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More Than a Market Cycle

I’ve been in this industry long enough to see markets rise and fall, interest rates swing wildly, and consumer sentiment shift almost overnight. We’ve seen booms that made headlines and busts that left scars. Yet through it all, one constant has remained: real estate professionals find a way forward.

But today, we are staring at something different — not a normal cycle, not a temporary market hiccup, but a fundamental challenge that threatens the very foundation of American homeownership. Housing affordability and lack of inventory are not just economic problems. They are human problems. They are reshaping families, communities, and opportunities in ways we cannot afford to ignore.

The numbers are sobering. According to the National Association of Realtors, the U.S. has faced a housing shortage (or “supply gap”) of 5.5 to 6.8 million units since 2001 due to underbuilding. (National Association of REALTORS®) The exact figure depends on methodology (whether one counts demolition, obsolescence, household formation, etc.). (Brookings)

Even more cautious estimates show significant deficits: Zillow estimates a shortfall of 4.5 million homes in its own studies. (Urban Institute)

These gaps are not just numbers on a page — they translate into homes that never exist, buyers sitting on the sidelines, and frustration in communities everywhere.

The Crisis Defined: Why Affordability Is Collapsing

We cannot solve a problem unless we are honest about what’s driving it. And make no mistake: this crisis is the result of multiple forces converging at once.

Zoning and Permitting Bottlenecks.

Restrictive local zoning and regulatory delays are not just policy abstracts — they’re very real forces throttling housing supply. Studies and industry reports frequently point to zoning codes that limit density, prohibit multi-unit housing in single-family zones, demand large lot sizes, enforce excessive setbacks, and restrict accessory dwelling units. All these constraints tilt development decisions toward higher-cost, single-family homes rather than more affordable infill or multifamily housing.

But zoning is only part of the problem. The permitting and approval process itself has grown more cumbersome. According to one analysis, the average time from submitting a building permit to completing a single-family home in 2023 was 10.1 months, of which 1.5 months was the authorization phase before construction even begins. (Eye On Housing) That period has lengthened by roughly three months since 2015. (cloudpermit.com)

In jurisdictions with slower reviews, delays stretch even further. In Washington state, for example, research shows an average permit delay of 6.5 months, which adds tens of thousands in holding costs to each new home and prices many buyers out of the market. (Washington Center for Housing Studies)

Across the development industry, delays are widespread. A 2024 survey by the National Multifamily Housing Council found that 70% of developers reported construction delays in the prior three months, and of those, 77% said permitting was a contributing factor. (National Multifamily Housing Council)

Even in high-density markets, zoning remains a choke point. In San Francisco, reports have documented that initial permit stages can take 450 days, with further approvals — for multifamily or single-family housing — stretching into years due to environmental reviews and neighborhood appeals. (Wikipedia)

What this means in practice: a developer may spend six months or more in the permitting queue before doing a single shovel of work. Every month of delay increases interest costs, carrying costs, insurance, financing risk, and the uncertainty of material/labor prices rising further — all of which ultimately inflate the price of the finished home or kill marginal projects entirely.

If we want to address the affordability problem meaningfully, we must treat zoning and permit reform not as optional policy debates but as core levers in the solution set. Reforming zoning to allow more density, codifying firm timelines for approval, removing duplicative design reviews, and automating permit workflows are not nice extras — they are essential for restoring supply and bringing down costs.

Rising Construction Costs.
Material and labor costs have surged. According to the National Association of Home Builders (NAHB), construction costs accounted for 64.4 % of the average price of a new home in 2024 — up from 60.8 % in 2022. (National Association of Home Builders)

In addition, NAHB reports that metal products and equipment parts saw year-over-year increases of 24.2 %, while structural metal rose ~13.6 % etc. in June. (National Association of Home Builders)
Further, NAHB/Wells Fargo data indicate that since December 2020, building materials have increased ~34 % — a figure often cited in trade-policy discussions. (National Association of Home Builders)
These cost pressures push builders toward higher-margin developments and make entry-level creation harder to justify.

Rate Lock-In (Mortgage “Lock-In”) Effect.
One of the best-documented constraints on supply is that many homeowners are reluctant to give up ultra-low mortgage rates. Redfin reports that as of first quarter 2024, 85.7 % of mortgaged homeowners had interest rates below 6 %. (Redfin) 

That means fewer people are willing to list homes when their replacement mortgage could cost much more. Redfin also notes that the “lock-in effect” is beginning to ease, but the impact remains substantial. (Redfin)

Home Price Growth Outpacing Wage Growth: A Reality, Not an Anecdote

This isn’t just speculation — the data clearly show that home prices have climbed faster than incomes in recent years, driving affordability deeper out of reach for many American families. According to the Harvard Joint Center for Housing Studies, in the 100 largest metropolitan markets, the median sale price of a single-family home was 5.6 times the median household income in 2022 — a ratio that reached an all-time high. (Harvard Joint Center for Housing Studies) To put that in perspective, as recently as 2019, the price-to-income ratio nationally was about 4.1. (Harvard Joint Center for Housing Studies)

By 2024, that same ratio was hovering near 5.0 in many metro areas, still sitting at historically elevated levels—well above long-term norms. (Harvard Joint Center for Housing Studies) Over the last several years, home prices have appreciated by more than 50-60% in many markets, while household incomes have grown far more modestly. (National Association of Home Builders)

Another angle: the National Association of Realtors’ Housing Affordability Index often shows that housing is less affordable now than in past periods—even when factoring in mortgage rates and income growth. (National Association of REALTORS®+2National Association of REALTORS®+2) For example, in June 2025, the index was 94.4 — meaning that a median-income family earned only 94.4% of the income needed to qualify for a mortgage on a median-priced home under standard assumptions. (National Association of REALTORS®)

All of this means that even in the best of times — with favorable mortgage rates — many families struggle to bridge the gap between what they earn and what homes cost. Without acknowledging and confronting this disparity, we risk writing policy essays that don’t match lived reality.

