Real Estate Expert Answers US Housing Crisis Questions | Tech Support | WIRED

Summary

In the video, urban planning professor Kate Nelischer addresses the pressing issue of housing affordability, discussing rent increases, the housing crisis, and the impact of institutional investment on the market. She highlights the scarcity of affordable homes, the role of supply and demand, and the challenges of converting office spaces into residential units. Nelischer also touches on innovative housing solutions like modular and mass timber construction, the history of redlining, and the effects of gentrification and Airbnb on housing availability.

Takeaways

• 📈 Rent prices have increased significantly over the years, with a near 100% increase since 1995, outpacing income growth.
• 🏘️ Low-cost housing units are disappearing, transitioning into luxury housing or for-sale homes, leading to higher rental costs.
• 🏢 Institutional investment in housing has risen, with corporations now owning about 50% of rental units, up from 18% in 2001.
• 🆘 The current housing situation is described as both an emergency and a crisis, with vacancy rates well below the healthy market threshold of 5%.
• 💰 The high cost of housing is primarily a supply and demand issue, with the US short of about 4 million homes to meet current demand.
• 🛠️ Converting abandoned office buildings to residential use can be economically challenging due to the extensive renovations required.
• 🏗️ New housing technologies like modular and mass timber construction are emerging, offering potential solutions for increasing housing affordability and sustainability.
• 🌊 The impact of rising sea levels on oceanfront property values is yet to be seen, but it hasn't affected home prices significantly so far.
• 🚫 Redlining, a historical practice of racial discrimination in housing, continues to affect neighborhoods and contribute to racial segregation.
• 🏛️ Gentrification, often driven by institutional investment, leads to displacement of residents and changes in community dynamics.
• 🛏️ The reduction of available housing, partly due to the conversion to short-term rentals like Airbnb, is driving up rental prices and contributing to the housing crisis.

Q & A

Why does rent seem to increase annually while salaries do not?

Rents have been increasing due to various factors including inflation, the disappearance of low-cost housing units as they transition to luxury housing, and an increase in institutional investment where corporations buy properties to rent for profit. Additionally, the percentage increase in rent from 1995 to now has almost doubled, outpacing income growth.

What is the current state of the rental market in terms of corporate ownership?

As of the information provided, approximately 50% of rental units are owned by corporations, up from only about 18% in 2001. This shift has contributed to the increase in rental prices as corporate landlords aim to maximize profits.

How is the current housing situation classified legally and what does it entail?

The current housing situation is considered both an emergency and a crisis. A housing emergency is declared legally when vacancy rates drop below 5%, allowing municipalities to implement policies like rent stabilization and rent control to address the issue.

What factors contribute to the high cost of houses?

The high cost of houses is primarily due to supply and demand issues, with the US being short about 4 million homes to meet current demand. Additionally, increasing interest rates make development projects expensive, encouraging developers to focus on luxury housing over affordable options.

Why are cities not repurposing abandoned towers for affordable or homeless housing?

Converting certain abandoned buildings to residential use can be economically unfeasible due to the extensive renovations required, such as replacing windows, reconfiguring plumbing, and updating electrical and HVAC systems. The age and condition of the building play a significant role in determining whether demolition and new construction is more viable.

What are some emerging housing technologies that could impact the market?

Modular housing, also known as prefab, allows for components to be manufactured off-site and assembled on location, reducing labor costs and neighborhood disturbance. Mass timber is another technology where large beams of wood are laminated together for strength and fire resistance, enabling the construction of taller buildings with a lower carbon footprint.

How is the rising sea level affecting the value of oceanfront property?

Surprisingly, the rising sea levels have not yet significantly affected home prices. However, this is a complex issue that may evolve as climate change impacts become more pronounced.

What is the historical context of redlining and its implications on current housing?

Redlining originated in the 1930s when the US federal government created maps to determine safe investments for federally backed mortgages, effectively excluding areas where predominantly black families lived. The impact of redlining is still felt today in terms of racial segregation, disinvestment, and gentrification in historically redlined neighborhoods.

What are the effects of gentrification on a neighborhood?

Gentrification can lead to both direct and indirect displacement of residents. Direct displacement occurs when people can no longer afford the increased rents, while indirect displacement is the result of changing community dynamics, such as different shops and community members, making residents feel uncomfortable in their own neighborhoods.

