RXR CEO Scott Rechler on housing affordability: The real issue is supply

Speakers

Scott Rechler — Chairman and CEO of RXR / Board Member of the New York Fed

Summary

The US faces a structural housing supply gap of 4-7 million homes, which is the primary driver of affordability issues, not institutional buying.
A "bifurcated economy" exists: The "Digital Economy" drives 90% of growth, while the "Real Economy" (small businesses, first-time homebuyers) is suffering due to high rates and credit constraints.
Regional banks are structurally "broken" regarding construction lending; they cannot compete with big banks or provide necessary capital to regional homebuilders.
Political pressure on institutions (like Blackstone) buying single-family homes is "marginal" because most are pivoting to "Build-to-Rent" rather than buying existing inventory.
Proposed solutions include tax holidays for retirees to sell investment properties (unlocking supply) and mortgage portability, though these remain hypothetical policy ideas.

Trade Ideas

Ticker	Direction	Speaker	Thesis	Time
REGIONAL BANKS	AVOID	Scott Rechler Chairman & CEO, RXR (Real Estate Developer / Fed Board Director)	Rechler explicitly says regional banks are "broken," "can't afford to compete with the big banks," and "don't have the capacity to be lenders." Construction and Commercial Real Estate (CRE) lending were the bread and butter of regional banks. If they are retreating from this due to capital constraints and regulatory pressure, their earnings growth engines are stalled. They are losing their best clients to private credit or G-SIBs (Global Systemically Important Banks). Avoid the sector. Even if they appear "cheap" on book value, they are value traps with no clear path to growing their loan books. A sudden, aggressive Fed rate cut cycle that steepens the yield curve and rescues their balance sheets.	1:12
LARGE PUBLIC HOMEBUILDERS	LONG	Scott Rechler Chairman & CEO, RXR (Real Estate Developer / Fed Board Director)	Rechler states there is a "supply gap" of 4-7 million homes, but "regional banks... are not lending today to the regional builders." Homebuilding is capital intensive. Small, private builders rely almost exclusively on regional bank construction loans. If that capital spigot is turned off, small builders cannot build. Large public builders (D.R. Horton, Lennar) do not rely on regional banks; they have investment-grade balance sheets and access to public debt markets. Therefore, the "broken" regional banking system forces market share consolidation into the hands of the large public builders. Long large-cap builders as they are the only ones capable of bridging the supply gap in a credit-constrained environment. A severe recession that crushes overall housing demand regardless of supply constraints; persistent high rates locking up buyers.	—
SINGLE-FAMILY RENTAL REITS	LONG	Scott Rechler Chairman & CEO, RXR (Real Estate Developer / Fed Board Director)	Regarding the political backlash against firms like Blackstone buying homes, Rechler notes it is "marginal" and that "most of them are focused on Build-to-Rent versus buying inventory." The market fears regulation will stop institutions from owning homes. Rechler clarifies that the smart money has already pivoted to "Build-to-Rent" (BTR). This pivot aligns with the government's goal (creating new supply) rather than fighting it. This reduces regulatory risk for BTR operators and positions them to solve the supply crisis. Long BTR-focused REITs. The political headwinds are overstated, and the underlying demand for rentals remains high due to the affordability crisis preventing home ownership. Specific legislation banning bulk ownership of single-family homes, regardless of whether they are new builds or existing inventory.	—