The housing debate in California has long been dominated by a simple, seductive explanation: zoning. If only cities would loosen their local land-use rules—eliminate parking minimums, legalize multifamily housing, streamline environmental reviews—then housing would become abundant and affordable again.
This narrative, pushed by prominent writers like Ezra Klein and Derek Thompson in their new book Abundance, has been embraced by a growing chorus of technocrats, YIMBYs, and frustrated renters. The problem, they insist, is the tyranny of local homeowners and bureaucrats blocking new development.
But what if that’s not the whole story? What if, as antitrust attorney Basel Musharbash argues in a deeply researched and devastating exposé for BIG, the real obstacle to affordable housing isn’t the planning department—it’s the consolidation of economic power by a handful of national homebuilders and Wall Street investors who have quietly seized control of America’s housing supply chain?
Musharbash’s piece, “How Big Homebuilders and Private Equity Made American Cities Unaffordable,” centers on Dallas-Fort Worth (DFW), long held up as a model of laissez-faire housing policy. DFW has cheap land, weak zoning, minimal regulations, and rapid population growth.
If the “build, baby, build” thesis were right, DFW should be an affordability utopia. But it isn’t.
As Musharbash shows, the median home price in the region has nearly tripled since 2011, and fewer than 4% of homes sold in 2024 were priced under $200,000. Families making under six figures are increasingly locked out of homeownership altogether.
“Dallas was truly a place where the American dream of homeownership was alive and well,” Musharbash writes. “That’s no longer true.”
So what changed? Not the zoning. What changed was who builds homes, who owns them, and who profits.
Over the last three decades, the DFW housing market has undergone a dramatic transformation. Small and midsize builders who once dominated the landscape—local firms that employed local workers and took out loans from local banks—have been systematically pushed out by massive, Wall Street-backed conglomerates like D.R. Horton and Lennar.
These firms, using financial advantages unavailable to independent builders, have engaged in a sustained campaign of mergers, acquisitions, and predatory pricing to consolidate the market. By 2024, just ten builders controlled over 60% of new home sales in DFW, and the top two controlled more than 30%.
And with that consolidation has come a disturbing shift: from building homes to maximize shelter, to building homes to maximize shareholder value. Large builders deliberately underproduce housing to maintain pricing power. They use affiliated mortgage companies to offer below-market interest rates, creating artificial affordability while inflating sale prices.
They monopolize access to materials and subcontractors, leaving smaller firms to pay more or wait longer. They manipulate comps, distort land markets, and coordinate production schedules through shared data firms like Residential Strategies, Inc.
The result, as Musharbash puts it, is “a homebuilder oligopoly” that throttles supply and drives up prices—even in the most permissive zoning environments in the country.
This isn’t just a Texas problem. It’s a national one. And California, for all its procedural hurdles and CEQA fights, is no exception. In fact, in many ways, we’re worse off.
It’s easy to blame San Francisco’s infamously Byzantine planning process or LA’s tangle of neighborhood councils and zoning overlays. And yes, regulatory reform is necessary. But zoom out, and you see a deeper pattern at play: in California too, the housing sector has been captured by financialized giants and institutional landlords who profit from scarcity.
Our major builders are the same conglomerates operating in Texas. Our housing markets have likewise been infiltrated by private equity firms and REITs (Real Estate Investment Trusts) who snatch up single-family homes and convert them to rentals. And our small builders—those who might innovate, compete, or build affordably—are squeezed out of the capital markets entirely.
Even in a place like Davis, a progressive university town often caricatured as a bastion of NIMBY resistance, this analysis holds surprising relevance.
Davis has long debated housing through the lens of Measure J (and now J/R/D), which requires voter approval for peripheral housing developments.
Critics of Measure J often argue that it creates a chokehold on growth. And to some extent, that’s true—housing construction has not kept pace with demand, and affordability has worsened.
But the reality is more complex than a simple binary between local restrictions and state mandates.
As Musharbash notes, even where zoning is permissive, prices have soared because the market itself has been rigged. In Davis, the lack of diverse builders means even when housing is approved—say, in developments like Bretton Woods or DISC—it’s often dominated by the same handful of developers who face little pressure to innovate, lower prices, or meet the needs of low- and middle-income families.
The problem is not just that Davis restricts new growth; it’s that when it finally allows it, the benefits are often captured by powerful players with no incentive to build affordably.
Meanwhile, just like in Texas, institutional investors have begun to make their presence felt. In nearby Sacramento, data show growing interest from out-of-state capital in purchasing starter homes and converting them to rentals.
The result is eerily similar: fewer homes for owner-occupants, rising prices, and a quiet but profound shift from a homeownership society to what Musharbash calls “a rentership society.”
