Last week, I had the opportunity to attend the Residential Neighborhood Development Council (RNDC) Gold Flight at the ULI Spring Meeting in Denver — a closed-door session that brings together some of the most respected homebuilders, land developers, and real estate entrepreneurs in the country.
It’s a rare environment: candid, thoughtful, and grounded in real experience. Over dinner the night before the sessions began, one member shared his story — building a business, losing it, rebuilding again — and eventually leading a successful land development and homebuilding company. It was a reminder of just how much perseverance, grit, and vision lives inside this community. These are people who’ve lived through multiple economic cycles and persevered the test of time.
With such a large audience, I was honored to moderate a panel titled “Beyond the Hype: AI’s True Value in Homebuilding” — a conversation with Jenny Song (Infilla), Oliver Alexander (Prophetic), and Will Zhang (OpenHouse.ai). We explored how AI is beginning to reshape the homebuilding industry — not through flashy demos, but in real, operational ways.
Jenny spoke about the fragmentation of planning and permitting systems, and how AI can help bridge the gap between municipalities and developers by making approvals more predictable and transparent. Oliver shared how AI-centric firms are already pulling ahead in profitability — as shown in a chart comparing traditional firms to those that invested early in AI. Will walked through how predictive models are helping builders simulate buyer demand, optimize cycle times, and even forecast cash flow.
What united these perspectives was a sense of pragmatism. We weren’t talking about some distant AI future — we were talking about tools already being used on real projects. Tools that increase confidence, reduce risk, and help decision-makers move faster.
But after the meeting, I drove up and down the state meeting private homebuilders — many long-tenured and deeply invested in their regions — and a more pressing theme surfaced: the growing dominance of public builders, the shrinking space for smaller players, and the quiet erosion of choice in the market. One builder told me, “There were ten of us building in this region back in 2018. Now there are three.”
That stuck with me. And it’s what prompted this reflection.
Why Competition Matters
If one believes in a free market, a healthy economy relies on competition. And competition relies on choice. In housing, choice means more than just different elevations or floorplans. It means a diverse ecosystem of builders — each with their own approach to product, pricing, geography, and execution.
Today, public builders — the large, publicly traded homebuilders — account for around 45% of new home construction nationally. In some major markets, their share is well over 60%. That’s not inherently problematic — in fact, their growth has helped stabilize production, improve operations, and deliver much-needed inventory at scale.
But it does raise a concern. If market share continues to consolidate and smaller builders can’t keep up, we risk losing the breadth of thinking, experimentation, and regional nuance that only comes from a more competitive builder base.
Public builders bring scale, consistency, and cost efficiency — they’ve optimized for volume and velocity in ways that have raised the operational bar for the industry. But private builders bring local insight, flexibility, and the ability to serve more specialized market needs. Both are essential to a healthy, competitive ecosystem.
Consolidation, however, carries a tradeoff. If the field becomes too narrow, we don’t just lose competition — we lose adaptability. A healthy market needs both high-scale builders who can deliver consistency, and entrepreneurial builders who can adapt faster and innovate locally.
The Structural Disadvantage Facing Private Builders
Private builders haven’t fallen behind because of lack of effort. As Scott Cox recently outlined in Narrow Pathways: 7 Options Key Private Homebuilders’ Roadmap, they’re simply operating in a system where the math doesn’t work in their favor.
- SG&A Load: Public builders often close 5–6 homes per employee. That scale allows them to run leaner — sometimes 3–4% lower SG&A as a percentage of revenue. Smaller builders, even with great teams, can’t match that throughput.
- Cost of Capital: Publics access cheaper financing. Many carry modest debt levels and can borrow at institutional rates. Private builders often rely on more expensive capital or bank debt with stricter requirements. That gap alone can cost 3–5 points of margin.
- Direct Costs: Scale buyers negotiate better deals. Materials, trades, insurance — all come with better terms when you’re operating at national volume. Most private builders estimate a 5% cost disadvantage on direct construction alone.
These gaps aren’t about competence — they’re about structure. And they add up.
This dynamic has created what some describe as a “middle-market purgatory.” Builders in this segment find themselves squeezed — lacking the scale advantages of public builders while facing operational complexities that smaller, more nimble builders can often avoid. It’s a challenging position, but also one ripe with opportunity for those willing to innovate and adapt.
The Overlooked Advantage: Flexibility
Here’s what often gets missed in this narrative: private builders, while smaller, are often more flexible.
You can change direction faster. You can test ideas in one community without layers of approval. You can build relationships with land sellers, city officials, and buyers in ways that don’t scale — and that’s an advantage.
Ironically, public builders face the opposite challenge. When you’re large, change takes time. Innovation must be vetted, piloted, and risk-managed. That’s the reality of being a public company. It’s not a weakness — it’s a different tempo.
Which means: smaller builders may be in the best position to try new things first.
And that’s where technology comes in.
AI Isn’t Magic — But It’s Moving Fast
At our panel, Jenny Song described how AI is helping close the gap on permitting by reducing friction and eliminating blind spots in local planning processes. Will Zhang showed how predictive models are giving builders the ability to simulate demand and optimize spec strategy. And Oliver Alexander reminded us, with hard data, that those who embrace AI now are more likely to capture compounding gains — not just survive, but outperform.
These aren’t abstract concepts. Builders are already using this tech — not to replace their judgment, but to enhance it.
One example: a builder at the conference approached me after the panel and asked if the same pricing models used to move homes faster could be applied to land negotiations.
“If I could show a land developer when lots are likely to move — at what price, and how long it’ll take — that helps both of us. They get certainty. I get leverage.”
That’s exactly the kind of forward-thinking collaboration that AI makes possible. And it shows what’s uniquely available to those willing to experiment today.
The Role of Tech Companies and Capital Partners
AI and technology alone won’t solve every challenge private builders face. Adoption takes work. Operational discipline still matters. But these tools can compress timelines, reduce waste, and unlock capital — especially when paired with the builder’s expertise.
It’s also on tech companies — like ours — to build for everyone, not just the biggest players. If we only design for the top 10 builders, we reinforce existing imbalances. But if we work with builders at every scale, we help create a more dynamic, resilient market.
And for capital partners, this moment may call for rethinking how we evaluate risk. If a builder can demonstrate clear forecasting, demand simulation, and operational insight using modern tools — that should be a signal. One that speeds up trust and decision-making.
Let’s Keep the Field Open
What this all comes down to is simple: we need more builders, not fewer. The public builders will continue to grow and lead — and that’s a good thing. But the market is stronger when others can rise with them.
We need new ideas. We need different scales. We need both national efficiency and local insight.
Capitalism doesn’t guarantee fairness. But it does thrive when everyone has the tools to compete.
The opportunity is here — for builders, for tech companies, and for those willing to rethink what’s possible.
