Missing The Middle: Steps To Solve America’s Housing Crisis With Sean Roberts – RFP 47 Transcript
Sean Roberts (00:00): Something like 77 percent of households couldn’t afford the median-priced home in the country. That’s a big problem. That’s not just an economic problem. That’s a societal problem that’s preventing people from accessing homeownership and being able to build wealth.
Gordon Lamphere (00:21): Hi, I’m Gordon Lamphere, and welcome to The Real Finds Podcast, the podcast where we speak with key entrepreneurs, activists, and researchers shaping real estate and, as a result, our world. On today’s podcast, we speak with Sean Roberts. Sean is the CEO of Villa, an innovative proptech provider of prefab ADUs, primary residences, and multifamily developments. Villa and Sean have won numerous awards, including Inman’s 2023 Best of Proptech Award, and Sean has been featured in The Wall Street Journal and MarketWatch and is a contributor at HousingWire. On the podcast, we discuss the state of the US housing market, the missing middle, and several solutions to the housing crisis. It’s well worth a listen. Sean, thank you very much for hopping on the podcast today.
Sean Roberts (01:14): It’s a pleasure to be here. Thanks for having me.
Getting Into Real Estate in the Depths of the Financial Crisis
Gordon Lamphere (01:17): I want to talk about where you see real estate going, but first, what got you interested in real estate in the first place?
Sean Roberts (01:30): Gosh, I don’t know. I think I’ve always been pretty interested in it. Where I got more involved from a professional perspective was really in the depths of the financial crisis, when the entire world was a very different place than it is today. The opportunities to invest in real estate and real estate-related businesses were really interesting, and it was an incredibly interesting point in the cycle to get involved in investing in real estate in a bunch of different forms. Since then, I’ve spent the last fifteen or so years working on various operationally complex real estate businesses, and in particular, the past six years doing innovative things that are different from traditional real estate but related to it in many ways.
Gordon Lamphere (02:27): So what’s wrong with traditional real estate?
Sean Roberts (02:30): I wouldn’t say there’s a lot wrong with traditional real estate. It’s obviously all around us. As a category, there are both efficiencies and inefficiencies throughout the real estate market. On the capital markets side, the so-called institutionalized asset classes are pretty darn efficient now. But there are pockets within real estate that are far less institutionalized, and there are still a lot of interesting ways for different technologies to build and run real estate more efficiently, both financially and environmentally. There’s a lot we can be doing across the entire built world to create interesting business models that ultimately create more value in real estate, whether that’s businesses providing services to real estate or the real estate itself. It’s such a big category, with so many sub asset classes and businesses in and around it, that there are almost too many ways to slice it and attack it.
Where the Biggest Inefficiencies Sit
Gordon Lamphere (04:00): Where do you think the biggest inefficiencies exist in the market?
Sean Roberts (04:08): Real estate is way too broad a market to define in one conversation. We need to thin-slice it.
Gordon Lamphere (04:15): Or we can slice it up.
Sean Roberts (04:19): Right. What I’ve spent the last several years on is residential real estate, so I’ll focus there. It’s a massive part of the economy: hundreds of billions of dollars of annual activity across everything that changes hands and gets built, and a huge percentage of GDP. Housing is generally the largest spending item for most households. And the inefficiencies are all over the place. Think about how much it costs to buy and sell a home in America. We pay more in brokerage fees than most other developed countries, which seems a little odd. We don’t have enough housing in this country, and it costs us too much to build housing. That’s really the problem set I’m focused on now. But there are so many inefficiencies across residential real estate. It’s a big problem set to work on and solve.
The Root Cause of the Housing Crisis: Supply
Gordon Lamphere (05:26): Everyone talks about the housing crisis these days. What do you think are some of its biggest causes? You’re right in the trenches. What are you seeing?
