At DDB Capital, we believe one of the most consequential constraints on housing supply is the difficulty of converting raw land into approved, economically viable communities. That process creates an opportunity for disciplined investors who can resolve development risks at a cost that leaves an attractive margin of safety.
Available acreage becomes useful housing supply only when zoning, infrastructure, engineering and project economics align. The time and capital required to reach that point matter as much as the purchase price.
The National Association of Home Builders’ June 2026 analysis illustrates the scale of these costs. NAHB estimates that regulation accounts for $131,734, or 26.4%, of the average new single-family home’s sales price. That includes $46,795 attributable to regulation during land development. The total estimate increased more than 40% between 2021 and 2026. These are national averages, with substantial variation across individual projects and markets.
Time is also part of the burden. NAHB’s full study incorporates financing costs associated with regulatory delays. Among developers reporting such delays, the average was approximately seven months. The study also explains that the increase in its dollar estimate reflects both general inflation and a higher regulatory share of home prices.
For investors, the implication is straightforward: an attractive acquisition price can become an unattractive investment if approvals take longer, infrastructure costs increase or achievable lot counts decline. Underwriting must account for the capital and time required to produce a deliverable asset.
Builder strategy reinforces the importance of that work. In its 2025 Annual Report, D.R. Horton reported that 75% of its homebuilding lot position was controlled through purchase contracts at fiscal year-end. It also reported that 65% of homes closed during the year were built on lots developed by Forestar or third parties, while reiterating its preference for purchasing finished lots when possible.
We believe this emphasis on capital efficiency supports demand for land partners who can advance approvals, coordinate infrastructure and deliver lots on credible schedules. Their value comes from resolving uncertainties that affect a builder’s ability to start homes and deploy capital productively.
Our investment approach begins with acquisition discipline: establish builder demand, test infrastructure assumptions, evaluate approval requirements and limit capital exposure while those questions are resolved. Returns must remain attractive under realistic assumptions for delays, costs and sales pace.
Entitlement complexity creates an opportunity only when the cost of resolving it leaves sufficient value for investors.
At DDB Capital, we focus on identifying that value early and advancing land toward a clearly defined builder exit. We expect developers who combine local execution capabilities with disciplined underwriting to become increasingly valuable partners to homebuilders.
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