August 4, 2025 • 43 mins
In this episode, E.J. Antoni, chief economist for the Heritage Foundation, discusses the complexities of the housing crisis, focusing on inflation, demand and supply dynamics, zoning laws, corporate influence, and potential solutions. He emphasizes the role of government spending and regulations in exacerbating the housing market issues and offers insights into how to address these challenges effectively. It's a Numbers Game is part of the Clay Travis & Buck Sexton Podcast Network - new episodes debut every Monday & Thursday.
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Episode Transcript
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Speaker 1 (00:02):
Welcome back to a Numbers Game with Ryan Grodowski. Thank
you for being here again. I really have to just
take a minute and thank everybody who listens to this
podcast religiously. July was my best month so far. It
was better than June, which is better than May. Every month.
The show is growing, and I'm really building the show
with you and for you, and I want to thank
you for spending ninety minutes a week with me. I
(00:25):
genuinely truly appreciate it from the bottom of my heart.
If you want to help me continue to grow this podcast,
please like and subscribe if you feel very generous, give
me a review on Apple or Spotify, orever you listen
to this podcast, So just thank you, all right. The
theme of this episode is I've been thinking a lot
about Zoram Mandani and his rise and the anxiety is
(00:47):
fueling left wing populism. Now part of that is fueled
by race based ideology, right. You see the people who
brazenly push left wing racism, people like Sonny Haustin from
the view who's like the most openly racist person on television,
or Joy Read formerly from MSNBC, where everything in her
eyes was based on race and all laws should be
used for promote anti white racism. And while those people
(01:10):
are black and so specifically two people, a lot of
people who do promote this kind of stuff are white,
and they have this shared ideology that is anti white racism.
There's also those who are just mindwashed, people who are
brainwashed rather brainwashed completely, and they just believe in things
like releasing criminals and redistributing wealth and legalizing drugs and
(01:31):
pushing critical gender theory that's transing the kids. I remember,
back in twenty twenty three, there was a man named
Ryan who lived a couple miles from me. His name
is Ryan Carson. And despite having a lot on paper
that we are similar on, we're both around the same age,
we're both white guys, you know have We lived within
a few miles of each other, our names were both Ryan.
(01:52):
We were a world apart politically. Ryan Carson was an
Antifa activist who had just genuine hate in his heart
for conservatives in a way that I don't have for
democrats or progressives. He tweeted celebratory messages when rush Limba died.
When the BLM riots destroyed police stations, he called police
sub human. He just was bathed in far left ideology
(02:16):
over policing and race. And on October fourth, twenty twenty three,
at four am, he saw a young black man having
a psychotic breakdown. This is the kind of man who,
in a normal society should have been in a mental hospital,
whether he liked it or not. And Ryan approached the
man trying to help him, and instead of just calling
the police, and the man responded by stabbing Ryan Carson
(02:36):
to death in front of his girlfriend. Friends of Ryan
Carson responded by saying that he would have felt sorry
for the killer even after the crime and viewed him
as just a victim of a broken system. But Ryan
Carson was in fact the victim of a of not
just a cold blooded killer, but of a broken system.
He was bathed in victimhood. Ideology of liberalism was to
(03:00):
and he believed the lie of race and poverty in crime.
And he just was a broken person or broken system.
You can't help those kinds of people, you know. Even
after he was murdered, his girlfriend, who was witnessed his murder,
campaign for Zora Mandani because she was equally as brainwashed.
She's going to create more victims like Ryan Carson, and
(03:24):
she doesn't view what she's doing as being, you know,
negative towards the community at all. She thinks what she's
doing is healthful for people who are poor, people who
are who need policemen, people who need the system to work.
You genuinely have to just kind of let those people go.
They're not capable of winning, and you just have to
make sure those kinds of people never hold genuine political power,
(03:46):
which might happen in New York City, and that's horrifying.
But that's not all them. A lot of these new
supporters who are in their teens and twenties and even
in my generation in their thirties, they're not all blue hairs.
They don't you know, they don't only have blue hair.
They don't all dream of defunding the police. Some are
just really angry at long standing obstacles to achieve the
American dream. And I might make this a longer series
(04:09):
in the podcast and break it down issue by issue,
But some of the things that come off the top
of my head that are driving people to join progressive
populist movements are things like housing and healthcare and the
cost of education. If we're being totally honest with ourselves,
Republicans and conservatives haven't done enough to properly explain why
(04:29):
prices in these areas have gotten so out of hand,
and realistic public policy can address them. For today's episode,
I want to talk about housing specifically, and let's talk
with some numbers so we're all on the same page.
According to the Federal Reserve Bank of Saint Louis and
the website Zillow, which tracks us, the average home price
in the United States in twenty twenty five was five
(04:50):
hundred and twelve eight hundred dollars. Now, of course, that's
not the same everywhere, right. If you look at the
top twenty five metropolitan areas, the average is lightly higher
at five hundred and forty six thousand, two hundred, and
that's really weighted down heavily by some very inexpensive metropolitan
areas like Detroit, where the average home price is two
(05:11):
hundred and fifty four thousand, Saint Louis it's two hundred
and sixty two thousand, and Euston is three hundred and
thirty seven thousand. Houston is an interesting case study because
it's virtually no zoning laws allowing for massive construction. You know,
you could have a a strip club, next to a
gun shop, next to a church, next to an apartment building,
next to a single family house on one block if
(05:31):
you wanted to. It's also the third largest city geographically
in size. I think the only two that I don't
think I know the only two that have a larger
physical size with a population of over one hundred thousand
people are Anchorage, Alaska and Jacksonville. It's an immense physical
piece of land, so there's a lot of places to build,
(05:53):
and you can find neighborhoods like South Belt Ellington where
homes on the market can go for as low as
one hundred and twenty two thousand dollars, or Astrodome Area,
which is even cheaper than that, but it's nowhere near
midtown Houston. Areas like Westmoreland will run you close to
a million dollars. Other areas like Katie, the Woodlands, river
Oaks are equally as expensive, if not even more expensive.
