Affordability, Land, and Capital: Our Future Place Takeaways
Future Place 2026 highlighted a housing market under pressure from affordability constraints, uneven buyer demand, and a widening divide in land values by location. Despite a more challenging operating environment, homebuilder M&A activity remains resilient, supported by long-term buyers, including Japanese acquirers, who continue to look through the cycle. That said, buyers’ growing selectivity could weigh on valuations and shape deal structures.
For builders, developers, and capital providers, the central questions are increasingly where demand will hold up, which land positions will retain value, and how to price risk in a softer market. Four trends stood out from this year’s conversations:
Affordability Is Redrawing the Consumer Map
Entry-level homes have gone from the majority of the new-home market to a much smaller share. For example, in the Dallas-Fort Worth market, homes priced at or below $400K fell to 29% of the new-home mix today from 64% in 2018, while homes above $500K rose to 44% from 19%
With mortgage rates back above 7% and meaningful near-term relief unlikely, buyer traffic remains depressed, and builders are experiencing elevated cancellation rates. The strain is most acute at the entry level, where demand is likely to stay subdued until affordability improves. All eyes are on the 2027 spring selling season for some relief, though it’s not clear what might provide that relief as rates are poised to be higher for longer
Capital Is Abundant, but More Deliberate
There is irrational exuberance amongst the capital providers. They’re the primary participants at every conference we attend and oversupply is driving rates down in favor of our builder clients, though it’s also supporting land values
Non-bank capital, including private credit funds, land bankers, and family offices, is stepping in where traditional lenders have pulled back, with greater scrutiny of location, deal quality, and operator track record
Capital providers are favoring shorter-duration deals as longer-term land positions become harder to underwrite in an uncertain market
Land Pricing Is Becoming More Location-Dependent
Land in prime locations is expected to hold its value, while tertiary-market land prices are seeing sharper declines
As a result, the gap between land sellers’ price expectations and what established builders are willing to pay is widening, and land-position quality is likely to carry greater weight in builder valuations
A Softer Market Is Reshaping Home Pricing
The 2027 outlook is cautious: home prices will continue to soften, incentives and higher rates to persist, and housing starts to grow only modestly. Rate-sensitive buyers, rising inventory levels, and higher cancellations will likely keep pressure on pricing
Additional headwinds include geopolitical disruption in the Middle East, immigration enforcement weighing on labor availability and productivity, and visa limitations constraining housing demand
In response, some builders are shifting from mortgage-rate buydowns toward outright price reductions. However, unlike buydowns, price reductions reset comparables and are more difficult to reverse once conditions improve
Our Perspective: M&A Activity Remains Elevated, and Favoring Sellers
While the housing backdrop is challenging, the M&A market continues to demonstrate strength with new transactions being closed regularly. We are representing sellers in several key markets, where move-up product, robust lot positions, and an effective team are being rewarded with attractive premiums.
Please reach out for a confidential conversation to discuss your needs.