How does Airbnb impact the availability of housing for permanent residents?

Airbnb can reduce the availability of housing for permanent residents by taking potential long-term rental units off the market and converting them into short-term rentals. This contributes to higher rental prices and can also be linked to gentrification and increased home prices in certain neighborhoods.

What factors have made it more difficult for younger generations to buy homes compared to previous generations?

The disparity is largely due to the significant increase in home prices compared to income growth. For example, while the median home price has increased by 43%, the median income has only increased by 7%. This has resulted in home prices being about six times the median income in the US, making it more challenging for younger generations to afford homes.

What are the primary causes of homelessness according to recent research?

The leading cause of homelessness is a lack of access to affordable housing. Other factors such as drug use and mental illnesses exist but are not the primary drivers. High rents and low incomes make it easy for individuals to become homeless, with 8.5 million Americans currently at risk.

What is the situation regarding homelessness in Los Angeles and California as a whole?

Contrary to the myth that people move to Los Angeles for the weather, the majority of those experiencing homelessness in Los Angeles are from California, often from the same county. California has the highest number of unhoused people in the US, with a 40% increase since 2007. However, most are unsheltered, unlike in New York where the majority of unhoused people are sheltered due to the Right to Shelter policy.

Why are corporations investing in the housing market and what does this mean for housing affordability?

Corporations are buying up houses and investing in real estate investment trusts as they recognize real estate as an asset class similar to stocks and bonds. This is part of the financialization of housing, transitioning housing from a social good to a commodity that can be traded for profit, potentially impacting housing affordability.

What factors contribute to the scarcity of houses on the market?

The scarcity is due to the lengthy approval process for developers to build projects, increasing interest rates affecting the decision to sell existing homes, and a significant reduction in housing inventory since the pandemic. These factors have led to a supply that cannot meet the skyrocketing demand.

What housing policies are considered successful and where are they being implemented?

Vienna in Austria is highlighted as a place getting housing policy right. With 60% of people living in public housing, Vienna offers a mix of market-rate and subsidized housing, making it accessible to a broader range of income levels, unlike the US where public housing is primarily for low-income families.

What are squatter's rights and how do they apply in a place like New York?

Squatter's rights allow individuals who have lived on a property without a rental agreement for a certain period, in this case 10 years in New York, and have maintained the property, to claim ownership. This is a court-mandated process, and the original owner can defend their rights to the property. Success in claiming squatter's rights results in the property being deeded to the claimant.

Are there any affordable places to live, and if so, where?

Affordability is becoming increasingly rare, especially in places like California and New York City where the home price to income ratio can be around 10 to 1. Smaller rural communities and some areas in rural Texas may offer more affordable options, but even these areas are seeing a decline in housing supply, leading to increased costs.

What are the implications of buying a house listed on Amazon, and is it a good idea?

Buying a house on Amazon is part of the tiny homes trend, which involves very small homes built on small plots of land. While it's an exciting concept, it's not a significant trend, representing only about 1% of the active housing market and not offering a solution to housing affordability. It's also not recommended to make such a purchase impulsively.

What policies could help bring down housing prices and improve access to affordable housing for renters?

Policies aimed at increasing the supply of housing, such as offering tax incentives to developers who include affordable units in their projects, can help bring down housing prices. For rentals, policies like rent control and rent stabilization, which limit how much rent can increase annually, can provide relief to renters. New York City, for example, has about 16,000 rent control and a million rent stabilized apartments.

Outlines

00:00

🏘️ Housing Costs and Market Trends

Professor Kate Nelischer discusses the disparity between rising rent costs and stagnant salaries, noting a 100% increase in rent since 1995 compared to slower income growth. She attributes this to the disappearance of low-cost housing units, landlords charging more for upgrades or transitioning to for-sale homes, and an increase in institutional investment by corporations. By 2023, about 50% of rental units were owned by corporations. The script also addresses the housing emergency in terms of low vacancy rates, particularly in New York City, and the high cost of housing due to supply and demand issues, with the US short of 4 million homes to meet demand.

