Here's How We Fix the Housing Crisis

Summary

The American dream is deeply intertwined with homeownership, yet a housing crisis looms due to supply constraints, high mortgage rates, and skyrocketing prices. The government is implementing policies to increase housing supply, such as the Low Income Housing Tax Credit, and exploring innovative solutions like converting commercial properties into residential ones. Zoning reforms and addressing NIMBYism are also crucial. These efforts aim to make housing affordable, boost the economy, and revive the American dream.

Takeaways

• 🏠 The American dream is intrinsically linked to homeownership, which symbolizes stability, success, and a sense of belonging.
• 📈 The housing crisis is a multifaceted issue, driven by factors like insufficient housing supply, regulatory policies, NIMBYism, demographic shifts, and economic factors.
• 💰 Increasing housing supply is a priority for the government as it can help reduce costs for Americans by meeting the high demand for housing.
• 🛣️ Zoning regulations and restrictive policies have historically contributed to the housing crisis by limiting the types and quantities of housing that can be built.
• 🏢 The pandemic exacerbated the housing crisis by accelerating the shift to remote work, which increased demand for housing in less dense areas.
• 💸 The cost of housing is influenced by various factors including mortgage rates, housing prices, and rental costs, all of which have seen significant increases.
• 🏥 Policy tools like the Low Income Housing Tax Credit are being used to incentivize the creation of affordable housing units.
• 🌿 Environmental and NIMBY concerns sometimes clash with the need for new housing, but it's important to balance these concerns with the need for accessible and affordable housing.
• 🔄 The concept of 'filtering' suggests that building a range of housing types, including luxury homes, can indirectly benefit lower-income individuals through a cascade effect.
• 💼 Workforce training programs, funded by initiatives like the American Rescue Plan, are equipping individuals with skills needed in the housing construction sector.
• 🌐 Direct File is an innovative IRS tool aimed at simplifying tax filing for middle and working class Americans, potentially saving them time and money.

Q & A

What is the American dream often associated with?

The American dream is often associated with the idea of owning a home, which symbolizes stability, success, and a sense of belonging.

What factors contribute to the housing crisis?

The housing crisis is caused by a combination of policies and regulations, NIMBYism (Not In My Back Yard), demographic shifts, economic factors, and the speculative nature of homeownership.

How does the lack of housing supply impact the housing market?

The lack of housing supply is a major driver of housing prices, as it leads to insufficient inventory for the demand, causing prices to rise and making it difficult for people to afford homes.

What was the role of the Federal Reserve in affecting mortgage rates?

The Federal Reserve raised interest rates to combat inflation, which resulted in mortgage rates increasing to over 6 percent, making it more challenging for people to afford homes.

What is the Low-Income Housing Tax Credit and how does it work?

The Low-Income Housing Tax Credit provides tax credits to developers for eligible projects to incentivize the construction of affordable housing. It is the largest federal support for affordable housing in the U.S., having helped build about 3.8 million units since 1986.

What is the 'missing middle' in housing and why is it important?

The 'missing middle' in housing refers to the lack of diverse housing types such as townhomes, duplexes, and triplexes. These types of housing are important because they can help meet the demand for affordable and中等-priced housing options.

How does zoning contribute to the housing crisis?

Zoning often restricts the types of housing that can be built in certain areas, leading to single-family home dominance and limiting the development of more diverse and affordable housing options.

What is the impact of housing costs on the economy and innovation?

High housing costs can divert resources from productive investments into real estate, reduce economic mobility, and stifle innovation by making it difficult for individuals to take risks and start new ventures.

What is the role of workforce training in addressing the housing crisis?

Workforce training programs can help provide the skilled labor needed to construct more housing, addressing the labor shortage in the construction industry and contributing to the solution of the housing crisis.

What is Direct File and how does it benefit taxpayers?

Direct File is a new tool created by the IRS to help Americans earning income through a W2 file their taxes more easily and for free. It simplifies the process, saves time, and ensures taxpayers receive eligible credits and refunds.

How does the housing crisis affect businesses and the workforce?

The housing crisis can lead to difficulties for businesses in finding employees, as workers may struggle to afford housing near their workplaces. This can impact local and national economies and hinder business growth.

Outlines

00:00

🏠 The Housing Crisis and Its Impact on the American Dream

This paragraph discusses the American dream's close ties to homeownership, which is seen as a key to stability, success, and a sense of belonging. It highlights the current housing crisis, where the lack of affordable housing is affecting people's ability to achieve this dream. The discussion includes an interview with the deputy secretary of the treasury, Wally Adeyemo, who explains the government's focus on increasing housing supply to reduce costs. The paragraph also touches on factors contributing to the crisis, such as policies, regulations, NIMBYism, demographics, and economic factors. It emphasizes the need for policy changes at the city, state, and federal levels to address the housing crisis.