Sean Roberts (05:38): The core root cause, in many ways, is a lack of supply. We’ve underbuilt housing for the last fifteen or twenty years relative to household formation and demographics, largely as a function of underbuilding on the heels of the financial crisis. Not only do we have a multimillion-home deficit, somewhere between three million and six million homes depending on who you listen to, we’re also not building enough housing going forward. We build something like 1.4 or 1.5 million homes a year today across single-family homes, multifamily, and manufactured homes, and we need about 1.9 million homes a year for the next decade just to keep up with demographic demand. So not only do we have a big hole to dig out of, we’re actually losing ground at the current pace. We’re just not building enough housing to keep up.
The second problem is that the market is so tight and undersupplied, and although interest rates have come down a little lately, they’ve been pretty high for the last couple of years, and home prices have appreciated a lot. Housing is really expensive. And the supply we’re adding, at least in single-family residential for the most part, is too big and too expensive for most households to afford. Run the basic math on what a family earning $100,000 a year could afford at the median national home price and the median national home size, and the buying power of a typical family at that income level has been cut close to in half from pre-COVID levels to today. The homes we’ve been building average about 2,400 to 2,500 square feet across the whole country, with median prices somewhere in the mid $400,000s depending on how you look at the data. Those houses are typically too big and too expensive for the vast majority of households. There was a statistic earlier this year from, I think, NAHB that said something like 77 percent of households couldn’t afford the median-priced home in the country. That’s a big problem. That’s not just an economic problem. That’s a societal problem that’s preventing people
Sean Roberts (07:57): from accessing homeownership and being able to build wealth in ways that have been fundamental to America for many decades. It’s a problem we have to attack with a greater sense of urgency in this country, and really the only way out of it is adding supply. If you believe the core root cause of our housing challenges is a lack of supply, then a lot of the things the government can do proactively don’t help. The government providing subsidies or making mortgages cheaper are demand-side solutions that may give individual buyers more buying power. But what happens on the other side? You give buyers a tax credit, and the seller immediately raises their price by the amount of the tax credit. Subsidizing the demand side of the market really isn’t a durable solution. Same thing with rent control. You’re creating the wrong incentives and not solving the core problem, which is that we have to build, baby, build, and put more homes on the ground. That’s what actually gets us out of this. We need enough housing to reach equilibrium for the number of households that need it, and the best way to do that is to build more homes.
How Do We Build More Homes? The Case for Infill and Middle Housing
Gordon Lamphere (09:14): How do we build more homes? We haven’t been, and there’s clearly demand. Is it an issue of the size of the product? Is it an issue of how we’re building homes?
Sean Roberts (09:32): That’s a really broad and complicated question, so I’ll hit a few themes I think are important. The vast majority of housing in the US is built by large production home builders, which are really good at what they do. They can efficiently build big homes in master-planned subdivisions. We need that. It’s an important part of the housing market, it’s been the lion’s share of what we’ve built over the last several decades, and it’s still the lion’s share today.
That said, infill home building is really where we need to focus as a country. That means creating opportunities for additional density in other housing typologies, often colloquially called the missing middle or middle housing, where we add density to existing urban and suburban areas and make better use of land by adding housing units to existing infrastructure and markets. That has worked fairly well in some parts of the country, and we’re seeing a lot more policy pathways opening up to build these infill, missing middle typologies. It needs to be an increasing part of the solution, because those are the locations where people want to live and work, where home prices are highest, and where it can have a pretty big impact.
Those typologies can take a lot of forms: smaller-format single-family homes, townhomes, small multifamily buildings, ADUs. There’s a whole lot we can be building. But we need to think about how to use existing land around existing infrastructure in smarter ways, so we can deploy smaller entry-level homes really cost-effectively and put housing where people actually want it, rather than continuing to take down hundreds and hundreds of acres of farmland to build big tract home developments of 4,000-square-foot homes. That’s not where the bulk of the demand is today.
What’s Holding Back Middle Housing: Zoning and the Diseconomies of Small Scale
Gordon Lamphere (11:41): So what’s primarily preventing middle-income and middle housing?
