We are warnings- and crisis-weary, impatient for a run of sustained, demand-driven dynamism.

Higher-for-longer, more volatile-for-longer, more unstable-for-longer, ... atypical this, anomalous that, risk-this, and threat-that, each day, a higher, denser, more daunting wall of worry.

Actual dynamism faces off with feared mayhem, underscored by a minefield of global menaces and machinations.

In this context, homebuilding enterprise strategists—ears to the ground—hear nothing so pronounced and resurgent as demand that won't be deterred. In this same context, economist Kevin Erdmann illuminates a bright line in this Erdmann Housing Tracker analysis, "A Macro-Summary of the State of American Housing Construction."

Erdmann's clarion challenge opens this way:

The American housing market has two ways forward:

1)      An extended building boom, which may slowly reverse the debilitating housing costs that have undermined our economy and our culture. It will take years or decades of building hundreds of thousands of units more than we are now, annually.

2)      Building at current levels, which is not high enough to lower rents and prices of residential land (and homes).

America is short by millions of units, but the lack of production is due to legal restrictions over the long term and supply chain capacities in the short term. The floor in American housing production can only be lowered from here by legally removing more buyers, builders, or owners from the marketplace."

Erdmann goes further – and further than most other industry estimates – to quantify in specific terms how "short by millions of units" we stand in early 2024.

Depending on population growth trends, something close to 1.5 million units a year are needed to keep up with household formation, and more than 10 million units are needed to get back to pre-Millennium supply norms."

The issue, Erdmann asserts, is a fork in the road, Path 1 or Path 2.

At the micro level, costs determine outcomes. At the macro level, when you are in a state of deprivation, the state determines the costs. Nature abhors a vacuum, and that includes a vacuum where 15 million homes should be. The richest nation in the world can only be housing-poor at the end of a gun."

"Water runs down hill," Erdmann concludes, "unless you build a damn."

Against an Erdmann backdrop of hard-won progress or painful defeatism, a realistic approach to reigniting dynamism in the face of paralysis and polarization requires an entire repertoire of leadership, partnership, and accountability to shareholders, stakeholders, channel partners, localities, team members, and homebuying and renting customers.

JP Morgan Chase chairman and ceo Jamie Dimon's 61-page epic annual letter to shareholders counts through the ways homebuilding, residential development, and investment business leaders had better put this entire tool-box to work to avoid winding up on Erdmann's depressing and defeatist Path 2.

Here's a quick run-through on the Jamie Dimon leadership playbook of the moment:

1. Embrace the OODA (Observe, Orient, Decide, Act — repeat) Loop: Implement a strategic process of constant review, analysis, decision making, and action. Understand competitors, market dynamics, customer preferences, costs, and emerging trends through diligent study and data analysis. Adapt plans based on thorough assessments.
2. Continuous Learning and Assessment: Foster a culture of constant learning and assessment through engagement with employees, clients, competitors, and stakeholders. Encourage curiosity, humility, and openness to feedback to identify blind spots and challenge assumptions.
3. Challenge the Status Quo: Be willing to question established beliefs and sacred cows within your organization. Seek out innovative approaches, even if they deviate from conventional wisdom. Encourage a culture of innovation and experimentation.
4. Long-Term Vision and Decision-Making: Shift focus from short-term metrics to long-term trends and outcomes. Develop a "future-back" approach to anticipate future challenges and opportunities, informing strategic planning and risk management.
5. Decisive Leadership: Foster a decision-making environment that balances the need for thorough analysis with the necessity of timely action. Empower individuals to make decisions and act decisively, while ensuring the right processes and information-sharing mechanisms are in place.
6. Build Trust and Respect: Prioritize earning the trust and respect of employees, customers, and communities. Demonstrate integrity, transparency, and accountability in leadership actions. Cultivate a culture of mutual respect and appreciation.
7. Effective Communication and Vision: Communicate a clear, coherent, and consistent vision that aligns with organizational values and goals. Inspire and motivate employees by leading by example and actively engaging in the mission.
8. Engage in Public Policy Discourse: Recognize the importance of engaging in public policy discussions and advocating for policies that support economic growth, stability, and societal well-being. Understand the interplay between domestic and foreign economic policies and their implications for business operations.
9. Global Leadership and Collaboration: Acknowledge the interconnectedness of global economies and the importance of international collaboration. Lead with strength and diplomacy to foster unity among allies and address shared challenges effectively.
10. Strategic Pillars for Success: Develop a comprehensive strategy that encompasses maintaining leadership, achieving economic success with allies, strengthening the nation domestically, and addressing pressing challenges. Align business strategies with broader national and global objectives.

By integrating these insights into their strategic planning and decision-making processes, leaders in the residential construction, development, and investment sector can navigate the complex landscape of business conditions, political dynamics, and global challenges, positioning their organizations for long-term success and resilience.