05:01

🛠️ Challenges in Housing Conversion and Technologies

The script explores the economic and logistical challenges of converting abandoned buildings into affordable or homeless housing. It explains that newer buildings are difficult and expensive to convert due to the need for significant structural and system changes. It also touches on the vast amount of unused office space in New York City. Additionally, the script introduces modular housing and mass timber as innovative housing technologies that can be more cost-effective and environmentally friendly, with mass timber enabling the construction of taller buildings.

10:02

🌊 Impact of Climate Change on Property and Housing Policy

The video script discusses the potential impact of rising sea levels on oceanfront property values, noting that so far, it hasn't affected home prices. It also delves into the history of redlining, a federal practice that discriminated against black families by denying them access to mortgages in certain areas. The effects of redlining are still felt today, with these areas experiencing disinvestment and gentrification. The script also addresses the negative effects of gentrification, including direct and indirect displacement of residents.

15:05

🏚️ Corporate Investment in Housing and its Effects

The script examines the trend of corporations buying houses and the impact on the housing market, including the financialization of housing. It dispels the myth of BlackRock buying single-family homes for rent but acknowledges their investment in real estate investment trusts. The script also highlights the scarcity of houses on the market due to lengthy development approval processes and fluctuating interest rates. It contrasts the housing policies of Vienna, where a significant portion of the population lives in public housing, with the US approach.

🏡 Solutions to the Housing Affordability Crisis

The final paragraph addresses the scarcity of affordable housing, with examples of areas becoming less affordable due to lack of development interest. It briefly touches on the tiny home trend as an exciting but not yet widespread solution. The script suggests policies to increase housing supply and provide affordable units, such as tax incentives for developers and rent control or stabilization measures, as ways to combat the housing affordability crisis.

Keywords

💡Urban Planning

Urban planning is the process of designing and managing the development of land, resources, and infrastructure in urban areas. It plays a crucial role in ensuring that cities are efficient, sustainable, and livable. In the video, Kate Nelischer, a professor of urban planning, discusses various aspects of housing and city development that are central to the theme of the video, such as the impact of institutional investment on housing affordability.

💡Rent Increase

Rent increase refers to the annual rise in the cost of renting a property. It is a significant concern for many tenants, as it often outpaces the growth of their income. The script mentions that rent has increased by almost 100% since 1995, while income has not kept pace, which is a central issue in the discussion of housing affordability.

💡Housing Emergency

A housing emergency is a legal term used when the vacancy rate in a rental market falls below 5%, prompting the municipality to declare a state of emergency and implement policies such as rent stabilization or control. The script highlights that New York City is in a housing emergency, with a vacancy rate of only 1.4%, indicating a severe lack of available housing.

💡Supply and Demand

Supply and demand is an economic principle that describes the relationship between the availability of a product and the desire for that product among consumers. In the context of the video, it is mentioned as the primary reason for the high cost of houses, with the US being short about 4 million homes to meet the current demand, leading to increased prices.

💡Institutional Investment

Institutional investment in housing refers to corporations buying properties to rent them out for profit. The script explains that this has led to an increase in rental prices and a decrease in available housing, as these corporations often convert properties into luxury housing or for-sale homes, contributing to the housing crisis.

💡Vacancy Rate

The vacancy rate is the percentage of unoccupied housing units in a given area, which is an important indicator of the health of the housing market. A low vacancy rate, as mentioned in the script for New York City, suggests a tight market with limited housing options for potential renters.

💡Luxury Housing

Luxury housing refers to high-end residential properties that are typically more expensive and offer premium amenities. The script discusses how developers are increasingly focusing on luxury housing due to higher profit margins, which can lead to a decrease in the availability of more affordable housing options.

💡Gentrification

Gentrification is the process of renovating and improving a neighborhood, often resulting in increased property values and the displacement of lower-income residents. The video explains that gentrification is often caused by institutional investment in lower-income neighborhoods, recognizing a 'rent gap' and leading to higher rents and demographic shifts.

💡Housing Affordability

Housing affordability refers to the ability of households to afford adequate housing without suffering financial distress. The script discusses the issue of housing affordability in the context of rising rents, increasing house prices, and the lack of supply, which makes it difficult for many people to find housing that fits their budget.

💡Airbnb

Airbnb is a platform that allows property owners to rent out their homes or rooms to travelers. The script mentions that the rise of Airbnb has affected the housing market by reducing the number of long-term rental units available, contributing to higher rental prices and potentially to gentrification.

