New: 🧠 Market Minds Issue #117

We appreciate each and every one of you for taking the time to read Market Minds. Buckle up and enjoy the free value, and you won’t want to miss… why a rare 390–9 vote in Washington might finally move the housing supply needle.

The U.S. House just passed the Housing for the 21st Century Act by a 390–9 vote, a number so lopsided it feels imported from another era . In a capital addicted to stalemate, this is the equivalent of a clean balance sheet.

The bill is the House companion to the Senate’s ROAD to Housing Act and has backing from leadership on both sides of the aisle. Translation: this isn’t a messaging exercise. It’s a supply-side intervention wrapped in political realism.

The throughline of the article is simple: sometimes politics help. And when they do, it’s usually because pain has gone fully bipartisan. Housing costs are no longer a blue-state zoning problem or a red-state labor problem. They are a generational lockout problem. When 30-somethings can’t buy homes in Texas or California, ideology fades and self-preservation kicks in.

This isn’t Washington redistributing demand. It’s Washington trying to manufacture supply.

The bill’s most meaningful changes are procedural and that’s where the real estate market quietly lives.

The HOME Reform Act would limit duplicative environmental reviews and exempt specific infill and small-scale developments from NEPA review. That includes:

This is not sexy policy. It’s plumbing. But plumbing determines flow.

If you’ve ever watched a small multifamily deal stall for 18 months over layered environmental reviews, you understand the opportunity here. A 10–15% reduction in time-to-permit doesn’t just accelerate delivery; it materially changes IRRs. When entitlement risk compresses, capital loosens.

And here’s the subtle shift: infill and small projects are being prioritized. That’s a nudge toward distributed density instead of megaproject dependence. Think more 12-unit plays, fewer 300-unit moonshots. The middle of the market, historically the hardest to pencil, may finally get oxygen.

HUD will develop model zoning frameworks. There will be grants for regional agencies to modernize codes. Pattern books will be pre-approved to speed permitting.

This is Washington doing something unusual: incentivizing local reform without federalizing land use.

No one in Congress is bulldozing your planning commission. But if federal dollars start flowing toward municipalities that adopt pro-housing frameworks, local resistance suddenly has a price tag.

The long game here isn’t one bill cycle. It’s standardization. If the GAO study on a standardized federal building code gains traction, we’re staring at something bigger: a gradual erosion of the hyper-fragmented regulatory patchwork that inflates construction costs.

Fragmentation is expensive. Standardization scales.

If politics keep helping, that’s the unlock.

The legislation also revokes the permanent chassis rule and consolidates HUD as the chief regulator for manufactured housing.

That sounds technical. It’s not.

Removing the chassis requirement allows HUD-code homes to behave more like traditional site-built housing in both perception and function. That matters for financing, appraisals, and resale psychology.

Manufactured housing has long been the orphan asset class — efficient, scalable, and socially stigmatized. Regulatory modernization doesn’t eliminate stigma, but it lowers friction. In a country short millions of units, friction is the enemy.

If this provision survives intact, expect capital to lean harder into factory-built housing. Not because it’s trendy, but because time, labor, and cost curves are brutal in stick-built construction.

This is where supply actually bends.

The bill expands income eligibility and maximum median purchase prices under the HOME program and broadens Community Development Block Grant uses to include new construction.

That adjustment sounds incremental. It isn’t.

Federal affordability thresholds have lagged market realities for years. Updating them effectively widens the federal buy box. When eligibility tracks actual median pricing, you reintroduce liquidity into price bands that have drifted above outdated caps.

Liquidity is oxygen. Especially in markets where entry-level inventory has been choked by rate lock-in and underbuilding.

This won’t solve affordability overnight. But it reduces the policy distortion between what Washington thinks homes cost and what they actually cost.

Alignment is underrated.

Here’s the real takeaway.

For the last decade, housing has been hostage to two forces: local obstruction and national paralysis. This bill suggests that when housing affordability becomes a voting issue in every district, paralysis weakens.

Markets move on math. But they also move on narrative. A bipartisan 390–9 vote signals something deeper: housing supply is no longer politically radioactive.

If federal pressure nudges even a fraction of municipalities to modernize codes, if environmental review timelines compress at the margin, if manufactured housing gains regulatory legitimacy, the cumulative effect compounds.

Supply doesn’t need a miracle. It needs momentum.

Sometimes politics distort markets.

Sometimes politics unlock them.

This looks like one of those moments when Washington, improbably, might help.

Sixty-four percent of single Americans struggle to afford their rent or mortgage, versus 39% of married households . That gap isn’t about budgeting discipline. It’s about math.

Nearly half of single Americans earn under $50,000. Only 9% of married households fall into that bracket . Meanwhile, home prices have climbed nearly 50% since before the pandemic, rents roughly 20%, and wages lag behind .

Two incomes can muscle through elevated housing costs. One income absorbs the full shock. The market hasn’t fully repriced for that reality.

In Washington, D.C., the typical condo costs $379,000. With current rates and median HOA dues, that’s about $2,974 per month. Split between two people? Roughly $1,487 each. Live alone? You write the full check. The annual penalty approaches $18,000 .

In San Francisco, the annual gap exceeds $40,000 .

That differential changes behavior. When the monthly payment consumes half of take-home pay, buyers don’t stretch, they stall. Sellers can anchor to yesterday’s comps, but if the marginal buyer is structurally income-constrained, absorption slows before prices meaningfully adjust.

You see it in longer days on market. Incremental price cuts. Quiet seller concessions.

Single Americans are nearly twice as likely as married households to stay put because they can’t afford the home they want . Forty-one percent say moving itself is too expensive .