Carrying those 10 strategic leadership cornerstones forward in the throes of challenge to homebuilding, development, and investment, Dimon highlights accountability and partnership – private sector, public, community-level, and household-level – as essential to choosing a Path 1-style approach to housing crisis solutions.

1. Understanding Domestic Concerns:
   • Recognize the sentiment among Americans regarding domestic issues such as immigration, border security, and the fraying of the American dream, particularly for low-income and rural Americans.
   • Acknowledge the legitimate frustrations of citizens who feel neglected and left behind amid growing wealth and prosperity elsewhere.
2. Addressing Economic Growth and Policy Making:
   • Emphasize the importance of deliberate policies aimed at driving healthy economic growth, focusing on increasing GDP through measures such as tax policies conducive to employment and capital investment.
   • Advocate for consistent and well-conceived regulations that streamline processes and drive better outcomes without unnecessary burdens on businesses.
3. Infrastructure and Permitting:
   • Highlight the need for timely permits on projects at federal, state, and local levels to improve infrastructure development and reduce investment costs and delays across various industries, including construction.
4. Government Budgeting and Fiscal Management:
   • Stress the importance of proper federal government budgeting and fiscal management to minimize waste, uncertainty, and inefficiency in the economy, thus fostering growth.
5. National Interests vs. Self-Interests:
   • Encourage prioritizing national interests over self-interests, advocating for collaboration and policies that benefit the broader economy rather than specific industries or entities.
6. Celebrating American Exceptionalism:
   • Celebrate the principles of freedom, democracy, and enterprise that define American exceptionalism while acknowledging and working to correct the nation's flaws.
7. Promoting Collaboration with Business:
   • Advocate for healthy collaboration between government and businesses, emphasizing the role of companies in creating jobs, supporting communities, and driving prosperity.
8. Improving Government Competence and Effectiveness:
   • Call for improvements in government competence, leveraging expertise from various sectors, including the private sector, to address complex challenges and enhance policymaking and implementation.
9. Balancing Social Media Concerns:
   • Address the negative impacts of social media and advocate for voluntary measures by platform companies to enhance user control, authenticity, and information integrity while balancing competing values such as free speech and privacy.
10. Focusing Resources and Leadership:
    • Stress the importance of focusing resources and leadership on complex domestic and international challenges to maintain America's position as a global leader.
11. Hope for a Positive Outcome:
    • Express optimism and faith in America's ability to overcome challenges and lead the Western world by coalescing with allies and upholding enduring values.

Zeroing in specifically on the fork in the road that Erdmann outlines, Dimon lays out a high-level road map to a Path 1 to progress:

1. Addressing Housing Affordability:
   • Recognize the pressing issue of housing affordability, particularly for low-income and rural Americans.
   • Advocate for policies that promote affordable housing solutions, such as targeted tax credits or incentives for developers to build affordable units.
2. Streamlining Permitting Processes:
   • Highlight the need for timely permits on residential development projects to alleviate bottlenecks and reduce costs associated with lengthy approval processes.
   • Advocate for reforms at federal, state, and local levels to streamline permitting and encourage more efficient development of residential properties.
3. Supporting Infrastructure Investment:
   • Emphasize the importance of infrastructure investment in supporting residential development, including transportation networks and utility systems.
   • Advocate for policies that prioritize infrastructure projects that facilitate residential growth and improve access to affordable housing.
4. Fostering Public-Private Collaboration:
   • Encourage collaboration between government and private sector stakeholders to address housing affordability challenges.
   • Advocate for partnerships that leverage private sector expertise and resources to develop innovative solutions for affordable housing.
5. Promoting Regulatory Efficiency:
   • Advocate for regulatory reforms that reduce unnecessary burdens and costs on residential development projects.
   • Support initiatives to streamline zoning regulations, building codes, and other requirements to make housing development more efficient and cost-effective.
6. Investing in Workforce Development:
   • Recognize the importance of investing in workforce development programs to address skills shortages and support job growth in the construction industry.
   • Advocate for policies that promote vocational training and apprenticeship programs to expand the pool of skilled workers available for residential construction projects.
7. Innovating Housing Finance:
   • Explore innovative financing mechanisms to increase access to homeownership and promote housing affordability.
   • Support initiatives that expand access to mortgage credit for underserved populations and facilitate alternative financing options for affordable housing development.
8. Promoting Sustainable Development:
   • Advocate for sustainable development practices that prioritize energy efficiency, environmental conservation, and community resilience in residential projects.
   • Support policies that incentivize green building practices and promote the development of sustainable, mixed-income communities.

By focusing on these specific aspects of housing affordability and residential development, business leaders in the homebuilding and real estate sectors can align their strategies with Jamie Dimon's insights and recommendations, ultimately contributing to more inclusive and sustainable housing markets.

So what will the answer to Kevin Erdmann be? Path 1 or Path 2?