Housing Development Insights

Fascinating new economic research shows Opportunity Zones have created far more housing than previously known (313,000 units) and at far cheaper subsidy cost than most people realize ($26k/unit) -- making OZs perhaps the most efficient, effective housing supply creation program in existence. I suggest we double down on what actually works, eh? The groundbreaking research was published yesterday by the Economic Innovation Group. The authors concluded that OZ are "dominating other housing tax incentives" in terms of production and efficiency. OZs provide capital gains tax benefits to incentivize long-term investments (10+ years) in designated lower-income neighborhoods. Among their findings: 1) Prior to the legislation, the neighborhoods that became Opportunity Zones had been "left behind" -- economically challenged areas seeing no housing supply growth for a decade. Since then, we've completed 313,000 new housing units across OZs nationally, with more still under construction. See chart below for an absolutely wild visual of this impact. 2) Opportunity Zone neighborhoods now outpace the national average in creating new housing supply. This is another crazy stat because "these are genuinely distressed communities," as one of the authors, Adam Ozimek, noted. He added that some reporting suggesting otherwise has centered around an "unrepresentative handful of outlier anecdotes." 3) OZs account for 48% of new housing in designated tracts, 16% across all low-income communities, and 4% of all new housing nationally. One of the report's authors, John Lettieri, wrote that "these are astonishingly large results" impacting not only urban areas, but also suburban and rural and in between. 4) At a subsidy cost of just $26k/unit, co-author Benjamin Glasner noted that OZs are "vastly cheaper than traditional housing subsidies" for taxpayers. "The results underscore that flexible, market-driven tax incentives can mobilize private capital, unlocking significant investment potential in distressed communities." 5) Why are Opportunity Zones so effective and efficient? Unlike other programs, OZ projects have a "by-right" qualification with no bureaucratic pre-approvals. It's a federal tax benefit that doesn't require approval from cities to tap into (other than standard permits etc. to build) or special connections to access. It turns out simpler is better and faster. We should incentivize the creation of things we need more of as society. We need more housing. So let's lean heavily on programs that actually work. And OZs clearly work well. Encouraging to see that HUD Secretary Scott Turner -- along with policymakers on both sides of the aisle -- want to extend and expand Opportunity Zones. Perhaps even to include for-sale homes in addition to rental apartments. Bottom line: Opportunity Zones, in Glasner's words, "may be the most effective pro-housing supply policy in America today." Let's double down on what actually works. #housing #apartments

Maine just legalized 3 units per lot statewide. No planning board approval needed for 4 units or fewer. But the real breakthrough isn't the density. It's what they eliminated: Maine has seen the biggest house price growth in the US since 2019. The median cost is $400k, nearly double what it was 6 years ago. Radical change was needed. So they broadly legalized ADUs as part of the larger package of reforms. Including sweeping changes to zoning and land use regulations. Here's what LD 1829 actually does: 1/ Density: • Maximum 2 off-street parking spaces for every 3 units • Three dwelling units per residential lot is now legalized • Affordable housing developments get 2.5x the base density allowance Municipalities are now required to permit multiple dwelling units per residential lot. 2/ Review Processes: • All planning board members must attend mandatory training • No planning board approval needed for projects with four or fewer dwelling units • Wastewater verification and subdivision threshold "loopholes" have been simplified Required planning board approval for smaller projects is prohibited. 3/ Other Changes: • Owner-occupancy mandates for ADUs eliminated • Uniform dimensional standards for multiple-unit dwellings same as single-family homes • Minimum lot sizes in growth areas capped at 5,000 SF with 1,250 SF per dwelling unit density This is the density breakthrough. Maine now allows up to 4 units on lots in growth areas, with just 1,250 SF of lot area per unit. That's 4x the housing on the same land. Small developers can finally compete without needing millions in land acquisition. Maine eliminated barriers that made small-scale multifamily difficult to build. The timeline for these changes: Applies immediately: Fire sprinklers, ADU definition, and mandatory training. July 1, 2026: Core zoning and density changes. July 1, 2027: All other municipalities. The bigger picture: Maine has shifted how housing density and development approval is processed. Something more states should follow. Read the full report linked in the comments.

