The Walker Webcast: In-Depth Housing Market Analysis with Ivy Zelman

Episode Date: August 21, 2025
Host: Willy Walker, CEO of Walker & Dunlop
Guest: Ivy Zelman, EVP & Co-Founder of Zelman, a Walker & Dunlop Company

Episode Overview

This episode of The Walker Webcast features Ivy Zelman, a leading voice in the housing and real estate industry, returning for an in-depth discussion with Willy Walker. The conversation covers the current state of the U.S. housing market, sector performance, affordability challenges, effects of policy changes (like tariffs and immigration), the evolving rental and for-sale markets, the impact of economic indicators, and the role of AI in real estate. Ivy offers candid, data-driven insights, tapping into both Zelman & Associates’ research and on-the-ground feedback from industry players.

Key Discussion Points & Insights

Housing Sector Performance: Surprises & Disappointments

• Year-to-date Stock Performance (as of August 2025):
  • Mortgage sector: +48%
  • Furniture: +17%
  • Building products: +13%
  • Home builders: +11%
  • S&P 500: +8%
  • Manufactured housing: –3%
  • Single-family rental (SFR): –6%
  • Apartment REITs: –10%
• Ivy’s Take: Outperformance is driven by “expectations that we’re going to see lower rates and the Fed is going to start cutting” ([04:14]).
• Underperformance in rental sectors stems from “the expectation that the for-sale market will start to gain some traction at their expense,” though Ivy doesn’t fully agree with this consensus ([04:14]).

Macro Trends: Rates, Tariffs & Affordability

• Rate Expectations: The market is being driven by hopes of Fed cuts, but a low unemployment rate may delay them.

  “If we see slowing job growth, I think that’s going to be a catalyst for them to act more aggressively on rate cuts” — Ivy ([11:25]).

• Tariffs: Thus far, tariffs haven’t materially raised costs for new construction; however, home improvement retailers are experiencing upward price pressure:

  “It’s a bit of a tale of two markets...tariffs have not had any inflationary impact [on new construction] whatsoever,” whereas “the home improvement market’s feeling the tariffs” ([07:52]).

• Affordability Dilemma: Buydowns of mortgage rates to even sub-4% aren’t generating the same sales bump due to worsening consumer credit and reduced discretionary income:

  “The reason that we are told they’re going that low [on rate buy-downs] is they can’t qualify the buyer without a rate that low. So there’s definitely more pressure on the consumer...” ([17:08]).

• Inventories: “Inventories are up about 20% from a year ago” in the existing market ([21:14]). Builders are grappling with both increased competition and margin pressure.

Lock-In Effect and Existing Home Sales

• Large portion of homeowners are “locked in” at low mortgage rates:
  • 72% of mortgages below 5%
  • 54% below 4%
  • 39% below 3.5% ([22:52])
• Who’s selling? Downsizers, investors offloading second homes, and “three Ds” (death, divorce, default)—while discretionary sales are still absent and “fear” is prompting more listings ([23:56]).

Industrial Changes: Homebuilder Consolidation

• Public builders hold unprecedented share: “Public builders overall... account for roughly 57% of new home sales today,” up from a third post-GFC and single digits 30 years ago ([27:32]).
• Major advantages for large public builders include “cost of capital,” “scale advantages,” and “better negotiations with vendors” ([27:32]).
• The growth incentives are being re-evaluated: “Their backlogs are down, their orders are down, their earnings are down, their ROEs are down” ([30:53]).

Housing Shortage: What Kind and How Severe?

• Ivy downplays the rhetoric on raw shortage numbers, emphasizing it’s an affordability shortage rather than an absolute unit shortage ([30:53], [32:43]).

  “We have a shortage of affordable housing. So we can talk about shortages till we’re blue in the face, but the real impediments... start with land costs and regulatory pressures.”

• Rise in young adults living at home is a structural, affordability-driven issue.

Regulatory Solutions & Federal Initiatives

• Regulatory burdens—from “impact fees” to local NIMBYism—are a major barrier; only broad regulatory changes, potentially through federal intervention, will meaningfully move the needle ([34:39]).
• Federal efforts discussed, with rumors of a coming executive order from the Trump administration to loosen restrictive policies ([36:41]).

Data Reliability & Market Nuances

• Ivy expresses skepticism over federal housing start data, especially regarding recent surprising increases:

  “We were expecting a pullback...Permits were flat and were down year over year. We’re expecting starts to be down 8% this year.” ([37:58])

• Multifamily: Despite record absorption and high occupancy, rent growth has surprised to the downside, especially in overbuilt ex-COVID “hot spot” markets ([40:21]).

Rental Market Dynamics

• SFR and multifamily both face oversupply issues in previous COVID “winner” markets. In contrast, Midwest and Northeast regions are seeing relative strength ([42:14]).

  “The COVID winners are now the COVID losers. And they’re the ones that are seeing the most pressure” ([25:38]).

