Here's why your adult child can't afford to move out

The United States is short millions of homes — and some experts say the problem is nearing its breaking point.

On Wednesday, practitioners from across the housing industry gathered in Washington, D.C., at the National Housing Supply Summit to discuss those causes and solutions, specifically focused on what role the federal government can play given that issues of housing supply are often relegated to state and local governments.

Though estimates range from the low 1 millions to upward of 5 million, depending on the source, many housing insiders echo an idea: The shortage of houses has a multitude of causes and it requires a multitude of solutions that need to be carried out in harmony.

It’s easy to recognize the results of the shortage: First-time homebuyers have fewer options, and homeowners are staying in their houses longer because of a lack of choice. There are also the homeowning parents who haven’t been able to shake the adult children living in the basement.

Identifying the causes — and solutions — is more difficult. But that’s what attendees on Wednesday tried to do. Here’s what they said about the housing shortage and how to improve things for home buyers.

Earlier this month, President Donald Trump began imposing tariffs on some goods imported from countries, including Canada, Mexico and China. More tariffs are expected to take effect on April 2.

Products used in homebuilding — including lumber, steel and aluminum — are among those affected. Rob Dietz, chief economist at the National Association of Homebuilders, said that by the time all of those taxes are imposed and reciprocated, he expects there to be a 50% to 80% tariff on those goods.

That would have serious implications for the U.S. homebuilding industry, one that imports about 7.3% of its building materials, according to Dietz. More data from the NAHB suggested that about $14 billion worth of imported goods were used to build multifamily and single-family housing last year. If those materials become more expensive, the cost will be passed on to homebuyers.

But there could be an upside to the tariffs, according to some of the panelists. Though when asked to name a positive outcome, their initial response was silence — and then laughter — some suggested that the taxes could give way to much needed change in the industry’s approach and that greater efficiency would mean lower costs for consumers.

“In times of turbulence, you pivot, you learn, you innovate,” William Jenkins, senior director of environment and sustainability at homebuilder Clayton Homes, said during a panel discussion. “For us, we had to fully review all of our special drawings for the lumber that we used so that we could change species to the American species of lumber," an audience member said.

“It’s possible that it could accelerate change,” added Ken Pinto, president of supply chain consulting firm Kenzai USA.

From building codes and permitting to material supply chains, the U.S. homebuilding industry is decades behind where it should be, panelists said, and the inefficiencies are making homebuilding slower and costlier.

When it comes to building codes, rules that regulate how we design and build safely, the United States does not incentivize following one model. All 50 states have their own policies, and they can comprise hundreds of local codes and variances.

“The number of actual codes that we have per capita in this country is, bar none, the largest number that exists in this world,” said Ivan Rupnik, founding partner of MOD X. That just slows things down, putting U.S. homebuilding leagues behind countries such as Sweden and Japan, Rupnik added.

When it comes to building factory-made housing, inefficiencies in interpreting the country’s codes can create a nightmare. “The challenge we have is in the consistency of interpretation of what the prescriptive codes are,” said Vikas Enti, CEO of Reframe Systems in Massachusetts. Enti — whose modular homes are made in what he calls “microfactories” — often jokes that “gravity works differently in every town.”

A Byzantine permitting process slows down U.S. homebuilding ever more, drawing out the time that it takes before shovels can legally hit the ground. The local governments responsible for approving permits are “really struggling,” said Jenny Song, CEO of Infilla. The San Francisco-based software company is working to digitize and streamline the permitting process. In some areas, it is still paper based.

“There’s a lot of low-hanging fruit and an opportunity where technology can better support local governments in making them more efficient in processing all the applications that are coming through.”

Builders really want to bring you more condos, townhouses and manufactured housing, according to some summit panelists.

“The fact is, we don’t have enough of all kinds of homes,” said Mike Kingsella, CEO of the Washington, D.C. policy center Up for Growth. But single-family homes “are not a monolith," he said. "There is a huge market for duplexes, triplexes, [and] triple-deckers, many of which lend themselves to homeownership opportunities in a nation that is struggling to deliver starter homes more than ever before.”

Part of the rub comes from strict zoning, which dictates which kind of structure can get built and where.