The New York Times just published a piece on housing that leads with our team's research — and I'm grateful they're centering the question that should be at the heart of every housing conversation: building for whom? For years, the narrative has been simple: just build more housing and prices will come down. But our analysis of six high-growth metros shows it's not that straightforward. Take Phoenix. The city built aggressively. New units had a vacancy rate over 9%. Yet rents for extremely low-income households jumped 26.7% while rents for high-income households actually fell by 5.3%. Or Seattle, where our team found lower-income households saw rents rise faster than wealthier ones despite new construction coming online. The pattern was consistent across Atlanta, Dallas, Houston, and Washington D.C. too: new supply didn't translate to affordability for the people who need it most. As I told the Times: "You can't just build, build, build and think it's going to work out for everybody in the end. You need to think about what you're building and who you're building it for." The housing crisis is solvable. But the solution isn't just "more supply." It's the right supply, built intentionally for the people who need it most. Proud of our team for this essential research. Read the full NYT coverage: https://lnkd.in/eFXRiBEQ Read our complete report: https://lnkd.in/edxpjA_f

Construction Gridlock: 1,800 Projects on Hold and No Clear Path Forward UK construction is grinding to a halt. Over 1,800 high-rise building applications are stuck in the Building Safety Regulator (BSR) approval process. Fewer than a dozen have been approved, stalling sites, pushing up costs, and damaging investor confidence. Safety is essential but when regulation blocks delivery without clear guidance, the whole sector suffers. The Bottleneck Only 14 of 45 Gateway 2 projects approved Just 1 of 13 Gateway 3 submissions passed 75% of applications rejected due to missing/incorrect info Approvals taking 10–17 weeks Backlog dates to autumn 2024, after collapse of private building control firms Why the Hold Up? The BSR cites poor documentation and gaps in fire and structural design fundamentals that should be well understood. But the regulator is also criticised for offering limited guidance on what compliance looks like. The result? Even well designed schemes are getting stuck. What’s at Risk Delayed housing and commercial developments Increased programme and financial risk Growing uncertainty for clients and investors Slowed delivery of critical infrastructure What Needs to Change Clearer, co-written guidance from BSR and industry Better upfront design coordination at RIBA Stage 3 A more responsive Gateway system Ongoing dialogue between regulators, contractors, and clients A Call for Action The sector must step up but so must the system. If we don’t unblock this process now, we risk freezing progress at a time we can least afford it. Have your projects been delayed at Gateway 2 or 3? Let’s talk about what’s needed to move forward. #Construction #BuildingSafety #BSR

In 2020, Peter Thiel sent Mark Zuckerberg an email identifying a specific political risk: when housing, healthcare, and education become unaffordable through market mechanisms, people stop believing markets work. Since 2000, hospital services have increased by 281%. College tuition by 197%. Childcare by 159%. Housing by 111 percent. And over the same period, televisions fell 98% in cost. Software fell 73%. And wages increased only 131%. Housing is the most visible of these outcomes. The median American home now costs more than 5 times the median household income. In San Francisco and Los Angeles, that ratio exceeds 11 and 12 times. The first-time homebuyer share of purchases has fallen to an all-time low of 21 percent. For the generation entering its peak earning years, the primary asset that built middle-class wealth for their parents is structurally out of reach. This dynamic reflects how the system is structured rather than a simple market flaw. For 65% of Americans, housing serves as the primary retirement asset. As supply stays constrained, home values rise, reducing affordability for new buyers. Our research team traced the full policy history of how housing became structurally expensive, which policy interventions could actually work, and which designs can allow the next generation to access the same system on similar terms. Read the full Deep Dive here: https://lnkd.in/gjucRC2g