Sean Roberts (11:47): There’s a plethora of issues. A lot of it comes down to land use and zoning. Depending on where you are and what you want to do, in a lot of places it’s relatively easy to build a big multifamily building and relatively easy to build a normal single-family home. But if you want to build something like a quadplex, putting more, smaller units on the same land, there may not be allowances under the zoning and land use regulations that let you do that as of right. That makes it a lot harder to be creative about the housing typologies we really need.
That’s starting to change. We’re seeing a lot of land use reform across the country creating pathways to do this. California has done it, and many other cities and counties have relaxed restrictions within single-family zoning to create pathways for adding housing units to single-family lots. That’s great, and it’s part of the solution. Ultimately, smart land use reform that allows gentle density unlocks not just the ability for developers to build these homes, but the ability for people to buy attainably priced housing. The developer wins, the end buyer wins, and it makes a lot of sense.
Another problem that goes hand in glove with land use is how these missing middle infill projects have typically been built: by local developers and general contractors who face the structural diseconomies of small scale. They’re really good at what they do locally, but it’s hard for them to access the efficiencies of large-scale production and the lower cost of capital that big production home builders and big apartment developers can. If you’re building a handful of four-unit buildings or some townhomes
Sean Roberts (14:11): as an independent developer, you typically have a much higher cost of capital than the big corporate players. You’re also typically paying a higher tax rate, or your investors and vehicles are. So your money is more expensive than the big guys’ money, and the big guys don’t want to do smaller-scale projects. They want the big projects that move the needle for their companies. As a result, there’s a dearth of capital formation around these smaller projects, which can often generate really good returns but are structurally less efficient and harder to do unless you have a better mousetrap than the traditional construction industry.
Policy Levers: Impact Fees and Tax Treatment for Small Builders
Gordon Lamphere (14:53): I’d like to double back on two things. First, the financing aspect. As somebody who does deals regularly in the commercial sector, office, industrial, go down the list, I know a bigger deal isn’t any more difficult than a smaller one. The bigger deals take the same effort as the smaller deals. So how can governments and communities incentivize small deals? If I’m a developer selecting a deal, I don’t want to bite off one small house when I can knock out 30 in the same amount of time. How can we structure that for the future?
Sean Roberts (15:42): The issue isn’t going from one to thirty. It’s efficient to build three hundred or more. Building the thirty is the hard part. It’s really hard to do that as an independent developer at decent scale, and the big guys want to build the three hundred, so there’s a gap in the market for developers going after these smaller projects.
From a government policy perspective, there are lots of things they could potentially do. In a non-geographically specific sense, one lever that makes sense is providing some kind of sliding scale or breaks on development impact fees for developers building smaller-format typologies. That can really change the math on these projects. Jurisdictions can catalyze smaller entry-level homes by levying lower impact fees on those projects. That’s actually a really big one.
Another is tax treatment. A lot of smaller home builders and operators raise money from capital partners to build projects. If you’re doing for-sale housing, which is really what we need in this country, and raising that capital from friends and family, family offices, and smaller investors, it typically goes into an entity that’s taxed as a dealer, with profits taxed as ordinary income, which is expensive. The big builder C corps have a very different tax situation. That tax inefficiency is a problem. I’d love to see the federal government look at changes in the tax code or tax credits to reduce the tax burden on smaller home builders.
Sean Roberts (17:45): It makes a lot of sense, because you’re creating a pathway for capital to form around smaller-scale home building projects, and that money often stays in the community. You’re hiring the local developer, working with local trades, and building housing in the local market. That’s good for everybody. You get more homes built, and the economy does better. That kind of break would be really helpful for a lot of smaller home builders and developers. It’s hard for the federal government to say it wants to give tax breaks to real estate developers, of course, but it would help in a large way by letting the long tail of smaller developers compete on a more level playing field with big builders that are structured very differently.
Gordon Lamphere (18:35): I would say they already give developers, brokers, and investors like me plenty of tax incentives. They’re just maybe a little misaligned right now.
Sean Roberts (18:46): Misaligned with the goal of building more for-sale housing at affordable price points. Yeah.
