Addressing Affordability in Housing

Builders and developers alike are finding that building more affordable home products will result in sales


The state of affordable housing in the U.S. is something that cannot be ignored. There are serious obstacles for people trying to buy a home, and it seems price points have risen in every segment of the market. While some builders are attempting to maintain growth in the luxury segment, most of the industry has come to acknowledge that new approaches are needed.

A recent survey conducted by the National Association of Home Builders found startling evidence of these challenges in the way of consumer confidence. In fact, the findings indicate that four out of five households believe we are in a housing affordability crisis. That is a staggering statistic. While there are many factors contributing to these concerns, there are also many strategies being implemented to combat them.

There are several factors contributing to the rising costs of building a home. Rising costs for land, especially in highly desirable metro areas, is one major component. The cost of materials and the way tariffs impact those costs is another factor. The lack of skilled labor is the third major factor contributing to price.

Building affordable homes can lead to profit as homes turn over faster and the prices appreciate quickly, according to a survey by RCLCO Real Estate Advisors. Builders creating a product that is affordable for a first-time buyer will yield results.

Homebuilders are combating the rising costs of land is by implementing a number of approaches, whether it is through building multi-story townhomes on small lots to maximize space, adding rooftop decks and indoor-outdoor living spaces, or even something as simple as designing open floor plans for a more spacious feel.

Increasing the number of units per acre seems to be a popular solution for many builders and is encouraging imaginatively designed infill projects. Infill projects push architects to plan resourcefully with the space at hand.

Another way this issue can be mitigated is by taking advantage of the opportunities presented to them through ESG investments.

“Builders and developers will be the beneficiaries of an expanded pool of funds available to them,“ explains Manuel Lazerov, President of Infrastructure Financial, Inc., in his column.

Builders can take advantage of the added funds for projects like workforce housing, while simultaneously giving back to the communities in which they are building.

The materials used in a project is one factor that homebuilders have a bit of control over, as they can choose to use more or less expensive products depending on what is most necessary for a given project.

Patrick Duffy, Principal of MetroIntelligence, expands on this idea in his column. He argues that researching ahead of time is a key strategy for builders to ensure they are getting the best price for materials. The other key is recognizing that prospective homebuyers may not be opposed to paying more for certain features that they believe add value to the home.

“For example, with climate change promising higher temperatures and stronger storms, investing in the most energy-efficient windows and doors, resilient roofing tiles, waterproof stucco or siding, and water-permeable concrete surfaces can appeal to all types of buyers no matter where the current kitchen and bath styles are trending,” Duffy explains.

Another solution to saving on the cost of materials can be paired with combating land challenges, as attached homes or multifamily homes can implement shared walls and spaces.

Builders should look into incentives for building more sustainable homes, which can also help to reduce costs. In California, building energy-efficient homes has become the standard with Title 24; other states are likely to follow suit. Professionals can take advantage of existing incentives to save money while adding value.

The challenges with affordability may seem difficult to overcome, but they are encouraging creative innovation throughout the industry.

The skilled labor shortage is something affecting the industry on a large scale. In an interview last month with Builder and Developer Magazine, Robert Dietz, Chief Economist of the National Association of Home Builders, made the case that the skilled labor shortage is a generational challenge. A generation of skilled labor workers is retiring, and a new generation of laborers will need to be trained.

“It’s going to require recruiting tens of thousands of new workers every year into the industry, training them (because it’s a skilled worker shortage), and also, working to add different kinds of construction techniques to the market,” Dietz stated.

Experts across the board believe there are a number of possible solutions, but that implementing a variety of strategies is the best approach.

Homebuilders should seek out the resources available to them through industry organizations. Builders can also look into implementing a variety of resourceful designs. In any case, finding a way to build homes at a price point that is affordable to first-time buyers is going to be crucial moving forward.

Julia Edinger is the Editor for Builder and Developer Magazine. She can be reached at

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