• SFR saw negative rent growth in Q2 2025—a supply-driven phenomenon ([43:04]).

The Consumer’s Financial Health

• Ivy warns of brewing consumer distress, pointing to rising delinquencies (especially among first-time and subprime borrowers), increasing student loan defaults, and cost-of-living pressures that have not subsided despite “normalized” inflation headlines ([46:32], [48:40]).
• On student loans: “70% of the loans that are in default are people that didn’t finish their higher education... those people are more likely not to be homeowners” ([49:33]).

Immigration and Labor Costs

• No noticeable impact from recent immigration crackdowns; if anything, builder labor costs are easing as more workers seek jobs ([51:58]).

  “There hasn’t been an impact. And in fact, DR Horton just was talking about... there’s more competition for that work.” ([51:58])

Building Products and Home Improvement Markets

• Building product companies and retailers like Home Depot are feeling some pass-through price increases, though “margins are still under pressure” ([53:20]).
• Home improvement is likely a reflection of people intending to stay longer due to the “lock-in effect,” not a prelude to increased sales listings ([55:07]).

Demographic Shifts and Future Inventory

• Post-2030 will see a “wave” of aging-out homeowners, leading to increased estate/probate sales and possible downward price pressure if affordability does not improve ([55:07]).

Notable Quotes & Memorable Moments

• On consumer credit struggles:
  “What troubles me... is that the expectations are that Fed cuts will result in improved affordability. But we know the Fed can only control the short end of the curve... It could be stubbornly higher for longer, even if the Fed is cutting.”
  — Ivy ([13:00])

• On the difference between policy action in and out of recession:
  “[Outside a] recession, the actual Fed cuts have only been 97 basis points, and the resulting pickup, if you will, in the ten year has only been six basis points.”
  — Willy ([14:09])

• On consolidation:
  “Cost of capital is about 500 to 1000 basis points better for public companies...those advantages have given them much higher market share.”
  — Ivy ([27:32])

• On the core affordable housing issue:
  “We have a shortage of affordable housing. So we can talk about shortages till we’re blue in the face, but the real impediments... are land costs and regulatory pressures.”
  — Ivy ([30:53])

• On the future of housing supply:
  “Starting in 2030, we’re going to see... a lot more ‘aging out,’ a lot more inventory that’s going to come on the market.”
  — Ivy ([55:07])

• On AI’s likely impact:
  "You'll see [AI] on customer service, sales, where they can utilize AI bots and take humans out of the equation... Rocket is a great example of a company that's utilizing AI. I don't think the entire mortgage industry is benefiting as much as Rocket, though."
  — Ivy ([59:23])

Key Timestamps

| Segment | Timestamp | |------------------------------------------------|---------------| | Sector performance, surprises & letdowns | 03:45–05:12 | | Macro themes for the upcoming housing summit | 05:12–06:55 | | Tariffs and inflationary impact | 06:56–09:58 | | Fed policy, employment, and rate cut outlook | 10:38–13:00 | | Affordability struggles, rate buy-downs | 16:16–19:56 | | Margin pressure and changing inventories | 21:11–22:52 | | Lock-in effect and existing home sellers | 22:52–26:58 | | Builder consolidation & market share | 26:58–28:40 | | Housing shortage: scope and rhetoric | 30:53–32:43 | | Regulatory solutions and policy talk | 34:39–37:58 | | Trust in housing data and multifamily starts | 37:58–41:40 | | SFR and multifamily: market dynamics | 41:40–44:53 | | Consumer health, delinquencies, student loans | 44:53–51:31 | | Immigration’s real impact on labor | 51:31–52:39 | | Building products, home improvement trends | 52:48–55:07 | | Demographic shifts & "aging out" inventory | 55:07–56:36 | | AI in housing: efficiencies and headcount | 58:58–61:38 | | Where Ivy would invest $1 | 61:38–62:35 |

Closing Takeaways

• Best investment sector? Ivy names multifamily as the strongest bet owing to “opportunities...to accelerate rent increases once the supply is really worked through,” especially given stretched affordability in the for-sale market ([61:38]).
• The U.S. faces a persistent, trench-deep crisis in housing affordability—even more so than a raw unit shortage.
• Fundamental change requires regulatory reform as much as rate or builder action.
• The consumer is strained, with student loans expected to create further drag.
• AI is only beginning to disrupt housing but will likely first impact customer-facing headcount and mortgage operations.

Memorable moment:
Ivy sums up the generational nature of change in housing:

"My architect in Cleveland called me... He’s getting divorced. And I said, you know what, Rick, don’t be so egregious and lower it to half a million and I promise you’ll sell it. And he did." ([23:56])

This episode offers an unvarnished assessment of 2025’s housing landscape—essential listening for real estate professionals, investors, policymakers, and anyone navigating today’s turbulent market.