The Missing Middle is Still Missing: Why I Believe We Need More Than Just Luxury and LIHTC In most cities, we have two dominant housing models: -Luxury apartments with rooftop decks and garage parking, funded by private capital, marketed at the highest rent the market will bear. -Affordable housing financed through Low-Income Housing Tax Credits (LIHTC), often restricted to those earning 30%–60% of Area Median Income. What’s missing is everything in between. What is “Missing Middle Housing”? Missing Middle Housing refers to the types of homes that used to be common but have largely disappeared from new construction: -Duplexes -Fourplexes -Bungalow courts -Walk-up apartments above corner stores -Small multi-family homes in walkable neighborhoods -Creative infill developments These housing types fill a crucial need for working-class people, teachers, firefighters, baristas, social workers, and young families who don’t qualify for LIHTC housing but also can’t afford luxury rent or a down payment on a single-family home. Why It’s Still Missing The reason we don’t see more of this is not because there’s no demand. It’s because our systems actively work against it. Zoning laws that ban multi-family housing in most neighborhoods Parking requirements that inflate costs and reduce feasibility Financing models that favor large-scale over small-scale development Public resistance to change, often rooted in misinformation or exclusion Developers aren’t incentivized to build Missing Middle housing. Cities rarely streamline it. And when we talk about housing policy, this middle tier gets lost in the noise between high-end and deeply affordable. What We Need to Change *We need zoning that allows for gentle density. *We need capital that supports small-scale, context-sensitive development. *We need public conversations that value housing diversity as a community strength. We also need to stop pretending that LIHTC alone can solve our affordability crisis. It’s one tool. A powerful one, yes. But it cannot be the only strategy on the table. It’s Time to Build the Middle When we build only for the top and the bottom, we leave out the majority of our communities. We erode economic mobility. We undermine walkability. We disconnect our neighborhoods from the people who hold them together. If we’re serious about equitable cities, we have to bring back the middle. Not just in price point, but in form, in access, and in who gets to live where.

Something is very wrong in the housing market. In my LinkedIn feed, I keep seeing two striking themes: -First-time homebuyers desperate to find an affordable place to call home. -Real estate developers and property owners claiming they're “focused on expanding affordable housing options.” It got me thinking. Why are so many motivated, qualified buyers unable to find affordable homes, while developers continue to talk about affordability like it’s a done deal? The pieces don’t fit. So, I reached out to a few friends and industry contacts working in real estate, lending, and housing policy. Here are a few things I can tell you for certain: -Affordable housing projects are often proposed with price tags that are anything but affordable for actual first-time buyers. -Even when subsidies or incentives exist, they’re frequently buried in complex red tape, making it nearly impossible for those who need them most to benefit. -Market pressures and profit motives often mean homes meant to be “affordable” are priced just high enough to exclude the very people they’re intended to serve. These issues don’t stem from lack of demand or a shortage of buyers; they’re rooted in how “affordable housing” is defined, structured, and delivered. Imagine you’re a young professional or family hoping to finally own your first home—only to find that even “affordable” housing is out of reach, or to be told to "just keep renting." (Really, think about that for a moment. Imagine spending your weekends touring places, crunching numbers, and barely making the down payment—only to realize it’s still out of reach.) Creating a pipeline of homes people can genuinely afford requires intentional design, not just slogans about “affordable housing” or “accessible living.” If your company or organization promotes affordable housing without setting prices or policies that truly match community income levels, you’re part of the problem. First-time buyers aren’t just looking for the chance to “get in the market.” They’re trying to build a stable life, and a home is a huge part of that dream. Be better. Do better. Build better. #allofus