Musharbash is clear-eyed about the implications.
“Homes should be owned by homeowners, and homebuilders should be builders—not land speculators and asset managers for Wall Street,” he writes.
Restoring that vision will require more than tweaking zoning codes or streamlining approvals. It will require confronting the entrenched economic power that now controls who gets to build, where, and for whom.
In practical terms, that means rebuilding community finance systems so that local builders can access credit. It means regulating or even banning institutional ownership of single-family homes. It means enforcing antitrust laws against predatory consolidation in the construction sector. And yes, it means zoning reform—not because deregulation alone will save us, but because our current rules often favor those best able to navigate or game them.
For California, and for cities like Davis, the takeaway is urgent: the housing crisis cannot be solved by focusing solely on local rules while ignoring the national consolidation of economic power.
The zoning story, according to this view, is not false, but it is incomplete—and dangerously so.
As Musharbash’s meticulous reporting shows, we must broaden our lens. This is not a tale of parochialism or liberal overreach. It is a story of monopoly, finance, and the systematic destruction of the American Dream.
Interesting article, but I’m not seeing (or at least not aware of) major builders “restricting supply” in places like Texas. However, INVENTORY is skyrocketing in places like that (as well as Florida, etc.). It’s also increasing in California.
The country itself is not growing very quicky anymore (young people aren’t even having kids at replacement levels – nationwide).
Also, there’s this (from the article):
“Homes should be owned by homeowners, . . .”
The older I get, the more I realize that no one “owns” anything (other than the government – in the form of taxes and all of the other restrictions they apply on “your” property). “Homeowners” are simply placeholders and are responsible for all aspects of “owing” a house while they’re alive. (Reminds me of “owning” a pet.)
As far as some of the other facts put forth in this article, can’t the same type of thing be said about businesses like Walmart?
The REAL problem might be expectations underlying comments like this:
” . . . and fewer than 4% of homes sold in 2024 were priced under $200,000.”
Why would anyone expect to buy a house (and become a temporary “placeholder”) for under $200,000 – anywhere?
(Housing prices are generally declining now, however. They had entered a bubble in some markets – largely as a result of the pandemic.)
“I’m not seeing major builders restricting supply in Texas…”
You’re right that inventory is increasing in some Sun Belt markets like Texas and Florida. But the key claim in Musharbash’s article isn’t about current inventory levels—it’s about long-term market power. He argues that corporate consolidation among large homebuilders has created an oligopolistic dynamic: a few players dominate and can strategically underbuild to protect profit margins.
In Texas, even though more homes are being built relative to California, the share of those homes built by large national firms is massive. And those firms are no longer just responding to supply and demand—they’re modeling price-maximizing output much like OPEC manages oil production. As Musharbash writes: “Large builders don’t just build homes anymore—they manage assets. And part of managing assets is not flooding the market, even if you could.”
It could be argued that having a few large, publicly-traded companies “dominate” the market leads to economies of scale (and better deals in regard to their own costs, as you noted). Again, not unlike Walmart. But one difference between Walmart and housing developers is that it’s a lot more difficult to turn on (and off) the “spigot” in regard to housing construction. (Although Walmart also orders items in advance of a season, it seems a lot less complicated to adjust to changes in the retail market, v.s. planning and constructing housing developments.)
I would think that the tools they’re using these days “might” help them avoid a repeat of 2008, but I’m not sure if that’s true:
“He (Nick Gerli) warned that Texas is now the fourth most oversupplied housing market in the United States.”
“The city (Austin) has also seen a 20.4 percent fall in home values from peak pandemic highs, Gerli said, adding, “That’s the biggest metro-level correction in America in that timespan.”
“More severe losses are anticipated in smaller Texas cities: Pecos may see a 9.5 percent drop by October, while Zapata could experience a 7.2 percent decrease and home prices in Sweetwater may fall 6.9 percent.”
“Sales have slowed considerably as a result. In February, 21,892 homes were sold statewide—a 6.2 percent decrease compared to the same period the previous year. The average time a house remains on the market has also increased to 75 days.”
https://www.newsweek.com/texas-faces-major-housing-market-correction-prices-drop-across-state-2070190#:~:text=Texas%20Faces%20Major%20Housing%20Market%20Correction%20as%20Prices%20Drop%20Across%20State,-Published%20May%2010&text=The%20Texas%20housing%20market%20is,hit%20123%2C000%20in%20April%202025.
And that’s just Texas – the same thing is occurring in other Southern states like Florida.