05:01

🤔 The Paradox of Housing as Both Investment and Necessity

This paragraph delves into the conflicting roles of housing as both an investment and a basic necessity. It discusses the challenges faced due to the high cost of housing and the fear of investment loss, which prevents many from buying homes. The summary highlights the tweet exchange that captures the essence of the housing crisis and the societal push and pull between using housing for wealth generation and as a place to live. It also touches on the impact of NIMBYism, wealth inequality, and the role of housing in the economy, emphasizing that housing affordability is a complex issue that requires building various types of homes to meet demand.

10:03

🏗️ Overcoming Zoning and Regulatory Barriers to Housing Construction

This paragraph focuses on the challenges of building new homes due to zoning regulations and other bureaucratic hurdles. It discusses how zoning laws and anti-density regulations have contributed to the housing shortage. The paragraph also explores the historical context of zoning and its original intent to separate industrial and residential areas. It highlights efforts in cities like Atlanta and Austin, Texas, that have reformed zoning to allow for more housing construction. The discussion includes the role of federal grants and incentives to encourage local communities to build more housing and the importance of community-by-community approaches to solving the housing crisis.

15:04

💰 Financial Innovations and Investments in Affordable Housing

This paragraph discusses various financial innovations and investments aimed at increasing affordable housing. It highlights the role of state and local governments in utilizing federal funds for affordable housing projects. The paragraph mentions the Innovation Fund for Housing Expansion, a competitive grant fund to support the construction of affordable multifamily rental units and remove barriers to development. It also talks about initiatives to convert commercial properties into residential ones and the cost benefits of such conversions. The discussion emphasizes the importance of building housing near transportation hubs to reduce commute times and the overall impact on the economy and climate change.

20:08

🌿 Rethinking City Planning and the Role of Workforce Training

This paragraph emphasizes the need to rethink city planning to make housing more affordable and accessible. It discusses the historical separation of residential and commercial areas and the need for more mixed-use development. The paragraph also touches on the importance of building housing close to opportunities and reducing the reliance on cars. It highlights the role of workforce training programs funded by the American Rescue Plan in preparing individuals for jobs in the construction and other trades. The discussion underscores the connection between affordable housing and the ability to take risks, innovate, and rebuild trust in the American dream.

25:10

🚀 Policy Innovations for Housing and Tax Filing

This paragraph discusses the importance of policy innovations in addressing the housing crisis and simplifying tax filing processes. It highlights the need for cities to be accessible to people starting out and the potential for cities to invest in new housing and cultural infrastructure. The paragraph also introduces the Direct File tool created by the IRS, which aims to make tax filing easier and free for Americans earning income through a W2. The discussion emphasizes the potential for policy innovations to help build more housing, reduce costs, and improve the overall economy.

Keywords

💡American Dream

The American Dream is a national ethos of the United States, which suggests that prosperity and success are attainable by anyone through hard work. In the context of the video, it is closely associated with the idea of owning a home, which is seen as a key to stability, success, and upward mobility. The script discusses how the current housing crisis is making this dream unattainable for many, affecting their sense of belonging and financial security.

💡Housing Market

The housing market refers to the economic sector that involves the buying, selling, and renting of homes. The video script highlights the issues within the housing market, such as lack of supply, high demand, and the resulting increase in housing prices and rents. These factors contribute to the housing crisis, making it difficult for individuals to achieve the American Dream of homeownership.

💡Supply and Demand

Supply and demand is a fundamental concept in economics that describes the relationship between the quantity of a commodity that producers wish to sell at various prices and the quantity that consumers wish to buy. In the video, it is mentioned that increasing the supply of housing is one of the best ways to reduce costs for Americans, as it meets the high demand and helps to stabilize housing prices.

💡Mortgage Rates

Mortgage rates refer to the interest rate that banks or other financial institutions charge for borrowing money to purchase a home. The script discusses how the Federal Reserve's actions to raise rates to combat inflation have led to higher mortgage rates, making it more expensive for individuals to borrow money for home purchases and contributing to the housing crisis.

💡NIMBYism

NIMBYism, an acronym for 'Not In My Back Yard,' is a term used to describe the resistance of residents to developments, such as new housing projects, in their local areas. In the video, NIMBYism is presented as a significant factor in the housing crisis, as it leads to restrictions on new housing construction, exacerbating the shortage of available homes and driving up prices.

💡Low-Income Housing Tax Credit

The Low-Income Housing Tax Credit (LIHTC) is a tax incentive program in the United States designed to encourage private investment in low-income housing. The video explains that this program provides tax credits to developers for eligible projects, which helps to incentivize the construction of affordable housing units. It is considered the largest source of federal support for affordable housing and has been instrumental in addressing the housing crisis.

💡Zoning

Zoning refers to the set of laws that regulate how land in a given area can be used and developed. In the context of the video, zoning is identified as a significant barrier to increasing housing supply, as it often includes restrictions on density, lot sizes, and types of housing that can be built. These regulations can limit the construction of more affordable housing options, contributing to the housing crisis.