This is more consequential than it sounds. Transaction volume depends on movement, starter to move-up, urban to suburban, condo to single-family. When single households delay transitions by years, the ripple effect suppresses multiple deals downstream.

Rates are part of the freeze. But affordability of the next house is the real constraint. If the step-up requires a second income that doesn’t exist, the chain breaks.

Look at condo pricing across major metros . Some markets are correcting. Others are oddly resilient. But condos disproportionately serve single buyers and that buyer is the most payment-sensitive segment in the market.

Layer on rising HOA dues and insurance costs, and the entry-level rung gets shaky. For dual-income households, higher fixed costs are manageable. For single earners, they’re disqualifying.

Builders are trimming square footage. Policymakers are talking about ADUs and denser zoning . Those are long-term adjustments. The affordability strain is immediate.

Married couples represent a shrinking share of U.S. households . The archetypal two-income buyer is no longer the default. The growth cohort is single, younger, earlier in career, often carrying student debt .

That buyer is hyper-focused on monthly payment, not abstract long-term appreciation. They are more rate-sensitive because they lack a second income buffer. They are more likely to delay a move if the numbers don’t pencil.

Pricing models built around dual-income resilience are misaligned with demographic momentum.

Expect continued pressure in condo-heavy urban cores where the buyer pool skews single. Expect relative resilience in metros with lower absolute price points and manageable HOA structures. Expect policy debates around density to intensify.

Inventory can rise. Rates can soften. Sellers can negotiate.

But unless incomes at the lower and middle tiers accelerate meaningfully, or prices reset enough to close the single-income gap, transaction velocity will remain constrained.

The market has improved from the freeze of 2023–2024. Financing conditions are less punitive. Buyers are re-engaging.

Yet the core issue remains: the fastest-growing household segment is being asked to pay prices engineered for two paychecks.

Until that equation changes, volume stays capped and affordability remains the fault line running beneath the entire housing market.

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Nearly 1 in 5 new single-family homes being built today is a townhome, the highest share on record . A decade ago it was closer to 1 in 10 . When a product’s share of new supply doubles in ten years, that’s not a fad. That’s a strategic pivot by builders responding to land costs, rate pressure, and buyer math.

Capital flows to what sells. Builders are telling you, with their balance sheets, that attached housing is clearing at a price the market can tolerate.

Townhomes are typically smaller, often in the 1,300–1,500 square foot range . Smaller footprints reduce build costs. Lower build costs reduce price. Lower price reduces monthly payment. In a 7% rate environment, payment sensitivity is the market.

Nationally, townhomes are typically priced below detached single-family homes, and the gap has widened as supply has grown . When supply expands and price dispersion increases, it signals segmentation. Townhomes are becoming the entry-level product by design.

This matters because the first rung on the equity ladder defines the next ten years of housing mobility. If the entry point shifts from detached to attached, long-term buyer pathways shift with it.

About 40% of builders cut prices on newly built homes at the end of last year, and roughly two-thirds offered incentives such as mortgage rate buydowns . Builders cut prices and offer concessions when absorption slows. Public builders especially cannot afford stagnant inventory.

Townhomes represent a growing share of new construction . That means incentives are disproportionately visible in this segment. Concessions are most generous where inventory is deepest.

Incentives are not permanent features of a market. They are transitional tools used to move product. When rate volatility eases or demand stabilizes, they retract quickly because margins recover first in the most affordable segments.

Younger buyers are accustomed to shared walls and urban proximity. That’s observable in rental patterns and migration to mixed-use communities. The leap from renting an apartment to owning a townhome is incremental. The leap to a detached home in the exurbs is exponential in cost and lifestyle shift.

That makes townhomes psychologically and financially aligned with the current first-time buyer profile. Alignment drives velocity. Velocity sustains pricing power even when headline affordability remains strained.

If attached housing becomes the default entry product, then future move-up demand starts from attached equity. That shifts what “starter home” means over time. It also redefines which submarkets experience the strongest appreciation cycles.

Markets evolve around the product that clears. Right now, builders are increasing exposure to townhomes because they meet payment reality without sacrificing ownership. The data confirms it .

When supply trends, pricing gaps, and builder incentives all converge on one product type, that’s not noise. It’s a signal.

And signals like this tend to reward those who notice early.

This Avon townhouse is asking $19,500,000 for 6,249 square feet of ski-in/ski-out perfection, because apparently regular oxygen is for amateurs. Yes, the bedrooms are oxygenated. There’s a commercial-grade elevator that moves faster than most market cycles, heated decks with fireplaces, and views that make “touching grass” feel pedestrian. In a housing market debating starter townhomes… this one starts at $19.5M.

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Power is compressing friction before the market notices.

The HOME Reform Act would limit duplicative environmental reviews and exempt infill construction and projects with 15 units or fewer from NEPA review.

By targeting entitlement timelines instead of subsidies, the bill attacks time-to-permit, the hidden tax on housing IRRs, and unlocks small-scale density in the very places where projects used to die in process.

Less paperwork. More product.

Housing’s constraints are no longer cyclical — they’re structural. Washington is finally leaning into supply reform, compressing permitting friction and modernizing affordability tools instead of juicing demand. But the bigger shift is demographic: the fastest-growing buyer cohort is single-income, competing in a market priced for two earners, creating a measurable mobility drag and slowing transaction velocity. Builders see the math and are pivoting toward smaller, attached townhomes that align with payment reality. Policy is trying to unlock supply. Demographics are reshaping demand. The market is recalibrating around what one paycheck can actually support.

Have a great weekend - we’ll see you next Saturday.

Cheers 🍻

-Market Minds Team

The content of Market Minds is provided for informational purposes only and reflects personal opinions based on sources believed to be reliable. It does not constitute financial, investment, legal, or professional advice. Each reader is solely responsible for their own decisions.