November 6, 2026 — Our team attended John Burns' 2027 Housing Market Outlook in New York, which brought together builders, land developers, and capital providers to discuss expectations for the year ahead. Our Founder and CEO, Margaret Whelan, spoke on the panel "Deal Making: Buy, Sell or Pass Your Company on to the Next Generation," moderated by John Burns. The panel addressed how owners should weigh buying, selling, or passing their company to the next generation in a shrinking industry.
The room was cautious on the macroeconomic outlook but constructive on the industry's long-term fundamentals. Three questions dominated: how long rate pressure will last, where operators can add value to protect margin, and how capital should be allocated in a shifting market. Four themes stood out.
Housing is collateral damage to AI, war, tariffs, and policy. The AI-driven capex boom, elevated oil prices, and wage pressure from a shift in the immigrant labor pool are driving inflation and sustaining rate pressure. Panelists agreed rates will stay higher for longer, but there was no consensus on where 30-year mortgage rates will be a year from now, with estimates ranging from 6.5% to 8%. Lower birth rates, reduced immigration, and slower household formation suggest the issue may not be a national housing shortage, but a shortage of housing at the right price in the right location. Builders that stay acutely focused on their target customer will fare best.
Builders remain on solid, albeit challenging, footing. Despite ongoing affordability challenges, the industry is in a significantly stronger financial position than during the Global Financial Crisis. Housing production is 50% to 60% above the 2008-2012 trough, and homebuilder balance sheets remain healthy. Higher material and labor prices are compressing margins. AI adoption offers a path to better productivity, shorter cycle times, and less jobsite waste, and builders that lean into technology can offset some of that pressure.
Local land economics are magnified in a cycle. Land remains a local business. Dallas faces excess finished-lot supply and land price pressure, while Reno, Chicago, and Boise all have limited lot supply. There are few green shoots and little clarity heading into the 2027 spring selling season. So far, developers have robust balance sheets and are willing to wait out periods of reduced lot demand while managing cash flow.
Capital continues to flow freely: a solution seeking a problem. Liquidity is abundant across AD&C lending and land banking, and new capital continues to enter the sector. Most land bankers have long-term capital and disciplined structures, and we expect them to keep working collaboratively with builders as absorption remains challenging. Any distress on the margin will create land-buying opportunities for well-capitalized builders. There is no single right capital structure; builders that align theirs to their pricing, absorption, and margin strategy are best positioned to withstand the cycle.
Our Perspective: Consolidation will continue, with private builders commanding meaningful premiums. Despite the challenging rate environment, demand for quality private homebuilders remains strong. Well-capitalized public and private buyers continue to pursue growth, with established management teams, attractive market positions, and well-located land pipelines drawing the most interest. Buyers remain disciplined, but differentiated platforms are still earning premium valuations.
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