Kevin Oakley was thrilled to recently host
Ivy Zelman, Chief Executive Officer of
Zelman & Associates, on the Market Proof Marketing Podcast. Kevin and Ivy discussed a range of topics, including the housing industry for 2022 and beyond, she answers questions that home builders wrote in, she shares her thoughts on build-to-rent, as well as they discuss her book
Gimme Shelter: Hard Calls + Soft Skills From a Wall Street Trailblazer, when it’s okay to call people out by name, what drives her, and, of course, pancakes.
Housing Forecasts
Ivy shared her forecast for another strong year of starts for residential new construction after this year’s constraints to get supply to market. She credits the driving force behind the continued strength in the market with the pipeline of homes and communities coming and the recent land grab. Her forecast is contingent on rates not moving significantly higher, but the predictions are heavily connected to the speed and magnitude of the supply coming to market.
On the other hand, she believes home prices will likely begin to moderate as affordability pressure mounts. With the increased costs of land, labor, and materials, she foresees that if demand remains healthy the worst-case scenario could be that we see more incentives, which could lead to profitability squeezing and more competitive dynamics.
They also took a look further into the future about how the decelerating number of households throughout the decades will eventually impact housing if the level of supply grows too much in comparison.
Regionality
Ivy dives into some questions submitted by Market Proof Marketing listeners about the different markets across the country. She noted that red states are in a better position than blue states with a few anomalies. The southeast and southwest have the strongest household growth, and builders and developers have concentrated their capital allocation to those markets. That does create some risk with the amount of supply coming to those areas.
However, there are benefits and opportunities in markets outside those areas, including the Midwest. Areas with fewer public homebuilding companies often have a healthier dynamic because they don’t have those builders pushing up land prices, creating high supply, and yielding to pressure to move inventory.
Single-Family Build to Rent
Ivy and Kevin also discussed the build-to-rent market and how it is affecting land prices and how it will affect the future of homeownership. Ivy noted that $60 billion of capital had been publicly announced to pursue build to rent, and the companies behind the projects are willing to pay up for that land so that they can tell investors they’ve put their money to work. Ultimately, she believes that it can be a great product offering for some segment of the population, but with such a dramatic ramp of supply in the pipeline, there is a risk we’re going to overbuild without the necessary demand.
From Ivy’s book, Gimme Shelter
Kevin shared one of his favorite quotes from Ivy’s book. “Don’t try to manipulate people when your high-quality work should be enough.”
Ivy said her firm strives to provide an unbiased perspective within the industry and that their secret sauce comes from getting the real pulse of the market from homebuilding company owners and executives. They’re never trying to make the data and information fit in a box to support a view they already have. Instead, they utilize information to help them understand where the housing market is in the cycle and what the expectations can be going forward, never manipulating anything to make it fit a certain view.
Watch below or listen to the full podcast episode for more insights from Ivy Zelman and learn what has made her such a powerful force and leading expert within housing.