It might also be noted that some of the companies you’re mentioning are publicly-traded (meaning “anyone” can cash in by participating – assuming that their respective CEO’s don’t take all the money before the house of cards – so to speak -comes crashing down again).
I’m not sure how relevant this issue to Davis, so far. All of the large developments I’m aware of that have been proposed or built have been backed by local developers in Yolo County except the Cannery. These seem to be the small scale builders that you cite as important to the market. It may be that larger developers are moving in but they are not yet the source of the housing supply constraints in Davis.
“And with that consolidation has come a disturbing shift: from building homes to maximize shelter, to building homes to maximize shareholder value.”
Richard’s comment does reflect the nature of Davis development, but that may only be in the labeling of the housing development businesses. It is also interesting to look up Pole Line to Springlake to see if the described trend is barely beyond Davis’ shores. It is also interesting to look at Bretton Woods to see how that development is playing out.
With those observations said, “building homes to maximize shareholder value” has been alive and well in Davis for a long long time, which is why one local developer said in Council Chambers that “I’ve never built an (affordably small) home. I’ve never even considered building an (affordably small) home. And I will never ever build an (affordably small) home!”
That intransigence is one of the major reasons why Davis has a near total lack of for-sale affordable homes.
As the Chair of the Planning Commission once said on the record, “There is no such thing as affordability by design. If you want affordability, the only way to accomplish it is through affordability by size.”
Affordable. Good luck with that.
But one thing we all should be wary of is the lack of action against anti-trust issues going on in realty.
In Davis the nimby’s have done the oligarchs work for them driving up prices by restricting supply.
As for the oligarchs they own the U Mall. Brixmor, the owner of the U Mall, is a real estate investment trust(REIT) created by the roll up of commercial malls by Blackstone around the same time they put the bottom in the market here by buying up all the housing languishing on the market back around 2010.
The City wanted Brixmor to build a giant apartment project above the UMall but when Brixmor submitted its plan to the City the neighbors rebelled and demanded changes that made Brixmor give up on building housing on the site.
Your account of what occurred at University Mall is incorrect.
But it is fortunate that (despite the efforts of the city to screw things up), Brixmor didn’t abandon their original goal of rebuilding the mall, (even though the delay caused by the city probably cost the Brixmor AND the city more than necessary).
“ The City wanted Brixmor to build a giant apartment project above the UMall but when Brixmor submitted its plan to the City the neighbors rebelled and demanded changes that made Brixmor give up on building housing on the site.”
Seems accurate to me
So here’s what ACTUALLY happened, as I recall:
Brixmor came forth with a proposal to redevelop their retail mall (at a time when most other cities would appreciate it, in the face of declining brick-and-mortar stores and increased online purchases).
So rather than appreciate that fact/gesture, some (who think that the city should accommodate UCD’s plans to continuously increase “their” number of students at the expense of community colleges and CSUs), pushed Brixmor into adding student housing ABOVE the non-existent floors above their mall. Which of course is at an intersection that is ALREADY severely impacted by UCD. (At a mall which is ALREADY primarily for the benefit of and targeted to UCD students.)
As a result, Brixmor came up with a plan to create what was essentially a student dormitory (rent-by-the bed, I think) megadorm-style development above the mall. To which the planning commission (which normally supports more development) objected (and unanimously rejected).
But despite the rejection, the city council “approved” the megadorm proposal (with some minor tweaks as I recall). But Brixmor then returned to its original plan, regardless. Turns out that megadorms above a mall might not pencil-out.
And as a result, some have gone back to complaining about one of the few redevelopments of a retail mall (IN THE ENTIRE COUNTRY), simply because Brixmor, which specializes in retail/commercial development chose to stick with its original plans.
Talk about an “only in Davis” complaint.
You’re funny
Matt says: As the Chair of the Planning Commission once said on the record, “There is no such thing as affordability by design. If you want affordability, the only way to accomplish it is through affordability by size.”
I wonder if even THAT is true.
Seems to me that prices (per square foot) RISE as size is reduced.
At some point, somebody has to pay for something. (Hopefully, it’s someone other than “me” – so maybe that thought qualifies me as a progressive or liberal, or perhaps a conservative – not sure.
I put each of the two comments about what went down with the failure to achieve housing at the U-Mall, one by RG [2:05pm], and one by RO [5:20pm], a put them verbatim into ChatGPT and asked them to evaluate each and state which is more accurate. I did not do this with any pre-concieved outcome or agenda, more because I’m doing my best to learn the uses and limitations of ChatGPT and similar. The results are as follows, sorry RG and allies of RG, nothing personal, not even taking a side:
“Between the two comments regarding the failure to include housing in the redevelopment of University Mall (now called The Davis Collection) in Davis, CA, the second comment by “Ron O” provides a more accurate and nuanced account of the events.