💡Homelessness

Homelessness is the condition of lacking a fixed, regular, and adequate night-time residence. The video identifies the lack of access to affordable housing as the leading cause of homelessness, with 8.5 million Americans at risk due to high rents and low incomes.

💡Public Housing

Public housing refers to government-owned housing that is often provided at subsidized rates for low- and middle-income residents. The script highlights Vienna, Austria, as an example of a city getting housing policy right, with 60% of its residents living in public housing, which is a stark contrast to the much lower percentage in the US.

💡Squatter's Rights

Squatter's rights are legal rights that allow someone who has been living on a property without a rental agreement for a certain period to claim ownership of that property. The script explains that in New York, if someone lives on a property openly for 10 years and maintains it, they can go to court to claim squatter's rights, which if successful, results in the property being deeded to them.

💡Financialization of Housing

The financialization of housing refers to the treatment of housing as a financial asset or commodity rather than a social good. The script discusses how corporations are buying up properties to rent them out, viewing real estate as an asset class similar to stocks and bonds, which is part of the financialization trend.

Highlights

Rents have increased by almost 100% since 1995, outpacing income growth.

Low-cost housing units are disappearing due to market transitions to luxury housing or for-sale homes.

Institutional investment in housing has risen from 18% in 2001 to 50% today, with corporations buying homes for profit.

A housing emergency is declared when vacancy rates drop below 5%, allowing for policies like rent stabilization and control.

New York City's current vacancy rate is 1.4%, with ultra-low rates for affordable rentals.

The US housing market is short by 4 million homes, causing prices to soar due to supply and demand.

Developers are inclined to build luxury housing due to high interest rates and profitability.

Converting newer office buildings to residential use is economically challenging and complex.

Vienna, Austria, serves as a model with 60% of residents living in public housing, contrasting the US's 1.5%.

Modular housing, or prefab, offers cost and neighborhood disturbance advantages.

Mass timber technology allows for stronger, taller wooden buildings with a lower carbon footprint.

Oceanfront property values have not yet been significantly affected by sea level rise.

Redlining historically led to racial discrimination in housing, with lasting impacts on neighborhoods today.

Gentrification often results in both direct and indirect displacement of residents.

Airbnbs contribute to reduced long-term rental availability and may drive up housing prices.

Millennials face a more challenging housing market compared to boomers, with prices six times the median income.

The leading cause of homelessness is a lack of affordable housing, not drug use or mental illness.

Most homeless individuals in Los Angeles are from California, priced out of their previous homes.

Corporations are investing in the rental market, contributing to the financialization of housing.

Housing supply is constrained by long development approval times and increasing interest rates.

Policies that increase housing supply, such as tax incentives for developers and rent control, can help make housing more affordable.

Transcripts

- I'm Kate Nelischer.

I'm a professor of urban planning.

Let's answer some questions from the internet.

This is "Housing Support."

[upbeat music]

@ethan_to_go says,

"Why does rent have to go up every year,

but my salary doesn't?"

Sad face.

That's really disappointing.

So if we look back to 1995 to now,

the percentage increase is almost a 100% increase

in the amount of rent people are paying,

but income doesn't increase as quickly.

Of course, rents increase with inflation,

but this is more than that.

It's a lot of the low cost units

are disappearing from the market.

Because they have transitioned to luxury housing,

landlords are charging more and more,

based on upgrades they've made

or they've transitioned to for-sale homes.

There's also been an increase

in what's called institutional investment.

These are corporations buying up homes,

and also multi-family residential buildings,

to rent them out to make a profit.

In 2001, only about 18% of rental units

were owned by corporations.

Today, that's about 50%.

So it's really likely that you are paying your rent

to a corporate landlord.

@garrethmcdaid asks,

"Is there a housing emergency or not?"

We are in a housing emergency,

and we're also in housing crisis.

Housing emergency is actually a legal term.

If a vacancy drops below 5%,

the municipality can declare a state of emergency,

and that allows them

to access all these different kinds of policies,

rent stabilization, rent control,

are examples of this.

A healthy housing market

has above 5% vacancy rate.

The vacancy rate in New York City

is actually 1.4% right now.