How the Middle Got Lost
Gordon Lamphere (18:52): The other thing I wanted to double back on is why. Why did we see the structures develop that created this massive misalignment between small and very large housing in the United States? Why did the middle get lost in the shuffle? For somebody listening who doesn’t know the history of zoning and housing development, it seems odd that the middle would be missing.
Sean Roberts (19:26): A lot of it comes down to zoning policy put in place since roughly the middle of the twentieth century, when there was a massive preference for single-family homes and big residential subdivisions. Land was zoned accordingly, urban areas were zoned for larger multifamily, and the zoning pathway to do things in between really didn’t exist. Look at not just the zoning code but the mortgage market and its structure too: all the incentives were in place to build a whole lot of larger single-family homes and subdivisions for many decades through the twentieth century. That policy actually made a lot of sense coming out of World War II, given the demographics of the country. A lot of people had jobs, were able to afford homes, and built wealth in those homes. That was a really good thing in a lot of ways.
But looking back over the last 70 or 80 years, the very barbelled zoning policy of big multifamily versus single-family created de facto blocks on other housing typologies that could have been built, and that often were built in the early twentieth century in a lot of cities, but never rolled out as broadly as they should have. We’re seeing that change now, but it’s going to take a lot of time. One of the most interesting places to see the stark contrast of zoning policy is Vancouver, Canada. You literally have fifty-story glass-clad condo buildings right beside single-family houses, because the zoning code changes across the street and there’s nothing in the middle. It looks totally bizarre, and it is totally bizarre in a lot of ways. But that’s how the law was set, by a lot of people at the local and municipal level focused on creating suburban environments, which made a lot of sense for a long time and still does in a lot of places.
Sean Roberts (21:49): But we’ve got to create opportunities to do things in the middle.
Solutions: Smaller Lots, Smaller Homes, and Off-Site Construction
Gordon Lamphere (21:52): We’ve talked a lot about the problems, so let’s talk about solutions. You mentioned smaller entry-level homes. How do we get them into these communities? If you could sit down and write the code, what would be your best solution?
Sean Roberts (22:12): Like everything else, the market responds to incentives. In a world where zoning codes provide relatively easier pathways to building single-family homes (nothing is ever easy in real estate development, but relatively easier), the outcome will match the incentives: build the biggest single-family home you can, because you can only build one on that lot. The more home you build at a higher price point, the more margin you make as the builder. That’s what we see a lot of people doing, and it makes a ton of sense. It’s totally rational. When lots are platted larger and only work with that typology, developers respond accordingly and build the biggest home they can sell for the most margin. That’s how markets work.
What we need to do is create opportunities for other types of housing to work: allow smaller lots and smaller homes so we can get the math to work. From my perspective, the key to getting the math to work is thinking about the construction value chain really differently. That’s where what we do at Villa is somewhat unique. We don’t look at traditional stick-built construction. We do everything with off-site construction, which works really well for smaller-format, entry-level homes, especially in infill locations, because we can go faster and build at a lower marginal cost, and the product works really well for that part of the market. It doesn’t work the same way for the large production builders focused on getting as much margin out of a very large home as possible. Different parts of the market, different incentives, different strategic focuses, and everything needs to exist together. Every door we build counts and helps on the margin to bring housing costs into equilibrium with demand. We need every tool in the tool belt put to work building homes.
The Construction Labor Crisis
Sean Roberts (24:35): A big part of how we bring costs down is creating land use pathways to build smaller entry-level homes and doing that increasingly with off-site construction. That also helps bring the marginal cost down, because over the next 10 or 15 years, the construction labor we have in this country to keep building site-built homes is really dwindling. That’s a big problem. A large share of the cost inputs going into a home come from labor, and something like four out of every five builders, if not more, cite labor as one of their biggest input cost challenges. Our construction workforce has a significantly higher average age, and people are aging out. I think for every five skilled construction workers who age out of the market, only two come in to replace them.