“Frankly, in most American cities around the country — cities, towns, villages, hamlets — you have zoning codes that were written around 1920. If you’re lucky, 1950 or 1960. So we are quite literally trying to build homes in this nation under zoning codes and local policies that were written for 1950s America.”

Existing homeowners can chafe at the idea of relaxed zoning in their communities, fearing that inclusive policies could send property values plummeting in single-family neighborhoods.

Chris Gamvroulas, president of Ivory Development in Salt Lake City, noted that “people are not anti-development. Have you ever seen somebody go to a meeting to oppose a Costco. ... The NIMBYism is opposed to residential. It’s opposed to housing.”

Modular and manufactured housing can be less expensive and faster to construct, but, in addition to building code challenges, those residences also face the battle of public perception.

“If you had 15 options, how many unique homes could you build?” asked Mark Lee from MiTek, a building software company headquartered in Missouri. About 1.3 trillion, “and yet whenever we talk about standardization … we all kind of have this negative reaction to it” because “everyone wants a unique home. They don’t want to live in a cookie-cutter home.”

A key part of lowering the cost of homebuilding? A plentiful pool of construction labor.

Unfortunately, that workforce could be a ways away for the 1 million-plus homes needed in the U.S.

According to Branka Minic, CEO of the Building Talent Foundation, one generally needs about 300,000 construction workers to complete roughly 100,000 homes, or a 3-to-1 ratio of construction professionals to homes. But “because we are losing people due to aging out of the industry … we actually need to recruit 600,000 workers if we want to build 100,000 more homes.”

Roughly 30% to 50% of a home's price is the cost of labor, Minic said, so increasing the productivity and skills of the construction workforce “could then lead to better attainability of homes.” But there are some humps to overcome. “These jobs are not perceived as good jobs,” she said. “They are perceived as … dirty, difficult, dangerous, and dead-end.”

Correcting that perception could begin early in a child’s education, said Ed Brady, president of the Homes Builders Institute. “We have to continue to work on the public relations side of this industry,” Brady said. “We have to change the perception from the fourth-grade level to the counselor level to the parent level to the legislative level to the funding source level.”

But the issue also hinges on immigration policies in the U.S., which limit who the construction industry can recruit, said Laura Arce, senior vice president at Unidos. Given the U.S. has an aging population and declining birthrate, “we need to face reality and think about who’s out there,” Arce said. “Between 2020 and 2030, we’re forecasting that 70% to 80% of net new entrants into the workforce are going to be Hispanic,” so restrictive immigration policies and narrowing legal pathways into the country “is not going to help. It’s going to hurt, to make things worse.”

Homeowners across the country have felt the upward pressure on the insurance market, and it’s widely been considered an affordability problem. But on Wednesday, panelists argued that insurance costs have entered the supply conversation, too.

“If you’d asked me three years ago or five years ago, is insurance part of the housing supply solution, I would have put it pretty, pretty low on my list,” said Thom Amdur, senior vice president of real estate developer Lincoln Avenue Capital. “Three years ago in particular, that really changed … It is actually very closely tied to our ability to produce new housing in this country.”

The role of insurance in supply started around the time Hurricane Ian struck the Southeast in the fall of 2022, according to panelist Danielle Lombardo, managing director at insurance firm WTW. Insurers weren’t prepared for the costs the storm brought, both because of the extent of the damage and because prices for repairs had increased.

Those costs have been passed on to both homeowners and the developers behind housing, especially affordable projects, and without relief in the insurance market, there will be less production because the expense is so prohibitive, Lombardo said.

“The insurance industry is not a nonprofit,” she said. “They’re trying to take in more premium than they’re paying losses … When you have weather patterns that are revolving annually, they’re constantly playing catch-up.”

Panelist Austin Perez, senior policy representative at the National Association of Realtors, put forth three possible — but partial — solutions to ease insurance expenses and bolster housing production. Among his proposals were the creation of a state regulation program similar to rent control, a federal insurance backstop that would be like Obamacare for your house, and grants and tax incentives to make properties more resilient.

All told, though it’s just one piece of the housing supply puzzle, it’s an important issue to solve, and it will require a holistic approach.

“After 17 years working on insurance issues, these are the three best ideas that anyone has raised,” Perez said of his proposals, “and they all have political downsides in the swift policymaking environment in Washington right now.”

This article was updated on March 24 to attribute a quote to an audience member.