Anything that charges less than $2,400 a month in rent,

the vacancy rate is actually 0.4 to 0.8.

A very low vacancy rate.

@iloveb43 asks, "Why are houses so [beeping] expensive?"

Houses are really [beeping] expensive right now.

Number one, it's a supply and demand issue.

The US is short, about 4 million homes

to meet the current demand,

and a scarcity of any commodity

means the price goes up, up, up.

In fact, 2023 was the least affordable year ever

to buy houses in the United States.

Interest rates are increasing,

or it's very expensive to invest in development projects,

and it also encourages developers

to develop luxury housing

rather than more affordable housing.

Because this wealthy market exists,

developers are building to target that market.

They're building very expensive luxury homes.

That means that other housing isn't getting built,

so everyone's prices increase as a result

of more luxury development.

@TrueNYJetGS asks, "Why are cities

not using these abandoned towers

to create affordable or homeless housing?

What the [beeping] is wrong with this country?"

Depending on the age and condition of the building,

sometimes it can actually be more economically viable

to demolish the building and build something new.

Older office buildings

or pre-war office buildings,

ventilation required that windows

be provided for every office space,

so it's easier to convert these older office buildings

to residential because they're already laid out

like our residential buildings.

Newer buildings are very difficult to convert

to residential, and it's very expensive to do this.

If you wanna convert this into a residential building,

you have to replace all of these windows.

You can't have a bedroom without an opening window.

You wouldn't have to puncture a hole in the middle

of the building to provide window access,

reconfigure all of the plumbing in the building

to hook up to all of the individual bathrooms and kitchens,

change the electricity supply,

change the HVAC systems.

So this requires just completely transforming

the inside guts of these buildings.

In New York City, there's about 94 million square feet

of unused office space.

That's equivalent to all of the office space

in Dallas and Houston combined.

It's a huge amount of vacant space right now,

and we have to figure out what to do with it.

@hiveforhousing says "What housing technologies

are here to stay? Modular?"

Modular housing can also be referred to as prefab.

Different components will be manufactured

in different manufacturing sites.

They're all brought back to the site

and assembled kind of like a jigsaw puzzle.

The manufacturing can take place where labor is cheaper,

and it also doesn't disturb the neighborhood as much.

Another new-ish building technology

that I'm really excited about

is something called mass timber,

where wood is laminated together with a special glue

to create really large beams of wood that are very strong.

They're also fire resistant.

They have a lower carbon footprint as well.

Mass timber is now becoming stronger,

and so it can be used to build higher and higher buildings.

Previous to a couple of years ago,

the highest building you could build in the United States

out of timber was six stories.

Now, you can build 18 stories.

So we're going to start seeing high rises

built entirely of wood.

It's pretty amazing.

@ReadLyte says, "It will be interesting to see

how the value of oceanfront property changes

as sea levels continue to rise."

This will be really interesting.

So far, though it really hasn't affected home prices.

@Shmoawkjg asks, "What is redlining?"

It's kind of come to signify any sort

of racial discrimination in housing,

but actually there's a really specific

history around redlining.

This is a redlining map from Cleveland.

In the 1930s, the United States federal government

decided to start a new mortgage program

to allow home buyers to access federally backed mortgages.

The government created these maps to determine

where their investments would be safe.

Green areas, where you see down here,

it's where the federal government felt

that their money would be well used.

They also created a D class or a red class,

which was really a no-go zone,

where the federal government did not want

to provide government backed mortgages.

These redlined areas are where black families lived.

It made it very difficult

for residents living in these areas,

predominantly black residents, to access mortgages.

Many of these maps exist

for communities all across the United States.

These maps were not made public

until 1978 when a historian stumbled upon them.

If you look at the neighborhoods

that were historically redlined,

these are still some

of the most racially segregated neighborhoods

across the United States,

and those effects are still felt today.

Many of the historically redlined neighborhoods

have experienced disinvestment,

and more recently,

many of them have become targets for gentrification,

displacing many of these residents as well.

@DonGhotti says, "Is gentrification all bad?

Pretty much.

There's something called direct displacement.

People are directly displaced from their homes

because they can no longer afford the higher rents.

Something else happens as well

that's called indirect displacement.

The shops are different.

The community members are different.