The U.S. multifamily housing market just hit a critical inflection point. Over the past 12 months, multifamily construction completions outpaced new starts by 223,000 units, signaling a major contraction in the development pipeline. In fact, the total number of units under construction is now at its lowest level since 2021, and industry experts say the trend will likely worsen before it improves. In May, apartment construction starts dropped 30% from April, according to U.S. Census Bureau data. Just 316,000 units in buildings with five or more units broke ground—a steep fall that wiped out the modest recovery seen in February, March, and April. It's a jarring reversal that underscores how volatile—and fragile—the multifamily market remains. While some blame recent tariffs for rising construction costs, the steep drop in starts began well before any trade policy changes took effect. Most economists point to elevated interest rates as the real culprit. Financing large-scale projects has become prohibitively expensive, forcing many developers to pause or cancel new builds. Still, there’s a glimmer of hope. Multifamily building permits actually rose 1.4% in May, and are up 13% year-over-year. The National Association of Home Builders (NAHB) says that may indicate May’s weak start numbers were more “noise than signal.” But with fewer projects breaking ground and the pipeline thinning, optimism remains cautious. REITs and major developers, despite pledging to restart their pipelines in 2025, have been clear that economic uncertainty and construction cost volatility are major headwinds. Tariffs may add some pressure, but financing constraints and return hurdles remain the bigger bottlenecks. Meanwhile, rental demand continues to grow. According to CoStar, the U.S. apartment vacancy rate peaked in late 2024 and is expected to trend downward through 2025. With completions forecasted to drop 45% this year, the supply-demand imbalance could drive tighter markets—and, potentially, higher rents. The bottom line? The multifamily sector is entering a constrained phase, marked by shrinking supply, suppressed starts, and surging demand. Unless financing conditions improve soon, developers may find themselves chasing a market they can’t build fast enough to meet.

I spoke with Bloomberg yesterday about the state of the housing market. Here are a few key takeaways: Easing Rate Lock-In Effect: Currently, 81 percent of mortgaged homes have a rate below 6 percent, a decrease from the peak of approximately 93 percent in 2022. Despite this improvement, the rate lock-in effect continues to constrain the market's full potential. Regional Market Variations: While the national housing market is trending towards a buyer's market, significant regional differences persist. Markets in Southwest Florida and parts of Arizona, Texas, and Colorado have weakened, whereas pockets in the Northeast and Midwest, including my hometown of Rochester, NY, remain seller's markets. Signs of Improvement: Although overall sales activity remains subdued, there are tentative signs of modest spring recovery. Pending home sales and purchase mortgage applications have seen slight increases compared to last year. This slow thaw is driven by factors such as wage growth outpacing house price appreciation, improving affordability, and increasing inventory. Life Events Driving Demand: Life events continue to drive housing demand. However, affordability challenges and macroeconomic uncertainties are keeping many potential buyers on the sidelines. Nonetheless, the slight uptick in activity offers cautious optimism for the remainder of the year, especially if interest rates moderate (though we're not predicting significant mortgage rate declines this year). Check out the full interview below! https://lnkd.in/eUSiKkVJ

India’s cities are expanding at an unprecedented pace. Affordable housing, however, is not keeping up. The future urban challenge is not only home ownership. It is the availability of quality, well-managed rental housing for the people who form the backbone of our cities. This is where Charitable Trusts must evolve. Amending the Charitable Trust Act can play a transformative role by enabling trusts to develop, own, and manage affordable rental housing at scale—as a service, not merely as a project. This includes: • Service housing for essential workers such as healthcare staff, municipal employees, and support services • Industrial housing for factory and logistics workers located close to employment hubs • Student housing that is safe, affordable, and proximate to educational institutions • Trust-led rental housing for vulnerable and transitional populations Such an ecosystem would reduce urban congestion, improve workforce productivity, and enhance quality of life—while ensuring long-term affordability, social accountability, and institutional governance. If India is to build inclusive cities, housing policy must move beyond ownership models and embrace rental infrastructure as a public good. #AffordableHousing #UrbanIndia #RentalHousing #CharitableTrusts #PolicyReform #InclusiveGrowth #CityPlanning #WorkforceHousing #StudentHousing #SocialInfrastructure