This is the context in which we operate. Every negotiation, every closing, every conversation with a buyer or seller is shaped by these realities.

The Human Impact: Faces Behind the Numbers

Numbers help frame the magnitude, but they do not capture the heartbreak and lived experiences. The real cost of this shortage is measured in people.

It’s the young couple who finally got pre-approved, only to lose out on five straight bidding wars. They’ve done everything right, yet they hear again and again: “It’s not enough.”

It’s the empty-nester living in a five-bedroom house they no longer need, staying put because every condo or townhome in their area is either unaffordable or unavailable.

It’s the municipality where teachers, firefighters, nurses, and essential workers can no longer afford homes near where they work, forcing longer commutes, fracturing communities, and weakening local cohesion.

And it’s us — real estate professionals — who see these stories firsthand. We are not just executing transactions; we’re witnessing dreams deferred, mobility constrained, and opportunities lost.

This is not sustainable. And more importantly, it is not acceptable.

Beyond the Problem: Real Solutions

If we are to be remembered as leaders, then we must do more than describe the crisis. We must propose and fight for solutions that can succeed in the real world. Here are four critical areas where change is possible — if we have the courage to demand it.

1. Unlock New Supply

We cannot transact what does not exist. The most urgent need is to build more housing — especially housing ordinary families can afford.

That means pushing for zoning reforms (including upzoning and flexible density) in places where infrastructure permits it. It means championing permitting reforms to shorten delays to groundbreaking. It means creating incentives for entry-level and workforce housing, so builders don’t feel compelled to chase only high-end margins.

Adaptive reuse is another powerful tool. Across many cities, office, retail, and industrial spaces sit underutilized. With the right incentives, many of these structures can be transformed into residential units — often more quickly and less expensively than new ground-up builds.

We must also press for infrastructure funding to support new housing — roads, utilities, transit connections — so new developments don’t get stalled waiting for external systems.

2. Promote Smart Financing Tools

Even when more homes exist, affordability will remain a barrier without creative and responsible financial products.

Down-payment assistance programs — whether grants, forgivable loans, or matched savings — can help close the gap for first-time buyers. Shared equity models — where a nonprofit or public partner shares in equity upside — can reduce initial costs while preserving long-term equity growth for buyers.

FHA, VA, and other government-backed programs should be modernized to reflect today’s housing market, not left mired in outdated limits or restrictions.

Crucially, we must invest in financial-literacy education. Many buyers struggle not because they lack ambition, but because they were never taught financial tools: credit, debt ratios, rebuilding credit, optimizing savings, etc. Partnerships with nonprofits, colleges, community groups, and even fintech firms can help fill that gap.

3. Encourage Mobility

Too often, supply is trapped because people with favorable mortgage rates refuse to sell. The “lock-in effect” must be addressed.

One approach: tax incentives for seniors or homeowners who downsize, making it less financially painful to move. Another: programs that allow eligible sellers to port favorable mortgage terms or lock portions of their current interest rate under constraints.

Creative pilot programs could allow “bridge mortgages” where a homeowner has temporary access to a favorable rate while selling, or partial interest rate subsidies to mitigate the jump to the next home’s rate.

The goal is simple: loosen inventory so the market can breathe again.

4. Educate and Empower Consumers

At its heart, real estate is a people business. We are guides, advocates, and translators for our clients.

We must commit not just to “closing deals,” but to educating. Show buyers financing models they didn’t know existed. Help them evaluate tradeoffs (e.g. lower-cost neighborhoods vs. transportation costs). Connect them with assistance programs. Help them plan for rate changes over time.

Over time, our role as educators may matter as much as our role as dealmakers.

A Call to Leadership

This industry has always been about more than closings and commissions. What we do shapes neighborhoods, strengthens communities, and builds the foundation for generational wealth. That’s why this moment matters so deeply.

Years from now, when history looks back on this era, the question will be asked: Did we allow the dream of homeownership to shrink into a privilege for the few, or did we fight to keep it alive for the many?

I believe we will be remembered as those who acted. Who refused to let barriers define us, and instead broke them down. Who saw families being left behind and told them: you will have a chance.

This is not just about houses. It is about hope. It is about preserving the promise that in America, if you work hard and play by the rules, you can own a home and build a future.

Let us rise to the challenge. Let us be the generation that didn’t flinch, didn’t stay silent, but stood together to protect what matters most. The legacy we leave will not be written solely in policy or numbers, but in the lives of millions of families who will one day say, “Because of them, we made it home.”

With conviction,
John G. Stevens