We’ve got a really big demographic problem on the construction labor front, and it’s not getting better anytime soon. Ultimately, that means building housing in traditional site-built formats will get slower and more expensive than it is today. That’s a problem, especially when we need to build more housing and build it faster. The best way to do that is to embrace the benefits of manufacturing approaches. And this blows my mind: the US builds about 3 percent of its housing stock using off-site construction methods. That is way behind several other developed countries. In Scandinavia, something like 25 percent of housing is built with prefab off-site methods. Japan is at 15 percent, Germany at 10 percent. We’re way behind the rest of the world in embracing off-site construction, and we’ve got to catch up. It’s the only way to bend the cost curve down and avoid massive cost and cycle-time inflation as the labor base ages over the next decade. We have to do it.
Why the US Lags in Prefab
Gordon Lamphere (26:44): Why do you think that is? Is it cultural? Anybody familiar with construction, and all of our listeners who are developers or investors, understands that off-site construction offers a wide range of benefits, like scale. So why isn’t off-site construction for housing applied more in the United States?
Sean Roberts (27:14): It is, and it’s actually gaining share quite a bit for many of the reasons I just mentioned. But over the last several decades, there were a lot of public policy decisions, really following World War II, that in many ways advantaged traditional site-built construction and disadvantaged manufactured homes and off-site construction. In a lot of ways, that’s a function of years of lobbying from different home building groups, which is totally fine and rational, and it made a lot of sense for the country. When you have a lot of people to put to work and a lot of housing to build, and you have that labor base, as we did for much of the twentieth century, that’s awesome. It drove a ton of economic growth, built a lot of homes, and worked pretty well. The problem now is that we don’t have that labor base.
So we need to rethink the policies that advantaged site-built construction and level the playing field between traditional stick-built construction and the various forms of prefab. That will come from revising building codes, revising land use codes, and creating commercial solutions that make prefab housing more attractive to the end buyer. There’s definitely a cultural stigma in the US, especially around manufactured homes, and it’s going to take creative companies like Villa to commercialize off-site construction in new applications and change the mindset of the end buyer in a way that drives adoption. Frankly, the homes are sometimes higher quality than what you can get from a site-built home, which is a good thing. But we need to change some of the rules to make this work scalably.
The good news is that we’re starting to see that change. In the world of HUD-code manufactured homes, there have been a lot of innovations over the last five to seven years. We can now build attached duplex manufactured homes, and HUD announced last month that we’ll be able to build quadplex manufactured homes.
Sean Roberts (29:37): We can go vertical and build two-story manufactured homes. Consumer financing for manufactured homes on permanent foundations, treated as real property, is pretty darn similar to conventional financing, thanks to Fannie Mae and Freddie Mac programs. So a lot of federal policy is aimed at leveling the playing field between what you can do with a manufactured home and a site-built home. That’s a very good thing, and I think we’ll see more of it going forward, because not only does it create more housing that can be built faster and cheaper, it’s also in many ways more environmentally friendly than site-built construction. It just makes a lot of sense. But like all things in construction, it’s an industry that doesn’t move quickly, and full adoption will take many years.
Manufactured Housing Isn’t the Mobile Home You’re Picturing
Gordon Lamphere (30:25): We’ve had manufactured housing investors on the podcast before, and most of them were involved in what I’d call mobile home or trailer parks. Most of our listeners don’t picture manufactured housing as high-quality, multistory housing. They picture the traditional mobile home. Can you go a little more in depth on that?
Sean Roberts (30:59): It’s a very common perception, and I used to be an investor in manufactured housing communities, so I understand that business really well. It’s important to remember that the HUD code, the federal building code for manufactured homes, is a minimum standard, like every other building code. When we build a home that complies with the federal HUD code but will be used in a higher-end application, we think about its physical characteristics very differently. Instead of building 2×3 exterior walls with seven-foot ceilings and linoleum floors to create the cheapest possible mobile home, we use a very similar production supply chain to build a home with 2×6 exterior walls, nine-foot ceilings, much nicer flooring, counters, and fixtures, and much better fenestration. It’s just a better home. It can be built to the same code, but significantly above what that code requires, while getting the lower marginal cost of production in a factory. We thought really differently about the upstream production chain and the product it can build, and we spec the homes, built to our designs by our factory partners, to a level that meets the market we’re focused on.