💡Workforce Training

Workforce training involves programs and initiatives designed to equip individuals with the skills and knowledge necessary for specific jobs or professions. The video script emphasizes the importance of investing in workforce training, particularly in the construction trades, to address the housing crisis. By providing training, more people can gain the skills needed to build housing, which in turn can help to increase the supply and alleviate the crisis.

💡Innovation

Innovation refers to the process of introducing new ideas, methods, or products to improve or alter existing practices. In the video, innovation is discussed as a necessary approach to solving the housing crisis, with examples including policy changes, new housing models, and the use of technology to streamline processes like tax filing. The emphasis is on finding creative solutions to increase housing supply and affordability.

💡Direct File

Direct File is a new tool created by the IRS to simplify the tax filing process for Americans, particularly those earning an income through a W2. It is designed to be an intuitive, free service that helps individuals calculate their taxes and claim eligible credits. The video highlights Direct File as an example of policy innovation that can save middle-class and working-class families time and money, allowing them to invest these resources elsewhere, such as in housing.

Highlights

The American dream is closely tied to the idea of owning a home, which is seen as a symbol of stability, success, and a sense of belonging.

The housing crisis is characterized by a lack of supply, high demand, and policies and regulations that contribute to the problem.

The President is focused on increasing the supply of housing as a way to reduce costs for Americans and address the housing crisis.

Mortgage rates have increased significantly in recent years, making it more difficult for people to afford homes.

Housing prices have tripled since the early 1990s, and the median U.S. home gained significant value between December 2020 and December 2021.

Rental prices have also skyrocketed, moving at the fastest pace in 40 years, contributing to the overall housing crisis.

The Low Income Housing Tax Credit is a key policy tool used to incentivize the creation of affordable housing units.

The pandemic exacerbated the housing crisis, with remote work leading to increased demand for housing in certain areas.

There is a need for a variety of housing types, including single-family homes, townhomes, duplexes, and triplexes, to meet different needs and preferences.

Zoning regulations and NIMBYism (Not In My Back Yard) are significant barriers to increasing housing supply and affordability.

The federal government is providing grants and financial incentives to communities that take steps to increase housing supply and remove barriers to development.

Upzoning can stimulate housing supply, and some cities are taking steps to allow for denser housing development.

The conversion of commercial properties into residential use is seen as a potential solution to increase housing supply.

Housing affordability is critical for the economy, as high housing costs can limit labor mobility and constrain economic growth.

Workforce training programs, funded by the American Rescue Plan, are helping to train people for jobs in the construction and housing sectors.

The cost of housing is a foundational issue that affects individuals, businesses, and the overall economy.

Direct File is a new IRS tool aimed at simplifying tax filing for middle and working-class Americans, potentially saving them time and money.

Addressing the housing crisis is seen as a key to restoring the American dream and fostering innovation and economic growth.

Transcripts

The American dream is predicated on the idea of owning a home. Stability, success, a sense

of belonging. It's the figurative and literal key to upward mobility and financial success.

Most people design their lives around owning a home one day, and when it feels like you

can't do that, it sucks. And so that's why it's really important to

understand what's going on in the housing market that makes it impossible for people

to own homes and the policies that are being put forth in order to fix it.

I had the chance to sit down with deputy secretary of the treasury Wally Adeyemo to talk about

the policies that the government is putting forward to fix the housing crisis.

So one of the things that the President has us focused on is increasing the supply of

housing because that's one of the best ways to reduce the cost for all Americans is to

have more supply. Because the housing market has a lot of issues.

It's policies and regulations, it's nimbyism, it's demographics, it's economic factors,

and the inherent speculative nature of home ownership.

created this perfect storm that has led to the housing crisis. The lack of housing supply

is a [00:01:00] major driver of housing prices. We just don't have enough inventory for where

people want to live. also have SCAHA mortgage rates because the Federal Reserve was raising

rates in order to battle inflation.

So if you're trying to buy a home right now, you're dealing with mortgage rates that are

north of 6 percent and they were like 2 3 percent a mere 3 years ago. And housing prices

that have more than tripled since the early 1990s.

Things have cooled off recently, but between December 2020 and December 2021, the median

U. S. home gained 52, 000 in value, and in 11 markets specifically, it grew by over 100,

000, which is basically impossible to keep up with.

And even if you're not trying to buy a home, rental prices have skyrocketed too, moving

at the fastest pace in 40 years. Between May 2021 and May 2022, rents went

up by more than 15 percent to an average price of 2, 000. There is a reason that housing

drove two thirds of the inflation metrics that we've had.

And this is all problematic because housing is a foundational need.

When people talk about how they experience the [00:02:00] economy, that's usually what

they're referring to. But there are also several lines of bifurcation.

There are the 90 percent of homeowners that are locked in below 5 percent and into a fixed

rate mortgage. They're pretty much insulated from monetary policy, and in my opinion, preventing

us from having a recession, but also might feel like they don't have any mobility to

move away. They might feel house rich, but cash poor.