And so this is kind of making you feel uncomfortable

in your own neighborhood.

Both of these things are bad.

I think a lot of people think about gentrification

associated with these kind of design choices

that hipsters make.

So you think of the Helvetica house numbers

or sometimes the gentrification fences around homes.

Really, these are kind of an effect of gentrification.

They're not causing gentrification.

Gentrification is really caused

by institutional investment in lower income neighborhoods.

Investors are coming in

and recognizing what's called a rent gap,

the gap between the current rents

that are charged in low income area

and the potential to charge higher rents.

These neighborhoods might be really centrally located,

might be near transit,

and so investors see an opportunity to buy up

and improve buildings

and then take advantage of that gap

by charging higher rents.

@Burns12Regina says,

"I'm confused as to how exactly

are Airbnbs affecting the housing market.

A lot of rentals that would have been provided

for permanent residents have transitioned to Airbnb housing,

which means it reduces the amount

of total rentals available on the market

and drives prices up.

For example, we can look to London.

It is the city with the largest number

of Airbnbs in the entire world.

50,000 Airbnb units were previously long-term

rental units in London.

That means that 50,000 rental apartments

were taken off the market

and are no longer available to permanent residents.

Also, some research has shown

that Airbnb's increasing

actually contributes to gentrification

and raising home prices in certain neighborhoods.

@scottyzs_ says,

"How the [beeping] did my parents buy a house

at 26 years old while I have $2,000 in my bank account?"

I feel your pain, scottyzs_.

Really, things are much different

for millennials than they were for boomers.

When boomers were reaching the age to buy a home

around the late 80s, early 90s.

If you made about $50,000 a year,

the average home at that point was about $121,000.

So that's really only about a two times

increase from your income.

There is a little bit of a dip here

following the 2008 recession,

but it increased dramatically since.

The median home price increased by 43%,

where the median income only increased by 7%.

The average right now in the United States

is a home price that is about six times the median income.

If you think about very expensive places

like the California coast or New York City,

that can be about 11 times the median income.

@kevinvdahlgren asks,

"What is the leading cause of homelessness?"

There are a lot of common misconceptions

around people who are unhoused,

that perhaps drug use is involved,

that there are mental illnesses,

and these things do exist,

but they are not the drivers of homelessness.

Recent research from the University

of California San Francisco actually found

that the leading cause of homelessness

is a lack of access to affordable housing.

It's very easy to lose your home.

8.5 million Americans right now are at risk

of becoming homeless because rents are so high

and incomes are so low.

Any increase in rent

or perhaps a medical emergency could be the difference

between someone remaining in their home

and becoming unhoused.

@Nosemanoo says, "Why are there so many homeless

in Los Angeles?"

There's a common myth that

there are a lot of unhoused people in Los Angeles

because they move there for access to the good weather.

This is really not true.

Researchers have found that the vast majority

of people experiencing homelessness in Los Angeles

are from California,

and even from that specific county,

that they previously had housing in that area

and were then priced out of it and became unhoused.

California, as you can see here,

has the most number of unhoused people

of any state across the country.

This number has increased 40% since 2007.

New York also has a very high number

of about 103,000 people.

There are differences though.

Most of the unhoused people in California are unsheltered.

This means they don't have access

to temporary shelter facilities.

In New York, the majority of those people are sheltered.

That's a result of a policy in New York City

called Right to Shelter.

New York City is the only city in the country

that mandates the city to provide a shelter bed

to every single person who requests it.

@dawnjay_ says,

"Why are corporations buying up houses just to rent them?

Why should any house be owned by [bleeping] Walmart?"

I don't know about Walmart,

but corporations are certainly buying up houses.

There was a lot of internet speculation

about a company called BlackRock,

which is a private equity firm,

buying up single family homes and renting them out.

This isn't really happening.

However, BlackRock is investing

in real estate investment trusts that are investing

in apartment building acquisitions and rentals.

So BlackRock isn't buying up suburban homes,

but they are investing in the rental market,

and so corporations are recognizing real estate

as an asset class that they would like to invest in,

just like stocks and bonds.

This is a form of what's called

the financialization of housing,

and this really means the transition

of housing from a social good,

from something we need to live,

to something that can be bought and sold and traded,

and where people can make lots of money.