So yes, some of the homes we build are HUD-code manufactured homes, but they’re much nicer and in many ways much more analogous to a site-built home. Those homes are almost always installed on a permanent foundation, typically a concrete stem wall, although we use different foundation systems. Once the home is affixed to that foundation, it’s real property, functionally and aesthetically equivalent to a site-built home. A lot of people have walked through the homes we’ve built, and unless you really know what you’re looking for, it’s very hard to tell whether a home was built on site or built in a factory and set on a permanent foundation. Again, it’s about thinking differently about the value chain and how we commercialize these products in the market.
Villa’s Value Proposition: Cheaper, Faster, Less Risk
Gordon Lamphere (33:19): Speaking of commercializing these products, we’ll get into our final four in a couple of minutes, but first, what do you see as the biggest value you can offer people who want to partner with you as investors, or people who want to live in one of these homes?
Sean Roberts (33:54): To be clear, we do manufactured homes and volumetric modular, so anything that can be built three-dimensionally in a factory, we can help clients build. We work with individual consumers and with institutional clients spanning public REITs, private equity firms, and individual owner-operators, across various project scales. Our primary value add boils down to being solely focused on off-site construction. We aren’t tied to one factory, and we don’t own or operate a factory. Instead, we layer across the existing production ecosystem. Because we aggregate so much demand from various applications, we can route that demand very efficiently into a network of third-party-owned factories building products we design, which gives us efficiencies in the procurement pricing we can get from the factories.
Sean Roberts (34:53): If you went directly to a retailer or a factory, you’d pay retail. If you come to Villa, you basically get to pay wholesale, with a better-designed product. We can get the pricing down because we’re buying more in bulk than a typical builder could. Then you have all the efficiencies of off-site construction. We can do it significantly faster than site building. We can typically be in and out on site within three to four months, depending on where we are, rather than twelve months or more for site building. We can do it for a lower cost. And there’s a lot less risk on site.
Construction is risky, and any developer who has actually built something knows how much can change: costs, labor availability, timelines, inspections, permit approvals. Many folks are very good at navigating that risk, but there’s inherent uncertainty in traditional site-built construction. A lot of that uncertainty goes away when you build the home in a factory, in a controlled environment where you don’t have to worry about snow falling while you build, or trades not showing up on time. If the electrician doesn’t show up and the next crew can’t come in, your whole schedule is busted. In the factory, it’s all done very efficiently. You know what you’re going to get, when you’re going to get it, and what you’re paying up front. That’s a really big advantage in any type of construction, but especially residential construction at this scale.
So the punchline is that our value proposition is: we’re cheaper, we’re faster, and there’s less risk. And we give you the ability to tap into the entire broad ecosystem of factories by talking only to Villa, because we do all the work to orchestrate across that supply chain. That’s really unique. No other company does that in the market.
From Factory Floor to Foundation
Gordon Lamphere (36:52): It’s a fascinating value add. The one question I have is how you get your product to the site. There are so many benefits to building in a factory, with no weather and no crews failing to show up. But how do you get the product to the site?
Sean Roberts (37:21): That’s a core part of what we do. Fundamentally, as a business, we’re a demand aggregation and fulfillment layer, which means we connect supply and demand. When there’s a unit, or a batch of units, that we need to build with a factory partner, we essentially have an internal algorithm that routes that demand to the right factory, one that can build the right product at the most competitive price, at the most geographically proximate plant to reduce shipping costs, while also considering the factory’s backlog so it can be built quickly. That’s a multivariable optimization problem, because you’re solving for cost, speed, distance, and more. But with enough factories in your network, which we have, we can solve some pretty interesting supply chain problems that way.