Then there are those who are dealing with the aforementioned mortgage rates and they

feel like they're not able to finance a home and they have no mobility in general. Then

there are those that swoop in with bathtubs full of cash, like the 70 percent of New York

City homes that were bought with cash in the last quarter of 2023.

And then there are the 40 percent of homeowners with no mortgage at all. About 32 million

people, most of which are boomers. We all know this. We're kind of sick of hearing

about it. So let's talk about the policies that are being put in place in order to fix

it. Unfortunately, or fortunately, this is a problem

that has to be solved at the policy level. Something that happens at city, state, or

federal. And luckily, there are many policies that are being put into place in order to

fix this.

So let's first [00:03:00] talk about the initiatives that are around expanding home supply.

So one of the things that the President has us focused on is increasing the supply of

housing because that's one of the best ways to reduce the cost for all Americans is to

have more supply. Ultimately, there is so much demand for housing

in this country because since the financial crisis, basically, we've under invested in

building housing. And the pandemic only, uh, only created worse

than that problem. So yes, the pandemic did indeed worsen the

housing crisis. There was a massive shift to remote work during the pandemic, and according

to the San Francisco Federal Reserve, that accounted for more than half of overall house

price growth during that time. But the pandemic only exacerbated the issues that we already

had in the housing market. We have underbuilt since the Great Recession,

because a lot of home builders got scared. And so we've existed in this world where we

don't have enough housing units for the number of people that want them, and now it's going

to be about how do we reverse the years and years of underbuilding.

So treasury, one of the things that we have is the low house, the low income housing tax

credit, [00:04:00] which is one of the ways that we help to incentivize the creation of

housing. The Low Income Housing Tax Credit provides

tax credits to developers for eligible projects to incentivize building affordable housing.

It's the largest source of federal support for construction and rehabilitation of affordable

renting housing across the country, building about 3. 8 million units since 1986. The new

income averaging rule allows flexibility around mixed income developments, which is important

because we need all types of housing, something I'll talk about a little bit later.

And the president has proposed as part of his, um, state of the union address that we

use the low income housing tax credit to create 1. 2 million additional units of housing all

over the country that will help bring down the cost of housing, not just for the people

who get those new units, but for everybody, because more housing in your community will

mean that it'll. Um, meet the demand and hopefully decrease

the cost for all of us Decrease the cost of housing for all of us

sounds great, but this gets into the confusing part of the housing market. What is a house?

What is it? Is it meant to be a speculative tool? Is it meant to be an [00:05:00] investment?

Is it meant to be something that we live in? What role does housing play in our lives?

This series of tweets probably captures the confusion better than any paragraph I could

write or say. So Elizabeth Warren tweeted, America is in the middle of a full blown housing

crisis. There are a lot of ways to measure it, but I'll start with the most basic. We

are 7 million units short of what we need to house people.

What can we do? Increase the housing supply. It's 101. And somebody responded, I'd like

to buy a house, but houses are pretty expensive. At the same time, because houses are so expensive,

I worry that something might happen to drop their price, making a house a bad investment.

So I'd like to buy a house because it's a good investment, but I'm worried that the

house price will drop, making a bad investment. As Derek Thompson wrote about this push and

pull in his recent piece, in the U. S. our houses are meant to perform

contrary roles in society, shelter for today and investment vehicle for tomorrow. This

approach creates a kind of temporal disjunction around the housing market, where what appears

sensible for one generation, please no more construction near me it's annoying and could

hurt my property [00:06:00] values, is calamitous for the next. Wait, there's nowhere near me

for my children to live. And so that's the crux of the housing crisis.

We have this inherent push and pull between housing being the wealth generation tool for

the bottom 50 percent getting into my favorite chart that shows the breakdown of wealth,

and you can see that the bottom 50 percent have most of their wealth tied into their

home, and then being something that we're meant to live in and build community around.

Can you really make a ton of money off something that you're supposed to be housed in? does

it make sense? And so housing is the foundation for how we

experience the economy. A lot of times the reason that people feel bad is because they're

not able to get into homes that they would want to.

And a lot of times people will block new housing because they want to preserve the value of

their home. And that's NIMBYism, not in my backyard, avoid

building around me, please. A lot of older homeowners will spend a lot of time blocking

new development of housing for a variety of reasons. They're also staying in their homes

a very long time. So we have this situation where new housing isn't being built and then

new housing isn't coming on the market. Empty Nest baby boomers [00:07:00] own 28%

of the nation's large homes, while millennials with kids own just 14%. 56% of homeowners

aged 60 plus said that they will never sell their home. And there are also immense tax

breaks forcing nears to stay in their homes, so it makes sense that this would be going

on. There's also the lock in fact, which is what

Lance Lambert wrote about recently, where people are tied into this mortgage or they

don't have one at all, so why would they move? And to be fair, the younger generation is

buying homes. Roughly one in four Gen Zers are homeowners, with many buying during the

pandemic according to Redfin. But you also have an increasing number of

the younger generation living at home, which this is a bifurcation issue. This is a wealth

inequality problem. And there's still this older homeowner and

their blueberries meme because of the intensity of the pushback sometimes to building new

housing. And it's not just an age thing. Jerusalem

Dimsos wrote about how the Yanbis and climate change activists were butting heads in Minneapolis,

with the climate activists freaking out about development because of the environmental costs.

