Why Not Just Build More Houses? The Hidden Roadblocks to Solving the Housing Crisis

The Expert Podcast

Episode Description:

• Explores the simple question: If we have a housing shortage, why not just build more homes?
• Compares housing construction to other products like cellphones and appliances, highlighting longer lead times and complexity in housing.
• Breaks down the multi-step process of building a home—from acquiring land to design, permits, and actual construction—which can take years.
• Discusses how market conditions can shift drastically in the time it takes to build, affecting profitability.
• Explains why median-priced homes are hard to build profitably due to high fixed costs (permits, planning, carrying costs).
• Highlights that many builders only start to see sustainable profits in higher-end homes priced closer to $1 million.
• Shares real-world example of a Pennsylvania builder going out of business despite high housing demand—due to poor financial planning.
• Reveals how tight margins and overlooked fixed expenses (insurance, office costs, equipment amortization) can bankrupt a builder.
• Discusses pricing pressure: a house that should sell for $450K might need to be sold at $600K just to break even.
• Breaks down three main strategies to expand housing inventory:
  • 1. Build on open land – Cheaper but often far from job centers.
  • 2. Infill in urban areas – Closer to population but costlier and tightly regulated.
  • 3. Remodel or repurpose existing lots – Easier permitting but may displace current residents.
• Considers mobile home park redevelopment as a housing option—with pros and cons.
• Touches on how local government support or opposition can make or break housing developments.
• Discusses the challenge of zoning boards denying plans despite housing shortages.
• Notes how some developers shift to rental units (townhouses, condos), which doesn't fully solve ownership demand.
• States that the housing shortage is estimated at 5–6 million units, while only 1.5–2 million homes are built yearly.
• Emphasizes that most new builds serve current or future needs, not the backlog.
• Warns that it could take many years to reduce the gap—and future demand may keep rising.
• Concludes that housing construction is about complex math, long timelines, risk, and financial sustainability—not just picking up a hammer.