As for how we actually get the home from the factory to the site, it’s not the easiest thing in the world to move a 20,000- or 25,000-pound home module down the highway. There’s a lot of work we orchestrate around traffic control, escorts, and having a crane on the other end ready to pick up 20,000 pounds. A big part of what we do is orchestrating all the elements of getting the module from the factory floor onto the on-site foundation, and making sure everything is seamlessly integrated so the right things happen at the right time, cost-efficiently and safely, which is also very important. You don’t want to drop a 20,000-pound home on something. There’s a lot that goes into it, but we’ve built a machine that’s purpose-built to do that repeatedly, at scale, and very efficiently. We need companies that can do these things in America.
One thing that always blows my mind is that back in the 1970s, we were building an average of about 370,000 manufactured homes a year. Right now we do about 100,000 and change a year. So we’re at about a third of the peak production of the 1970s, and we’re in a housing crisis. Why aren’t we ramping up production? The vast majority of those factories, plus some new ones, still exist across the country. We’ve got 150-plus home building factories, some of which are sitting with idle
Sean Roberts (39:44): extra production capacity. We should be running these things at full throttle across the whole country and putting these homes where they’re needed. The fact that we’re not just blows my mind. A big part of our mission at Villa is to leverage that existing factory supply chain, bring that production capacity into new market applications, and be the fulfillment layer that connects the factories to new places to put prefab homes that we haven’t thought to use in the past. We’ve gotten really good at doing that at Villa, and we’re really just getting started.
The Final Four: Where Real Estate Goes in Ten Years
Gordon Lamphere (40:19): Sadly, I wish we were still getting started. I’ve learned a lot today, and so have our listeners. But we’ve got to get to our final four, where we learn a little more about you, where you see the world going, and maybe who you can put us in touch with. The first thing we ask everyone on this podcast is where you see real estate going ten years out. I know it’s hard to play Nostradamus, but the men and women in the arena tend to know where the future is going.
Sean Roberts (40:51): I don’t have a crystal ball. One thing I do know, as we mentioned earlier, is that labor is a real challenge in the construction industry, and that is going to necessitate more penetration of off-site construction. That will take a lot of different forms. We see big production builders today doing off-site framing and building roof trusses in factories. We’re going to need more of that. We’re going to need more volumetric modular production and more 3D printing. There are a lot of ways to take advantage of modern manufacturing methods and apply product-centric thinking to how we build real estate, so it doesn’t require quite as much labor on site. I think that mathematically has to happen.
Something we didn’t mention earlier that goes hand in glove with that is the laborer’s perspective. In a world where construction labor is constrained, if you’re a talented journeyman plumber or electrician, where are you going to go? To the big commercial jobs that pay more. That means lower price point, smaller-scale home building projects, the real estate we need most in this country, are among the first places the labor base falls away from, and they see disproportionate impacts from labor shortages and price inflation. That’s a problem, and the best way around it is to move some of the supply chain into factories. We kind of have to. I personally have pretty high conviction that it will happen. We’ve seen it in other economies with higher penetration of prefab housing, and the same thing will happen in the US over the next decade. It’s just math. Beyond that, I don’t know. The world is a complicated place with a lot of moving parts.
Advice for Young Professionals: Stay Curious
Gordon Lamphere (42:41): The world is definitely a complicated place, but I can say the number one issue in getting any deal to pencil is always labor and getting things done. A lot of bright minds are working on it, and I’d be very shocked if something doesn’t change substantially over the next ten years. But we don’t always like to look forward. Sometimes we like to look back. If you could go back in time and give yourself one bit of advice, maybe when you were graduating college, what would it be?