And the environmentalists are wrong about the environmental costs of building [00:08:00]

new housing, they're wrong about trees and open space and water quality,

In fact, not building new housing can lead to sprawl and it can lead to more cars and

vehicles and can actually be worse for the environment than not building at all.

As DimSauce writes, About 425, 000 people currently live in Minneapolis.

Despite all this change, Butler's Wildflower Sanctuary remains a public park, quiet proof

that growth and preservation don't have to be at odds. Even if triplexes replaced single

family homes in nearby neighborhoods, from the Sanctuary of the Garden, no one would

be able to tell. And that's the problem with NIMBYism is that

there's a rejection of change. But we need the change in order to make homes more affordable.

And housing affordability is not just about building single family homes, it is about

building these triplexes and duplexes, because we need 1. 86 million new homes per year into

2033 in order to keep up with demand. And this gets into the missing middle in housing,

where we don't have enough townhomes, we don't have enough duplexes and triplexes, etc.

And we could create millions of homes just [00:09:00] by turning single family homes

into these. Building all types of homes is important because

building is important. And this gets into the idea of filtering that even building,

like, luxury style homes can help with the housing crisis. A rich person would move into

the luxury housing, leaving another space open for a different person, that person would

move into the previous space, and so on and so forth.

Kate Piddington of UC Berkeley found that rents fall by 2 percent for parcels within

100 meters of new construction, and the risk of displacement is lowered to improving overall

neighborhood quality. Stephen Hoskins has put together a treasure

trove of research papers that get into the value of building new homes, what it looks

like to build new homes, the consequences of building new homes, and he cites two papers

that talk about this idea of filtering, with one of the papers stating that Building new

homes, even expensive ones, leads to important trickle down effects.

Thus, stimulating the supply of new homes is a viable approach to improving the housing

situation of the poor. A study by the Minneapolis Federal Reserve found the same thing. New

units help keep current prices down for everyone by opening up new opportunities for low and

moderate income [00:10:00] renters over a few short years through a chain of residential

moves. And so I'm saying all these things. So why

can't we just build more homes? Zoning.

I think zoning is a nice way of putting it. I think one of the things that one of the

challenges we have is that many people don't want more housing in their community because

they want to preserve the community the way that it looks at the moment. And part of our

goal is to make the case to people that building more housing can be additive to the value

of your community and improving it. There are a lot of headwinds to building housing,

and zoning is absolutely one of them. The Nice Canon Center has put together a really

brilliant paper talking about how we got here, and how, uh, we've experienced housing crisis

before, and how we've gotten out of them previously. A lot of it is anti density regulations, as

well as, um, resistance to, uh, to mass transit because we did have a housing crisis in the

1880s, but that was mostly a population issue, not a political issue.

We started building elevators and rail rapid transit, enabling people to live up or [00:11:00]

travel into cities. But then backlash began because people were like, I don't want all

these big buildings around me. And they write. zoning emerged as the mechanism to control

not only unwanted economic activity, for example, the defensible purpose of limiting areas in

which industry could settle, but also unwanted neighbors.

And so zoning has really choked out a lot of cities. Charlotte, North Carolina, 70 percent

of that land is dedicated to building single family homes. In Los Angeles, 70 percent of

that land is dedicated to building single family homes versus building more middle,

missing middle housing and then within zoning as well, there's minimum

lot sizes, height restrictions, parking requirements, even things like leaving space for our gigantic

fire trucks to make turns, which is important, but the fire trucks are huge. And so there's

all of these things I have to keep in mind when you're building.

And then the politics get messy too, like the city of San Francisco recently voted to

downzone, making it even harder to build homes in a city that has one of the worst housing

crises in the country. And then you have cities that [00:12:00] are

upzoning as well, as Maltman and Ryan found in their working paper in 2024, upzoning can

stimulate housing supply. If you make it easier to build homes. homes will be built.

I'll go back to my visit to Atlanta, where the mayor has been able to make the case to

that city and to his constituents that making modest changes to the way that zoning has

worked is going to improve not only the lives of people who get access to this new housing,

but it's going to improve the economy for everyone in Atlanta.

And I think that's true for communities all over the country.

And that's what we saw in Austin, Texas, a gym, surprisingly, for zoning reform.

Because Austin, Texas is building enough housing, the rents there went down 7%.

