Can Business and Government Work Together to Build America Out of Its Housing Crisis?

In the Oval Office, U.S. President Donald Trump held up a mock newspaper front page bearing the headline: “Trump to City: Let’s Build.” 

Across from him, New York City Mayor Zohran Mamdani had just pitched a plan to deliver 12,000 new homes in the city using federal funds. 

The February meeting signaled an unlikely alliance of a Republican president and a Democratic mayor, often at odds politically, finding common ground on the pressing need to expand housing supply. Congress took action, too, with the 21st Century Road to Housing Act—hailed as the largest housing affordability bill in decades—passed into law in July.  

The increasingly rare bipartisan push to solve the critical shortage of housing is not just happening in New York but across the United States. That’s because the nationwide shortage has led to surging home prices and rents in markets from Los Angeles, California, to Charlottesville, stretching many Americans’ ability to afford the most basic necessities. 

Failing to Keep Pace 

American homebuilding has failed to keep pace with demand since the 2008 global financial crisis, when construction activity fell sharply. It has since remained about 40% below long-term averages, with an estimated shortfall now of around 6 million homes, according to a 2026 Nuveen Natural Capital report. 

Meanwhile, prices have risen faster than incomes, pushing homeownership further out of reach for many Americans. Over the past five years, home prices have increased by roughly 54%, compared with wage growth of about 29%, according to the U.S. Bureau of Labor Statistics. 

The post-pandemic rise in borrowing costs has further hampered affordability. U.S. mortgage rates peaked at nearly 8% in 2023—their highest level in more than two decades—and remain elevated compared to pre-pandemic levels. 

The issues are compounding because housing supply continues to lag. Permitting, financing and construction take years. 

“Demand shows up in prices quickly; supply shows up in units slowly,” says Rodney Sullivan, executive director of the University of Virginia Darden School of Business Richard A. Mayo Center for Asset Management. 

Public Discourse About the Right Role for Business 

If supply is the constraint, policy cannot carry the full burden. Business has a key role to play, too, and its efforts are taking shape across the U.S. Investors and developers are taking a range of approaches—preserving existing housing, streamlining access to capital, and finding ways to build faster and more cheaply. 

Among policymakers, a focus recently has been on institutional investors, with the U.S. Congress considering bills to block them from buying large volumes of single-family homes. The concern is that investor demand is pushing up housing costs, something that is coming into sharper focus amid broad-based inflation and the overall rising cost of living. 

But Sullivan stands by the assertion that the central problem is fundamentally one of supply. The focus for policymakers and investors should be on efforts that increase housing stock, he says. 

“Large investors can’t solve a shortage by buying existing homes—that mostly reshuffles who owns the same units,” says Sullivan. “These investors can help most where the problem is fundamentally supply: financing and scaling new construction.” 

Restrictions may appeal politically. But if they deter investment in new construction or rental housing, Sullivan says they risk tightening supply even further.

More Than One Model for Affordable Housing Solutions 

For some investors, the opportunity they see is preserving existing homes that might have otherwise not been a viable option for the average American. 

Summer Kassir Haltli (MBA ’10), a partner at real estate investment group FCP, co-founded the firm’s housing preservation strategy. 

She focuses on maintaining affordability in existing properties for residents earning about 80% of area median income. That’s teachers, nurses, police officers and other essential American workers. 

Rather than building new units, her approach delivers affordability with existing housing, which she says can be executed more quickly and at lower cost. 

Preserving existing housing often scales faster than building new units. “We see it as a highly efficient and scalable solution,” Haltli says. 

It is, after all, a long-term investment strategy built around keeping properties full and generating steady rental income. 

The model depends on partnerships with state and local governments, as well. In exchange for restricting rents, owners can receive property tax breaks, allowing them to keep rents affordable while still generating returns. 

Access to capital, meanwhile, remains a central constraint, and some private industry leaders are trying to improve its availability. 

Among them is Erik Smith (MBA ’23), co-founder and CEO of Li-Check, a platform that streamlines applications for Low Income Housing Tax Credits. 

Those tax credits are the main financing tool for affordable housing in the U.S., he says. 

They’re administered at the state level, with each jurisdiction setting its own rules. Smith says that fragmentation creates friction for housing developers, who face different underwriting rules in each state, making it harder to enter new markets and scale developments. 

“In capital markets, friction signals inefficiency and inefficiency limits supply,” Smith says. 

The same dynamic applies to local incentives. He says tools such as payment-in-lieu-of-taxes agreements are designed to support affordable housing by lowering property taxes, but their design can determine whether a development moves forward. In some cases, he says developers cannot fully borrow against the tax savings—reducing available financing and undermining the economics of a deal. 

“Structure matters,” Smith says. “Thoughtful design grounded in how deals are actually capitalized can ensure these incentives expand rather than restrict feasible development.” 

Li-Check aims to streamline applications across states, reducing barriers for developers and helping more projects move forward. In a supply-constrained market, access to capital matters as much as capital itself. 

But capital alone does not deliver housing. 

Ask Reg Jones (MBA ’11), president of Pratt Homes, which designs and delivers modular and manufactured houses. He argues that factory-built housing can deliver both speed and cost advantages over traditional construction. Modular homes can be built at a lower cost per square foot and are ready for occupancy up to 50% faster, he says. 

The main barrier to greater adoption is perception, which often depends on local policy. “Working with local governments is critical to acceptance,” Jones says. Local policy also determines how quickly new housing can be delivered. 

The Next Generation of Leaders (and Homebuyers) Considers Its Options 

The constraints are now pricing out the next generation. The pressure is felt by those preparing to enter the real estate industry, like Nate Mancini (MBA ’26), vice president of careers for the Darden Real Estate Club during the 2025–26 academic year. He points to a market where construction costs have risen and new development has become harder to justify. 

“Supply is not that high and it’s hard to build it higher,” he says. 

The result is personal. “My generation’s purchasing power has been diminished by cost and inflation,” Mancini says. “It has not made sense for us to buy homes.” 

Like Jones, he argues the challenge is often local. “You need public policy on your side,” he says, pointing to the role of tax breaks in making projects viable. Development is also risky. “You have to lay out equity up front just to get to financing,” he says. 

The message from the Oval Office was simple: build. However, finding pathways to do that is complex and will take public-private partnership at every level from local to federal so that both the current and future generation of real estate industry leaders can finance, design and execute projects on the ground.