Key Points Supporting “Ron O”‘s Account:
Initial Proposal and City Encouragement: Brixmor initially proposed a retail-only redevelopment. However, city staff encouraged the inclusion of a mixed-use component with housing to address local housing needs.
Community Opposition: The proposed mixed-use development, which included student-oriented housing, faced significant opposition from local residents and the Planning Commission. Concerns centered around the project’s scale, design, and its focus on student housing.
davisvanguard.org
Planning Commission Rejection: In May 2020, the Planning Commission unanimously rejected the mixed-use proposal, citing issues such as inadequate community outreach and the project’s orientation towards students rather than the broader community.
davisvanguard.org
City Council Approval and Developer’s Decision: Despite the Planning Commission’s rejection, the City Council narrowly approved a revised version of the project with reduced height. However, Brixmor later determined that the mixed-use project was not financially viable and reverted to a retail-only plan.
Zoning Limitations: The city’s zoning regulations allowed for mixed-use development but did not mandate it. Consequently, the city lacked the authority to compel Brixmor to include housing in the redevelopment.
davisvanguard.org
Evaluation of “Ron Glick”‘s Comment:
While “Ron Glick” accurately identifies Brixmor as the owner and notes the community’s role in opposing the housing component, his assertion that “the nimby’s have done the oligarchs work for them” oversimplifies the situation. The failure to include housing was due to a combination of factors, including community opposition, planning commission rejection, and financial considerations by the developer.
Conclusion:
“Ron O”‘s comment aligns more closely with documented events and provides a comprehensive overview of the factors that led to the exclusion of housing in the University Mall redevelopment. It reflects the complexities of urban development, community engagement, and economic feasibility that influenced the project’s outcome.”
“ While “Ron Glick” accurately identifies Brixmor as the owner and notes the community’s role in opposing the housing component, his assertion that “the nimby’s have done the oligarchs work for them” oversimplifies the situation. The failure to include housing was due to a combination of factors, including community opposition, planning commission rejection, and financial considerations by the developer.”
This is not a very accurate assessment either. The real problem was that there was a thin margin for which housing could pencil out, when the neighbors pushed back, the council negotiated a compromise on dais that the reduced the size. That reduction then meant that the applicants could not find any builders for the housing and then they dropped the housing plan and came back with the all commercial. So in actuality, the chain of events that led to housing being dropped was due to community opposition and therefore in my view, Ron Glick was more accurate than Ron Oertel who glossed over this in his explanation.
The difference between RO’s recollection and RG’s rests on RO’s use of the term “minor tweaks.”
Apparently, what some thought were minor tweaks to appease concerns raised by the community, the property owner saw as a deal breaker.
Precisely. Although adding to that, they attempted to find a builder, but could not. That was the key problem.
Or so they claimed. But I think after they went to the City to redevelop the mall and the city said please build housing and then when they came with a plan and the community and the planning commission rebelled and the City Council told them to redesign they said to themselves this town is nuts and decided to simply do a re-development that couldn’t be blocked by the city or the locals because it didn’t involve a zoning change which is what they wanted to do in the first place. And don’t forget this all took almost ten years.
“Minor tweaks”
As I recall, THE most “pro-growth” planning commissioner was not supportive of having yet ANOTHER “rent-by-the-bed” development at the site, but was supportive of housing.
“And don’t forget this all took almost ten years.”
Exactly. Now, had the city simply gone-along with what the developer wanted in the first place (which also adhered to what the site was zoned for), the city would have received more revenue and a brand-new mall sooner, and the developer would have experienced fewer costs.
“. . . they attempted to find a builder, but could not. That was the key problem.”
That might have also been true if the megadorm that was put forth in response to meddling by the city was approved.
This developer was not a housing developer.
But perhaps more importantly, there’s now (almost) a place to park at the site for existing residents and visitors to the mall. It will serve more than the people “living upstairs” from it, and won’t be compromised by housing.
Let me see Covell Village was rejected through Measure J. Nishi had to give up access to Richards to pass a Measure J vote and is still un-buildable as a result. Ramos’ project got voted down twice, the community objected to building on Russell Field, West Davis citizens sued to block West Village. The neighbors objected to building housing at U Mall and the community dithered on a downtown plan for years while interest rates were at rock bottom so that now those projects aren’t currently economically viable. Now here we are with opposition to Village Farms coming from the neighbors and perfect is the enemy of the good progressives who think they know how others should develop a property they have no financial interest in.
Overall I think the impediment to housing in this community isn’t the oligarchs or the developers its the community.