They up zoned 170 acres to allow buildings up to 350 to 420 feet. Ended minimum parking

requirements. Eliminate eliminated single family zoning and allowed three homes on each

residential lot, allowing for duplexes and triplexes, and allowed for tiny homes and

accessory dwelling units. And this is what we could also see in Burlington, Vermont,

[00:13:00] as they just totally reformed their zoning, allowing for two buildings on every

parcel and fourplexes everywhere. But zoning is still problematic in many places,

and housing codes can also be a headache, specifying minimum off street parking, minimum

lot size, service coverage, mix of bedrooms, curb cuts, kitchen ventilation, which is great,

right? Like, it's important to have some sort of framework in place, but it ends up preventing

more growth than encouraging it. For example, according to Aaron Lubeck, a

lot of suburban America is codified to, you know, All of these things. Setbacks, sidewalks,

planter strips, curb to curb, side setbacks, impervious surface max, density, two off street

parking spaces per unit, minimum lot width, and a minimum lot size.

And the permitting process can be an absolute racket, too. There was a developer in Boston.

who gave a 750, 000 donation to a neighborhood association, presumably so they could go and

build a new development in that neighborhood. The compounded effect of all of this, the

housing codes, the restrictive zoning, and racketeering, [00:14:00] um, ends up with

cities that are not designed for people and ends up creating this shortage of housing

because you can build, but it's hard. As Deputy Secretary of the Treasury Adeyemo

says, And in order to do that, what the administration

has done is we've put together grants. For local communities that are willing to take

on, um, some of those interests and to, uh, to advance building more housing in communities

and changing the rules to make that possible. Ultimately, the way we're going to solve this

problem is we're going to have to do a community by community, which is hard, but we think

that the thing we can do in the federal government is create financial incentives that help communities

that are trying to do the right thing. Pay for that going forward, and we've seen

success.

It has to be community by community. And a lot of local communities are taking this on.

Montgomery County, Maryland is a great example of this because they just decided to start

bidding on projects because developers require a 20 percent profit, but the government doesn't.

[00:15:00] And so they stepped in and they said, you know, these projects aren't being

produced at a loss. They are generating money, but they're not

generating 20%. So they've built a 268 unit mixed use project. Income mixed use construction

project that is financed through a hundred million dollars fund created by the county

government. The fund does partner with private developers offering them large discounts,

which most developers are pretty happy about. That is now this huge complex is being followed

by a 463 unit complex for seniors and families, and a 415 unit complex across the street.

Because if you give people money and a way to build, they're going to do it.

Most of the money that the federal government gets, we provide the states and local governments

that then spend it on things like affordable housing. For example, as part of the American

Rescue Plan, we gave state and local governments more than 350 billion. Just last week, I put

out a blog that gave those state and local governments more flexibility to use any of

that remaining money to do exactly what you [00:16:00] said.

Come in and provide resources to either complete housing projects or build new housing projects

in order to make sure the remaining demands in our communities.

There are also things like the Innovation Fund for Housing Expansion, which is a 20

billion competitive grant fund that would support the construction of affordable multifamily

rental units, incentivize local actions to remove unnecessary barriers to housing development,

pilot innovative models to increase the production of affordable and workforce rental housing,

and spur the construction of new starter homes for middle class families..

There are also initiatives like converting commercial properties into residential properties.

35 billion has been dedicated towards that. None of it has been used yet because, uh,

the stipulations are quite intense. The environmental review, the permitting processes, everything

that we just talked about, um, in commercial to residential is hard, but it is starting

to happen. Sure. Yeah, I think, you know, a few months

ago I was in Atlanta, and I had a chance to go with the mayor to a project that they are

doing to create affordable housing, [00:17:00] using a commercial real estate property.

I know in places like Cleveland they're doing the same thing. And while they may not be

using the 35 billion that's been set aside as part of the infrastructure package, They

are using federal money. They're using American rescue plan money to build some of this housing.

So from our standpoint, what we want to do is create enough flexibility with all of the

federal resources. So cities and states can use them to build affordable housing in any

way that they want. And it is possible, according to Commercial

Observer, construction costs for ground up residential development in Manhattan could

run 500 to 600 a square foot, while a conversion generally costs between 300 and 400 per square

foot. So it is cheaper to convert commercial to residential rather than build an entirely

new residential. But as I've looked into it, because I agree

with you that ultimately, where possible converting commercial real estate into residential housing

makes a lot of sense. They're like practical issues, some of them being that there's just

not enough bathrooms in a commercial real estate bill to turn it into apartment buildings,

[00:18:00] but then their local political issues where many of these local communities

would rather try and hold on to commercial real estate because of the tax revenues.

To turn it into housing. But ultimately, I think mayors like the mayor in Atlanta and

leaders all over the country know that one of the biggest challenges we face today is

that housing cost too much. And the only way that we're going to address this challenge

Is by building more housing and helping people get into housing that is affordable for them

over the long term. The incentives just have to be in place and

commercial real estate is a problem within itself, but it gets into the value that businesses

get from building more housing, because this is not just an individual issue. It's not

just that people can't go and live the American dream, it's that businesses can't find people

to work for them.

one of the part of my job is talking to CEOs and small business and large business leaders.

