John Burns Research & Consulting (“JBREC”) 2025 Housing Outlook

The JBREC 2025 Housing Outlook was indeed the most informative day of the year - it was also a lot of fun! Our hosts curated a dynamic agenda full of timely, thought-provoking updates from a wide range of speakers.

• Optimism Abounds. As usual, the day began with a poll of the audience – which was evenly split between representatives of homebuilders/building products companies and representatives of capital providers. Despite a rocky year for housing demand and prevailing uncertainty, 44% of the attendees expressed greater optimism than a year ago, while 47% indicated they feel the same as they did a year ago! This is a testament to the resilience of our industry’s executives, who choose to focus on the long-term drivers that are boosting demand for new homes. Thankfully, there was little to no discussion about the upcoming election – only the recognition that both candidates realize housing’s critical importance.

• Rate Sensitivity is Declining. The outlook on interest rates and economic growth sparked discussion, with some speakers suggesting the Fed’s initial 50bp cut was intended to ensure a soft landing rather than signal we’re entering a cycle of contraction. Economists all pointed to mortgage rates at the 5.5-6.5% range longer-term, implying affordability challenges will persist. Another perspective offered on rates was that since 95% of U.S. residential mortgages are 30-year fixed rate mortgages, consumers are now less sensitive to rate changes overall. As a result, supply and demand dynamics might not shift dramatically over the next few years, even if rates do fall.

• Size Matters. While affordability, or the lack thereof, may persist, homebuilders are making concerted efforts to shrink home sizes and footprints, necessitating careful community planning, value engineering, and design innovation. Smaller, well-designed homes are appealing to both home buyers and renters. The JBREC team has contributed valuable research on this subject.

• BTR Will Rise Again. With its scalability, BTR is the future of SFR, and the industry will continue to consolidate, professionalize, and leverage scale to improve operational efficiencies. The best SFR providers are focusing on being top tier logistics companies – coordinating hundreds of work orders and customer touch points to provide a seamless consumer experience.  Interestingly, this same analogy was used by the growing number of private lenders and land bankers to emphasize that as they provide capital to homebuilders the differentiation will come from seamless execution.

• Driving ROIC Remains Important. The landscape for publicly traded homebuilders is evolving, with executive teams prioritizing streamlined operations to maximize return on capital. Land banking remains popular, while limited lot availability continues to constrain new supply.

• M&A is Robust. There are more buyers from more countries with more capital than ever before. The public homebuilders and large private homebuilders are increasingly competitive in these transactions, as they aim to deliver exponential growth to match their larger peers and maintain relevance. At the same time, foreign buyers are now comfortable in the U.S. market, seeking larger transactions to sustain their growth momentum. While it’s become harder for private homebuilders to grow, they can sell for record multiples if they believe it’s time to exit.

The Whelan Advisory team remains active, and we look forward to announcing several new transactions in the next few months. If you’re interested in selling your company, reach out to us below to discuss our process.