@HobeheidarAli1 asks,

"Why are there so few houses on the market?"

It takes a very long time for developers

to receive approvals to build their projects.

In Santa Monica, California,

the average development takes 48 months to be approved.

That's 48 months where the developer

is waiting for approval before they can begin construction.

Increasing interest rates are also affecting housing supply,

specifically for existing homes.

If you purchase your home prior

to the recent increases in interest rates,

you don't wanna sell and buy a new home

and risk getting a bad interest rate.

If we look at housing supply prior to the financial crisis,

it was pretty steady, but actually ramped up,

right before the financial crisis,

and then jumped off a cliff just plummeted.

6 million Americans lost their homes.

Housing production started up again,

but at a much slower rate

because developers were a bit scared.

Demand skyrocketed, but there wasn't enough supply

to meet it.

Some cities have seen actually a 50% reduction

in housing inventory since the pandemic.

@OurNewHomecoach says "Serious question,

where in the world

are they getting housing policy right?

I'd love to learn from that."

One place that's getting it right is Vienna in Austria.

It's dense, it's lively, it's vibrant.

It's a huge hub of culture.

In Vienna, 60% of people live in public housing.

That compares to about 1.5% in the US.

This chart shows the available housing in Vienna.

As you can see, about 57% is market rate,

whereas a huge percentage

of the available housing is either public housing,

meaning it's owned and managed by the government,

by private nonprofit organizations

that receive government subsidies to provide this housing.

So if you're looking at an apartment in Vienna right now,

odds are that you would qualify for public housing

because in Vienna, public housing is not just

for low income families.

It's also for middle income families.

In the United States, it is only for low income

or very low income families.

@yourfakem0ther says,

"What exactly are squatter's rights?"

So what that means, in a place like New York,

is that if someone lives on a property

without a rental agreement for 10 years,

takes care of that property,

is known by neighbors,

is not doing that secretly,

they can claim that they have rights to that property,

that they are the owner of that property

because they have used and maintained it

for that length of time.

Just because you claim squatter's rights

doesn't mean that the property becomes yours.

It's a court mandated process.

When you go to court to claim squatters rights,

the original owner can, of course, come

and defend their right to own the property.

If you are successful, the property is deeded to you.

If you are unsuccessful, you have to vacate the property.

@chippitydooda says, "Is there anywhere affordable

to live anymore?"

Almost no.

Places like California, New York City,

these are places where the home price to income ratio

can be around 10 to one.

It would cost you about 10 times your income

to afford the median home price.

Things get a little bit more affordable

if you wander into smaller rural communities.

Some places in rural Texas as well

are a little bit on the more affordable scale,

but even these are becoming more and more unaffordable

because the housing supply is dwindling in these areas

because a lack of development interest.

For example, in a place like Buffalo,

which is usually pretty affordable,

housing is becoming a scarcity

because there isn't enough development,

meaning that it's becoming more and more expensive.

@Thoreeeee says, "Should I buy a house on Amazon?

Let me know guys feeling impulsive."

I would say that's not a good idea.

The Amazon listing of housing is really part

of this broader trend of tiny homes.

These are very small homes

that can be built on very small plots of land

with just tiny homes.

These look like downsized mini versions

of suburban developments.

This is exciting, but it's not a huge trend yet.

Only about 1% of the current active housing market

are tiny homes.

It's not a solution to housing affordability.

@roseydell says, "What are the policies

that would bring down housing prices?

What policies would help renters

to have enough access to affordable housing?"

So when we're talking about housing prices,

we're really talking about increasing supply.

That is what is going to bring house prices down.

When you're talking about rentals,

there is of course, a need

for the increased supply of rental housing,

but policies can also be introduced.

The government gives tax incentives to developers

based on the promise that those developers

will include affordable units

within their new developments.

Rent control and rent stabilization

are things that are really helpful in certain contexts.

So there are about 16,000 rent control apartments

in New York City

and about a million rent stabilized apartments.

Rent control apartments are only those

that are built prior to 1947.

This means that rent prices are set

at what's called a base maximum,

which means that rent control apartments

cannot fluctuate above that maximum rent.

Rent stabilization means that there are limits

to how much the rent can increase year over year.

So those are all the questions we have for today.

Thanks so much for watching.

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