Recent events such as the ongoing California wildfires, freezing weather in the south, and President Donald Trump’s inauguration have dominated headlines. These topics were also at the forefront of discussion during the Jan. 22, 2025 Walker Webcast featuring Zelman & Associates’ CEO Ivy Zelman and Walker & Dunlop’s Chairman and CEO Willy Walker. The hour-long event delved into politics, nature, and affordability as they relate to housing.
The Political Landscape
One major concern is President Trump’s proposed tariffs on lumber from Canada and concrete from Mexico which could lead to a 4% to 6% increase in home prices according to industry contacts. However, it remains uncertain whether these costs can be passed onto consumers or if builders will absorb them themselves. Builders are currently focused on improving absorption rates by pushing back against rising material costs with their suppliers which may result in limited supplies but not necessarily impact home prices directly.
Another potential issue is labor shortages due to stricter immigration policies leading many builders who rely on subcontractors at risk for delays or increased costs due to a shrinking workforce.
Supply Discussions
Zelman noted that publicly traded homebuilders are being cautious when it comes new supply with an anticipated growth rate of only 5% per year through 2026 due partly because of issues like entitlements slowing down construction timelines while also having excess inventory already built up from previous years that still needs selling before starting new projects.
Walker brought up existing home inventory concerns noting how low interest rates under five percent have kept homeowners locked into their current homes rather than entering the market for something newer/bigger/better etc., resulting in lower turnover compared historical trends despite strong demand for housing overall nationwide (and even more so regionally).
However other factors such as rising property taxes/insurance premiums along with lifestyle changes like downsizing after children move out may contribute towards increasing existing inventories over time especially if people decide they no longer want live in areas prone to natural disasters like wildfires or floods.
The Wildfire Impact
Zelman and Walker also discussed the impact of the recent California wildfires on housing. While there may be some short-term rental inflation due to displaced homeowners, Zelman believes that it won’t have a major national impact as most of the affected homes are custom-built rather than mass-produced by large homebuilders. However, insurance costs and availability could become an issue for those living in high-risk areas such as Newport Beach and Orange County where homeowner’s insurance is not being renewed for some residents.
This could lead to more people considering moving out of these at-risk areas which would result in outbound migration from these regions over time. On-demand replays of this episode can be found on various platforms including YouTube, Spotify, and Apple Podcasts with new episodes released weekly featuring industry experts discussing current events impacting housing markets nationwide.
