Housing reform’s missing capital is key to unlocking abundance

For the first time in over a generation, the politics of scarcity are showing cracks. Even in California, infamous for gridlock, voters and policymakers are signaling a desire to remove bottlenecks and make progress possible again.

Nowhere is this shift more visible than in housing.

Daniel Lurie defeated incumbent mayor London Breed, in part, on a pledge to overhaul San Francisco’s outdated permitting system and accelerate construction timelines. Voters also ousted several members of the Board of Supervisors who routinely stalled or killed projects under the guise of protecting “neighborhood character” and who made financing new developments impossible with unworkable affordability requirements.

Impatience with delay and dysfunction is showing up statewide as well. Gov. Gavin Newsom signed reforms to streamline environmental review, a process more often used to delay or kill projects than to protect the environment. Months later, he signed Senate Bill 79, which allows denser development around transit hubs and limits local veto power over such projects.

Nor is the momentum confined to California. In New York, Democratic Socialist of America-endorsed mayor-elect Zohran Mamdani has pledged to reduce permitting delays and ease restrictions for private developers. In Washington, bipartisan housing proposals have advanced in both chambers, reflecting a simple fact – housing scarcity is now a mainstream political problem, not a niche concern.

This is the clearest expression of a broader shift: the abundance movement.

Abundance is the belief that we can build faster and better by pairing smart deregulation with targeted investment. The premise is straightforward. Progress depends not only on changing rules, but on re-learning how to build things. The economics are not new. The political will is.

But abundance is at risk of becoming a slogan. The politics have moved; the machinery that turns permission into homes has not. The next bottleneck is delivery, starting with finance.

Consider small multifamily housing. These are the two to fifty-unit “missing middle” projects that reforms are designed to unlock. Cities stopped building this type of housing decades ago and now say they want it back. In practice, the financing ecosystem has atrophied.

After decades of dormancy, banks have forgotten how to underwrite small multifamily. Underwriters rely on comparable sales to assess risk, but because so little small multifamily has been built, there are few comparable sales. Many lenders won’t touch the sector at all. Consolidation has thinned the ranks of community banks, weakening the relationship-based lending that historically made smaller, idiosyncratic projects feasible.

And that’s just the debt side. The lenders who will engage often demand steep equity contributions, typically 20-30% of total project costs and sometimes more. A two-unit condo in San Diego might require $900,000 in cash just to secure financing. Most small and midsize builders don’t carry that kind of liquid cash, and raising it deal-by-deal is slow. Institutional equity, meanwhile, often has minimum check sizes around $10 million, so these projects fall into a no-man’s-land: too bespoke for banks, too small for big capital.

“Missing middle” projects often yield strong returns. However, the financing ecosystem hasn’t realized this yet.

Political attention won’t stay fixed on housing for long. Today’s backlash against scarcity can easily become tomorrow’s backlash against disappointment. If reforms pass but little gets built, or prices don’t budge, voters will conclude the movement was a mirage. That disappointment will harden into skepticism toward additional reforms, such as clearer environmental review, hard timelines for permits, and fewer add-on mandates that kill projects.

That would be tragic. 

To deliver timely results and seize this moment, the abundance movement and its funders need to pivot from winning policy to underwriting delivery – the financing and tools that turn permission into homes.

Start with finance. In practice, abundance-aligned donors, angels, and venture investors are best positioned to pool capital to back small multifamily developers overlooked by institutional finance. Mission-driven funds and syndicates can write the first checks that get projects off the whiteboard and into the ground.

The payoffs will compound; every completed project generates comparable sales. With more comparable sales, underwriting becomes less guesswork, perceived risk drops, and equity requirements soften.

Projects can still die in plan checks, permits, and rework. So abundance-aligned funders should pair financing housing directly with investments in execution capacity, the tools and teams that reduce avoidable delay and lower soft costs. Companies like Planweave and Digs are building software that accelerates plan review and cuts the back-and-forth that turns months into years.

This is what it means to underwrite delivery. Fund the first wave of missing-middle projects, and fund the workflow infrastructure that makes the next wave faster, cheaper, and repeatable. Do both, and the “yes” in the law becomes a “yes” on the ground.

If abundance is going to stick, builders have to be able to build. And they need capital that’s willing to go first.

Alexander Billy is an economist and co-founder of MidFill, a housing-focused venture. Neel Sukhatme is dean of the University of Michigan Law School. The opinions expressed are those of the authors alone and do not represent the views of the University of Michigan or any other institutions with which they are affiliated.