Walker & Dunlop EVP Ivy Zelman: Housing, Regulations, Affordability Predictions For 2026

The world held its breath as President Donald Trump took the stage this week at the World Economic Forum in Davos, Switzerland. 

But while there was speculation the president would announce major news related to the U.S. housing sector, Ivy Zelman, executive vice president and co-founder of Zelman, a subsidiary of Walker & Dunlop, said nothing was announced that “we didn't already know.” 

“We thought there was going to be this big program announced to really drive more new construction and support for those that have been in the ‘have-not’ camp to be able to buy homes,” Zelman said on this week’s Walker Webcast, hosted by Walker & Dunlop CEO Willy Walker. “That, obviously, didn't get announced. I'm not sure that still won't happen, but it didn't get announced today.”

Housing affordability seems to be a key theme guiding decision-making in the sector, Walker said. In practice, this would mean lowering interest rates to entice more buyers to the market and lower the cost of homeownership, while at the same time not impacting the values of existing homes. 

Earlier this month, it was announced that Fannie Mae and Freddie Mac will buy $200M worth of mortgage bonds in an effort to ease affordability. Zelman said these efforts most likely won’t be enough to spur any meaningful change. Small policy moves are unlikely to push the needle, she said. 

However, the president mentioned his intention to pull institutional capital from the single-family rentals sector in his Davos speech, in another attempt to improve affordability, Walker said. While theoretically, this is a net positive for consumers, it may have adverse effects for homebuilders. 

“There's a very small group of people who appreciate it, and the rest don't like it,” Walker said. 

This is largely because many single-family homebuilders presell a percentage of their communities to single-family rental companies, giving them 20% to 25% of inventory sold right out of the gate, Walker said. This sort of “down payment” is very helpful for these developers to go out and build more communities. 

But now that this capital will be eliminated from the market, how will housing developers adapt? 

Zelman said there appears to be a carve-out for new construction build-to-rent communities. But a mixed offering, featuring a variety of for-sale and for-rent options, is up in the air. 

“On average, builders are probably selling about 5% in total of their product to single-family rental operators,” she said. “Certainly, that would be a negative if they weren't able to do so. It's a great distribution for them that gives them the capital to develop for-sale properties, or just keeping their overall leverage on their operations moving and keeping the machine going. We don't know yet for sure.”

On the multifamily side of the equation, the mantra used to be "survive until 2025,” Walker said. Now that 2026 is here, with the lingering oversupply from 2023 and 2024 that everyone thought would be absorbed by the end of 2025, rents didn’t see as big of an uptick as once predicted. 

In fact, per Zelman’s latest research report, most markets experienced flat rents, with some pockets of either slightly positive or slightly negative rent growth. 

“There was definitely great momentum during 2025 for absorptions,” Zelman said. “As we had so much supply hitting the market, lease-ups were benefiting from strong demand. We entered the fourth quarter, even though the supply remained elevated, and we started seeing the demand was under pressure, so we didn't have the same ability to drive absorption in the face of the supply.”

The “survive until 2025” mantra has quickly turned into “hang on until 2027” while 2026 runs its course, Walker said. 

The Sunbelt markets, Zelman predicted, will have unoccupied inventory beyond 2027, with almost every aspect of the housing market oversupplied, from single-family homes to rentals.

“We just published our single-family rental survey today, and it was the worst numbers in our survey history with respect to negative rent,” she said. “Growth of negative 1.1% — we've never seen a negative number.”

Zelman’s team revised its 2026 rental growth prediction from 3% down to 1.9%, due to markets that are still suffering from several years of supply that needs to be absorbed — even as markets such as the West and Northeast are up “quite a bit.”

Rather than a housing supply issue, like many think the country is facing, what’s going on in the housing market is really an affordability issue, she said. 

“Think about the young adults that are living at home with their parents at elevated levels relative to history,” she said. “Call it in the low 20% range when historically it was in the mid-teens. How do we get those young adults out of their homes? The problem is we need the price point to come down.”

Incentives, such as mortgage rate buy-downs, have become a huge part of how homebuilders are getting buyers to come to the table, particularly on the lower end of the housing market. But this creates a bit of a "circular challenge": having to build spec without a buyer, and the only way to get a buyer is by doing a mortgage rate buy-down. This will keep pressuring margins, Zelman said. 

Increasing local regulations have also burdened homebuilders, Zelman said. When a builder breaks ground on a new development, they're going to absorb all the costs associated with that local community's need for more police, fire departments and schools, otherwise called impact fees. 

They represent different proportions of the average selling price in every municipality, such as 15% in San Francisco or 5% in Houston, she said. This has become a struggle for builders trying to get developments off the ground.

“They're literally losing money before they break ground,” Zelman said. “Those impact fees are pretty exorbitant, so I do think it's a real problem for them. And that's just one aspect of cost. There's also the regulatory costs they have to deal with as well as environmental issues. Builders feel like they're taking one step forward and two steps back.”

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This article was produced in collaboration between Walker & Dunlop and Studio B. Bisnow news staff was not involved in the production of this content.

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