To address the nation's housing shortage that will improve affordability for buyers, local governments and consumers must do their part, the head of one of the nation's largest homebuilders says.
Municipalities and residents generally need to be more accepting of development, PulteGroup CEO Ryan Marshall told Willy Walker, chairman and CEO of the Walker & Dunlop real estate finance services brokerage, on a webcast Wednesday.
"We are a not-in-my-backyard population, and so everybody loves the idea of growing the economy, growing more jobs, until it relates to putting new development next door to you or across the street from where you currently live," Marshall said. "And then all of a sudden, we become anti-growth. Until we figure out how to solve that as a country, we're going to continually and perpetually have a chronic undersupply of housing."
Some industry analysts agree, though municipalities counter by saying they have the difficult task of balancing the need for growth with residents' wishes for quality of life.
Atlanta-based PulteGroup is the nation's third-largest homebuilder based on 2023 sales, according to Builder magazine. The company builds homes for first-time, move-up and 55-and-over buyers under the Pulte Homes, Del Webb, Centex, DiVosta, American West and John Wieland Homes and Neighborhoods brands.
Experts differ on the number of housing units needed nationwide, but Marshall said Pulte believes the U.S. could use 1.5 million a year, a total that includes for-sale homes and apartments. The country has been well short of that number for the past decade or longer, according to Marshall. Estimates of the current housing deficit range from 2 million to 7 million units, with Marshall estimating 3 million.
Home prices rising
In recent years, escalating prices of new and existing homes, along with mortgage rates above or near 7%, have hampered housing affordability, making it increasingly difficult for first-time buyers to jump into the real estate market.
Prices of existing single-family houses across the United States recently hit their 15th-consecutive record high, according to the latest S&P CoreLogic Case-Shiller U.S. National Home Price Index. The median price for new homes sold in September was $426,300, virtually the same as in September 2023 but still elevated and out of reach for some buyers.
From the Homes.com blog: Setting Your Budget: How Much Should You Spend on a House?
While Pulte and other builders have plenty of land in the pipeline, there's a limit to how much can be developed in any given year because it's controlled by local municipalities, according to Marshall.
"If we can supply a little bit more in both single-family and multifamily, I think that would probably be the single biggest and most powerful tool we could have to bring down prices and make housing more attainable and more affordable for more buyers," he said.
In many cases, grass-roots efforts by homeowners to oppose development are successful because city council members want to please their constituents and get re-elected, according to Ken Johnson, an economist and the Walker family chair of real estate at the University of Mississippi.
"Developers get so much resistance at the local level that it's hard to build," Johnson said in an interview. "Homeowners aren't seeing the long-term goal."
Managing growth responsibly has been a decades-long challenge for many municipalities, according to Scott Singer, mayor of Boca Raton, Florida, a city of about 100,000 residents north of Fort Lauderdale.
"We have welcomed new investment, and a lot of it, since the pandemic while maintaining the charm of a smaller city that punches above its weight when it comes to business strength," Singer said in a text.