And what they tell me is that It's hard for them to find employees. And when they find

employees, it's hard for those [00:19:00] employees to afford housing near the places

where they want them to work. So housing isn't only a challenge for individuals. It's a challenge

for businesses in our country too. So building housing is going to contribute positively

to the economy locally, but also nationally for us as well.

That's why I think if you talk to a business owner, it's The things that they're often

talking about is workforce training and more workforce housing so that we have housing

for the employees that work at their factories and work at their companies that is affordable

for them. And this impacts the entire economy.

And I think that the thing we have to think about, and you said this already, housing

is at its, at a core critical to the economy, but also critical to our communities.

And the idea that people have had to live further away and commute further to come to

work has huge costs for not only our climate, but for our communities, because that hour

and a half drive that could be a [00:20:00] 15 to 20 minute commute is the difference

between being able to coach Little League and instead sitting in the car just from the

standpoint of community impact. But it also comes at huge cost to our infrastructure

in our country. And that's partially why. We're very focused on trying to build more

housing, multifamily, but also single family that is close to transportation hubs. So subways

and bus lines in order to reduce the impact on the planet of the fact that right now for

too many Americans, they're not able to afford to live near their place of work.

So building more housing, building housing that's close to opportunity is going to have

a critically important Impact not just on the individual who gets that housing, but

on the entire on the economy, and also on our ability to meet some of our goals when

it comes to things like climate, climate change That is an extreme cost of infrastructure

per square foot, something that Governor Doug Burgum [00:21:00] highlighted in a recent

talk. Zoning came during the Industrial Revolution,

when there was a lot of like air pollution, other things say, Hey, we're gonna have the

factories here and the people here and we got to keep them separate. And then we went

even further and said, Well, here's the kind of homes that could be in retails there.

And we just, you know, it was a one dimensional map. And you draw it out and say everyone,

all these four things have got to be separate. And yes, we that was great for that was great

for People have built roads and it's great for for the car companies, and then we built

a city that's design. We built cities all over America that are designed for automobiles

and not designed for people. And then if you take a look at your cost,

any anybody that's been a mayor like Spencer has been the cost of running a city is the

linear feet of everything. It's a linear feet of sewer and water and sidewalk and roads.

And then when you get more of that, you need to have more fire stations. Low income.

If you got if you have a neighborhood that's all houses. If you want to have a coffee shop

that looks like a house, you should be able to coffee shop. Because then people say when

I, Hey, I leave my starter home, I got to move to a new home. It's got to have three

cars, three car garage. Why does it have three car garage?

Because the, [00:22:00] the mom, the dad, and the kids all got a car to be able to drive

to school, drive to church, drive to a restaurant, drive to a grocery store. Of course, you need

all that because you can't walk to anything. And part of, then people will, you know, they'll

go on a vacation and they'll say, wow, that was the most amazing vacation I ever had.

Why? Well, because we were, We went to someplace where we could walk and everything was right

there. Well, you can actually have that in our own states. You just have to design it.

We haven't sent, you know, there's places in northern Europe that have snow where people

bike all winter long. You can't hardly, you can't find a place like that in the U.

S. because we don't put the investment into, uh, building the infrastructure for multi

modal transportation. So I think one of the things that, that we have to look at as a

country, our housing costs are high. In part because of the way that we've designed our

cities and and I think there's a again this this form to check out Form based code.

There's some really interesting things that are there and this and you guys talked about

beginning the granny flats and other stuff But part of is we've got to get the coffee

shop the barber shop and law firms back into Residential neighborhoods in ways that can

help lower the [00:23:00] cost and create services where you don't need a car for everything

We have to redesign our cities, we have to build more housing, we have to think about

how the cities are being developed.

And then of course there's the jobs component too.

I think one of the things that we've done is we've seen a huge influx in workforce training

programs that have been funded by the American rescue plan.

Traditionally, I think the federal government spends maybe somewhere in the neighborhood

of 1 billion on an annual basis on workforce training. Because the American rescue plan

over the course of the last three years, we spent 12. 8 additional billion on workforce

training to help people get the skills they need to do the jobs that are need in the economy.

Uh, I visited a location a few months ago in California where they were training people

to become welders. Um, which is a profession that's needed or so much of the construction

trade. These were, um, Americans who had fallen were hard times, maybe spent a little time

in prison or lost a job. They couldn't train them fast enough [00:24:00] to go from being.

The training program to getting an entry level job that paid them 60, 000. Um, I visit another

workforce training program in Atlanta, where they're also going to train people to go into

these construction trades. And the key is that for many of these trades, one of the

things that is best for these people who do these jobs Is that you started an entry level,

some of them include apprenticeships that will allow you to earn up to six figures in

these jobs. So the key for us is making sure that we invest

in the training so that we have the employees to not only build housing, but to build all

the things that the economy needs. And because of the money that has been been invested in

workforce training by communities. But also by the federal government, I think we're better

positioned to do that. But ultimately, finding more people to do

these jobs is going to be a critical path, a critical thing that we have to do to be

able to succeed at building more housing.

