcity to surplus, hitting a 14-year high in national inventory. 📈🏠 But the affordability crisis is worse than ever. The attached graphic highlights the velocity of this shift. In just one year (July '24 to July '25), national housing stock jumped 26%. However, the story varies wildly depending on where you look. The Inventory Surge is Massive in Sunbelt Hubs: 🌊 📍 Raleigh: +55% 📍 Las Vegas: +43% 📍 Miami: +40% 📍 Atlanta: +37% While Other Major Markets Are Barely Moving: 🐢 📍 Chicago: +7% 📍 Minneapolis: +8% 📍 San Jose: +9% 📍 Providence: +10% If you remember Econ 101 📚, your instinct says that when supply floods the market—especially in those +40% zones—prices must fall. So, why is single-family housing still so unaffordable? 🤔 The issue is the stubborn gap between the cost of owning vs. renting. Even where supply is exploding, the total cost of borrowing keeps the monthly mortgage payment significantly higher than market rent. 🏘️🆚🏢 Demand is paralyzed by affordability, despite the available inventory. We are witnessing a severe dislocation between supply dynamics and pricing reality. Something has to give. 📉 Are sellers in your area holding out for yesterday's prices, or is reality starting to set in? John Monteiro, BS Economics, MBA Jeff Satz, PMP Cary Brzezinski Andrew Li, CPA Tandy Robinson, CPA Douglas Swift #RealEstateEconomics #HousingSupply #MarketTrends #AffordabilityCrisis #Finance

When Urban Planning Meets Economics: Ensuring Plans Capture Real World Dynamics Earlier this week, a former colleague was telling me about her frustration with an urban regeneration project she’s been working on. Apparently, on paper the design was exemplary: vibrant public spaces, mixed-use buildings, a diverse housing mix. The list goes on. But as the project advanced, it seems the vision began to shift: ➡️ Retail space was reduced ➡️Housing skewed toward the luxury segment ➡️Public realm investments were scaled back In my view, this wasn’t a failure of design. It was a predictable shift driven by economic forces. Markets, financing constraints, and risk assessments inevitably reshape projects once they leave the design stage. Understanding those forces isn’t a “nice to have”, it’s essential if a plan is to survive contact with the real world. Three economic lenses can help urban planners safeguard their vision: ✅ Opportunity Cost Every site has competing possible uses. If the financial return on premium apartments outstrips that of affordable units, development partners will push in that direction. Anticipating these trade-offs allows planners to identify which elements of their vision are most exposed to market pressures. ✅ Risk and Timing Developers often optimise for risk-adjusted returns, not just raw profit. If certain uses offer faster completion or easier financing, they will rise in priority. Planners who understand how risk is priced can negotiate phasing or incentives that protect longer-term public value. ✅ Externalities Some of the greatest public benefits, such as improved health outcomes from green space or increased footfall for local businesses, rarely appear in a pro forma. Recognising where value leaks from private balance sheets can help make the case for targeted public investment or policy support. It is often accepted that urban planning blends design, engineering, and policy. Economics (and the market forces that shape cities), however, are often treated as an after thought. When planners add an economic perspective, they position themselves to move from reacting to market pressures to shaping them. The most resilient plans are those that perform well on both the masterplan and the spreadsheet. —————— I post about Urban Economics & the hidden side of cities to equip Urban Planners to make more informed decisions. Follow me for more insights. #urbaneconomy #urbanplanning #urbandesign #sustainabledevelopment

When tracking regional positive and negative demand shocks, one of the important variables to watch in housing is net domestic migration. As we saw during the Pandemic Housing Boom in places like Austin, Southwest Florida, and Boise, net domestic migrants (i.e., Americans) often come with higher incomes and therefore have a disproportionate impact on housing demand relative to natural population growth. The Austin, TX metro area recorded +43,961 net domestic migrants between July 2020 and July 2021, followed by +37,652 between July 2021 and July 2022. More recently, that trend has rolled over hard. Between July 2023 and July 2024, the Austin, TX MSA saw 13,980 net domestic migrants—a 68% decline from the July 2020–July 2021 pace. The extent of housing overheating in the Austin metro—with metro home prices there rising around 70% during the Pandemic Housing Boom, making it the second-most “overvalued” housing market by Q2 2022—combined with this sharp rollover in net domestic migration helped produce a significant housing demand shock. As domestic high-income migration to Austin, TX metro slowed, the market increasingly had to rely more on local incomes, which had already become more stretched by elevated prices and rents during the boom. At the same time, Austin had a large pipeline of both multifamily and single-family supply coming online into the shifted market. As that supply delivered—and builders adjusted pricing and incentives to meet the market—that put additional pressure on the resale market inventory. Together, these demand and supply dynamics sharply altered the supply–demand equilibrium in the Austin housing market, manifesting in a large jump in active inventory for sale and a material home price correction. ------------ Sreenshot below via the ResiClub Terminal: https://lnkd.in/gbG2XNr9

Real estate investors are missing this. But here's what the data actually shows. These specific markets are about to shift first. Smart money follows patterns, not headlines. While everyone's watching broad market trends, the real opportunity lies elsewhere. It's in micro-market intelligence. Today I'm breaking down the exact submarkets showing early recovery signals. Across Texas's major metros. Dallas-Fort Worth tells the clearest story. Inner-ring properties near job centers are firming up faster than expected. B and C classifications specifically. The key? Light new construction pipeline. But here's the twist. Avoid anything shadowed by those massive Class A developments. They're still offering concessions through 2025. Your sweet spot: two-bedroom units near employment hubs. Where rent-to-income ratios stay below thirty percent. Houston presents a different puzzle. The western and southwestern corridors look promising. Near Medical Center and energy services. As 2026's construction pipeline shrinks. But stay away from distant markets with active development. And insurance headaches. Pro tip: flood due diligence isn't optional here. It's survival. Focus on economic vacancy recovery. Paired with renewal-first strategies. Austin's suburban Class B pockets are your early movers. Especially where they're not competing directly with new Class A properties. Urban areas are still working through heavy lease-ups. And tech sector volatility. The edge? Position below new construction rents. With measured rent-to-income ratios. San Antonio offers the most stability. Medical Center area, Westover Hills, and employment-adjacent areas show steady fundamentals. South and Southeast near Brooks, Port SA, and Toyota suppliers. Thanks to smaller development pipelines. Watch for sudden lease-up clusters. They could disrupt micro-markets. The pattern is clear. Job proximate, supply constrained submarkets win first. With resident focused execution. Track these signals. Validate with current data. And position accordingly. What patterns are you seeing in your market? The smartest investors are already positioning in these micro-markets. What's your biggest challenge in identifying early market shifts?