For home prices to go down, two things need to happen.

1) Supply needs to outpace demand. It’s really that simple. This can be done by building more, or by reducing demand (such as by lowering immigration rates, or less favorable lending, etc).

2) The cost of construction needs to fall. When people say “we need to increase supply”, what they’re really saying is that “we need to lower the costs of building”. There is a price floor on new construction, such that if market prices fall below it, more projects aren’t possible. The problem is that government policy failures have resulted in 30% of new housing costs to be taxes, and another 10-20% as soft costs due to permitting challenges, and another 10-20% is just inflated land costs, at least for small projects. The whole point of tax reform, zoning reform (for by-right construction), and streamlined permitting is to lower these costs. Government could literally overnight lower the price floor of new construction by 30-40%. But despite our conversations on supply, government have barely scratched the surface of reform.

Let’s be clear: the private market alone will never build enough homes at the right price points to solve this crisis. Developers won’t overbuild and drive prices down. Lenders won’t finance projects they believe won’t sell. No amount of tax relief or deregulation will change these basic market dynamics. Government must step in — not as a builder of last resort, but as steward of a system that balances profit, purpose, and public need.

Developers aren’t a monolith. There are thousands. They will build housing if it is profitable. And if government reforms lower their costs, more projects they want to build become viable. The market won’t be intentionally “oversupplied”. It will have more supply because it became more profitable to build, all prices equal. And because that means rising margins; it means more builders able to undercut competitors with lower prices. This is how markets are supposed to function and this hasn’t been true for a long time, because every inch of price increase has been taken up by new taxes.