There are many policies being put into place to fix the housing crisis, and it's not just

subsidizing [00:25:00] demand, but it is expanding supply. But we have all these variables, status

anxiety, the dual role of housing, housing as a retirement account, wealth inequality,

the constraints on economic growth and labor mobility, longer commute times, and sprawl,

and lack of innovation. In Negative Yield New York, Alex Yablon wrote

of the importance of cities being accessible to those just starting out, and how policies

like what we just talked about could fix it. He writes,

but once the city gets access to extremely low interest credit, it could also invest

in massive amounts of new housing to drive down the cost of living, as well as cultural

infrastructure. The city could create new studios, rehearsal

spaces, galleries, and performance venues to ensure that its vital artistic economy

can thrive alongside our other sectors that have increasingly crowded out the underground.

And there was another quote that talks about how when people don't feel free, that is constraining,

obviously. There's a deep sense in which freedom is achieved through the basics of life being

extremely plentiful and cheap. When we don't further that, people's lives become less free.

[00:26:00] When you feel like you don't have the mobility to go and get a start in a big

city, or you're too economically constrained in order to take a risk on yourself, That

impacts the entire economy. The downstream effects of not having enough

homes and not enough cheap homes for people has really impacted innovation. It's the housing

theory of everything. Lowering housing costs creates so many downstream benefits and frees

up so much capital. There was a Bloomberg piece that had a killer paragraph that said,

Instead of driving more innovation and growth, the bounty from today's knowledge economy

is instead diverted into rising land costs, real estate prices, and housing values.

The result is that working and middle class Americans are forced to devote ever larger

shares of their hard earned money for shelter. The central contradiction of capitalism today

is that a huge share of its productive surplus ends up being plowed back into dirt. Oh my

gosh. But you know, a lot of people talk about it's

time to build with regards to startups. They're like, go build, [00:27:00] go do this thing.

But the thing is, um, we kind of got to, you can think of it like a Maslow's hierarchy

of needs, right? The triangle. If we're not addressing the foundation of how people experience

the economy, it's going to be. difficult for them to go and take a big risk

on themselves. And so then you have sort of this selection bias where the only people

that are taking risks are the, those that have been able to have that risk finance,

whether that be through parents or maybe they figured it out, right. But having the ability

for more people to take on more risk in terms of how they direct their lives, not in the

stock market, but in terms of how they direct their lives is incredibly important.

Having some sort of fail safe measure in place for them, um, Through maybe cheap housing

is important too. Allowing more housing would ultimately allow

more people to build. It would remove probably elements of our structural and social isolation.

It would help to rebuild trust in institutions. Right now a lot of people feel misled because

the American dream has [00:28:00] evaporated. And so the faster that we can address housing

as we're doing through these policies, We can connect with each other and maybe have

hope in the American dream again.

And finally, direct file is another policy tool that will help innovate in the tax space

specifically. Removing middlemen. direct. File is a new tool that the IRS has

created that's going to help Americans. And for now it's going to be a pilot, but help

Americans who are. Earning an income through a W2, get a paycheck.

Middle class, working class. Americans file their taxes more easily, more easily, and

the, it's gonna make it faster for them to file their taxes, but it's also gonna be free.

Mm-Hmm. . Uh, and that's different than what is the normal experience of most Americans?

The average cost for an American to file their taxes using a prepare service is $240, and

it takes them 13 hours to do. The last time the IRS got money to invest

in technology, it was the 1960s. Before we had the [00:29:00] ATM, before man went to

the moon, before we had the personal computer, was when they built their infrastructure.

They are still building in a language called Cobalt. At the IRS. So what's happened is

the Congress is part of the Inflation Reduction Act.

Gave the IRS money and what they're doing with that money is they're using it to make

it easier for the American people To interact with the IRS and one of the things that we've

done Is create direct file and the way it makes it easy is because the IRS is the agency

that um deals with the tax code They're able to create a product that both allows you to

get intuitive answers to your questions, but also has a calculator that will help you as

you're filling out your taxes, make sure that you're getting the credits that you're eligible

for. So if you're, uh, if you're a firefighter

and you're filing out your taxes, it'll make sure that if you have children, you make sure

you're claiming the child tax credit so that you get the incentives and the money that

you deserve, [00:30:00] um, from the federal government as you're filing your taxes and

you get the right of return. The thing that you have is you have a choice and you can

make the choice paying money to one of the online providers and taking the time it takes

to use them. Or you can use a free product that's given

to you by the government that will allow you to help calculate your taxes and hopefully

will go faster. It's ultimately a choice you have to make and I think each American will

have to make a choice that's right for them. But our hope is that for a middle class family,

uh, they're going to make the choice that means they have to pay no money and they have

to spend less time so they can invest that money and time in their families.

Policy innovation is everywhere and it is indeed time to build.

Because we know that's one of the most important issues, no matter your age, no matter where

you live in the country, is the cost of housing is something that, um, is. To is higher than

you. We want it to be and we want to do everything we can to bring it down