Sean Roberts (43:22): Stay curious and keep learning, which I think I have embraced. One thing I’ve learned over the last couple of decades is that you don’t always know at the time how one experience is going to connect to a future one. A lot of interesting things I’ve done in my career have come full circle in what I’m doing now, including investing in manufactured housing years ago and building my own house. At the time, it’s hard to connect the dots and understand how what you’re doing and learning today can make you better at what you do tomorrow. So don’t get too much tunnel vision, focused only on the thing right in front of you. Open your eyes, soak it all in, and learn as much as you can, because you’ll find an interesting way to connect the dots and apply it someday. You don’t know what that will look like. Just keep your brain open.
Book Recommendation: The Most Important Thing
Gordon Lamphere (44:21): That’s terrific advice. Speaking of staying curious about the world, we’re always curious about books. It doesn’t have to be the next great work of art, but what’s a book someone interested in real estate, or the world in general, should pick up?
Sean Roberts (44:45): I’m a big fan of The Most Important Thing by Howard Marks. A lot of people love that book. It’s a great way to think about probabilistic thinking, risk, and investing. There are many others on the shelf behind me, but that’s the one that jumps to mind right away.
Who Should Be Our Next Guest?
Gordon Lamphere (45:05): There’s one last question we like to ask, and it’s the whole reason for the podcast. We firmly believe the men and women in the arena know the best voices to reach out to next, and this podcast is all about connecting people in the world of real estate. If we were to reach out to another voice in the real estate world, who should that be?
Sean Roberts (45:31): This is going to be a bit of a cop-out answer, but rather than naming a specific person, I’d say your prototypical Gen Zer, who in many ways is the up-and-coming user of real estate. How Gen Z will own or rent housing, how they’ll experience the office environment over their careers, how other real estate formats will affect them: I think it’s going to be really different from what folks our age have experienced. We’re not that old, but look at how real estate has evolved over the last couple of decades. We have totally new asset types, business models, and ways of using built space that are really cool. The next generation, whether Gen Z or Gen Alpha, will have really interesting and creative ways of using real estate. Things like co-living, which is kind of cool and has some traction, and other ways of using physical space will be thought about really differently. Understanding who the user is and how they’ll use space over time is really interesting. I don’t know if that counts, and I don’t have that many Gen Z or Gen Alpha friends who are tenants in real estate.
Gordon Lamphere (46:51): We have had Gen Z folks on the podcast to discuss a wide assortment of issues, from climate change to how people are using office space in new ways, and we have a couple of co-living guests coming on as well. So those are great insights. There’s one last one we’d like to ask for: if somebody wants to get in touch with you, Sean, what’s the best way to do that?
How to Reach Sean Roberts
Sean Roberts (47:21): Our website is villahomes.com, V-I-L-L-A Homes dot com. You can see all the pretty pictures of what we build, learn what we do, and contact us through the website. That’s one of the best ways.
Gordon Lamphere (47:38): Sean, thank you so much for hopping on the podcast today. We’d love to have you on again in the future.
Sean Roberts (47:43): It’s my pleasure. It was a lot of fun. Thanks for having me.
Gordon Lamphere (47:45): Thanks again to Sean. We appreciate his insights. If you enjoyed the podcast, please give us a like, a five-star rating, and a review. Your comments, interactions, and subscriptions truly matter, and they help us continue to bring on quality guests. You can find us on YouTube, Spotify, or wherever you get your podcasts. I’m Gordon Lamphere with The Real Finds Podcast. Thank you for listening.
Van Vlissingen and Co. has been the Midwest’s oldest commercial real estate brokerage, development, and management firm since 1879, and today is independently ranked the #1 commercial real estate agency in Chicagoland, home to the #1 independently ranked agent, Gordon Lamphere, and the region’s #1 ranked commercial property management team. If you own, manage, or invest in energy-adjacent, mixed-use, or transit-oriented property across Lake County, the North Shore, the Northwest and O’Hare corridors, DuPage and the I-88 corridor, Will County, or southern Wisconsin’s Pleasant Prairie, Kenosha, and Racine markets, contact Van Vlissingen and Co. at 📞 847-634-2300 or 🌐 vvco.com. For a market-wide view of where these dynamics sit today, see our State of the Chicagoland Commercial Real Estate Market for Q3 2026.