(06:15):
But I want to get to Houston in a little
bit because I think it's an important case study about
how to drive down housing prices in the way that
a lot of libertarians that they're and say this is
the answer to our problems. But let's get back to
the numbers nationwide are there is a housing shortage in America,
but it's unclear on how much that shortage is depending
(06:35):
on who you ask. According to the National Association of Realtors,
that numbers two point five million units, so we're short
two point five million units. Freddy max is three point
seven million, Zilo says it's four point five million, The
Brookings Institute says it's actually four point nine million, and
American Enterprise Institute says six million. So it really runs
(06:57):
the gamut from two point five million to six million.
Now let's just call it, say it's four to four
to point five million. Let's say Zillo is the most correct.
Why don't we just build more houses? That seems like
the obvious answer. Well, we do build a lot of
houses in America from twenty twenty to twenty twenty four,
an average of one point four to six four million.
(07:18):
One point four to six four million new homes. We're
being in construction every single year. But the US needs
one point six million to address the housing shortage, according
to the estimate by the National Association of Realtors. And
remember that's the group that said there's only two point
five million. If you go with Zillo or Freddie Mack
or the Brookings Institute number, you need closer to two
(07:39):
million new homes every year. Clearly, this is a supply issue,
and and you know when demand outstrip supply, prices go up.
Over the last fifteen years, home prices have gone up
one hundred and one percent in the top twenty metropolitan areas.
During the same period, hourly wages have gone up only
thirty three percent nationally in about forty percent in those
(08:01):
top twenty metropolitan areas. So prices for houses for homes
are growing more than twice the weight of wages. I
got into a huge debate with my brother about this
the other day. We were texting NonStop, and he was saying,
is actually that disposal income is growing on par with
home median home prices? And he pointed to Chad Gpt,
(08:22):
which is this is why I hate AI. Chad Gpt
said that home median home prices had grown fourteen times
over since nineteen sixty nine to twenty nineteen, while disposal
income income grew thirty thirteen point two seven times over. Now,
that's one answer is why home prices are growing. And
I think it's sophomoric, but it's there. It's just that
(08:43):
we have more disposal income, so therefore, you know, home
prices are going up. But I think that's I think
you can't argue from that standpoint because it's too long
of a time period, and we essentially have been two
different countries by that period. When you wait inflation in especially,
and you look at real disposal income from two thy
(09:04):
to twenty twenty five, real disposal income has only grown
by forty nine percent, while home prices have grown by
eighty four percent, So it's a much much different number.
Another argument, aside from home price is growing in line
with disposal income and the housing supply shortage, you know
what else is causing home prices to grow? What else
(09:25):
are the other two other other major issues aside from that, Well,
part of the answer could be that the cost of
building a home has risen so much. The cost to
build a new home is up twenty percent since twenty twenty.
It's partially because of the labor costs have gone up,
which will come down as the industry continues to mechanize,
but we're not there yet. But the other part is inflation.
(09:47):
The dollar is weaker in value as far as purchasing
power goes, and it's down significantly since COVID. According to
the Saint Louis Fed from twenty twenty to twenty twenty four,
the dollar has lost about twenty percent of its nomine
purchasing power. That means one hundred dollars in twenty twenty
is worth about eighty three dollars and thirty three cents
in twenty twenty four. Then there's the issue of zoning.
(10:10):
Most single family homes in America are built in areas
that you can't up zone, and it's very difficult, meaning
that you can't have like a twenty story apartment building
where a one family house currently exists in most cities
in this country. Now, this is the argument that progressives
and libertarians love the most to talk about. We have
to word of zoning, We have to word of zoning.
We have to get rid of zoning. You will hear
(10:31):
them say this till they're blue in the face. Progressives
love this idea because it means you can flood cheaper
housing in mostly pristine suburb areas or mostly pristine areas
of cities where people spend generations maintaining a good quality
of life and good schools. To them, those places like
the suburbs are the great evil in society because they're
(10:52):
usually whiter, they're wealthier, they have better school systems. It's
just it's capitalism and whiteness, and every bad thing in
one bubble is marked up in zoning laws. For libertarians
and the free market ILK and the GOP, it's the
chance to maximize growth and profits and desirable areas where
single family homes exist. And because they don't care about
(11:13):
maintaining cultural integrity or the fabric of society that generations
spend time building, why not destroy it. That's the libertarian argument.
I mean libertarians. I'll say this, growth for the sake
of growth is the ideology of cancer cells and libertarians.
They are equally on the same playing field when it
comes to that. But what we haven't talked about, and
(11:34):
what most people will not talk about, is the demand side. Now.
I hate to be the guy who constantly brings up
immigration all the time, but it is a key factor
in our housing crisis. From twenty twenty to twenty twenty five,
the US both eight point four to five million new homes,
while the population saw a natural increase of three point
(11:55):
sixty six million people, three point sixty six million people,
eight point four to five million homes. Housing prices should
be declining, But that's where immigration comes in. Immigration plays
a huge factor. Between twenty twenty and twenty twenty five,
four point seven million foreigners received legal permanent residence. That's
legal immigration, it's not illegal. That's nothing to do with
(12:17):
illegal immigration. That's legal immigrants. Four point seven million over
four and a half years. Then during Biden's presidency, you
add the four point five million illegal aliens who enter
the country, plus the known godaways, which is as many
as two million, plus those who are here on a
visa system, and you get a housing shortage. And while
(12:39):
they're not all buying homes, they're going somewhere. They have
to runs an apartment, they have to live somewhere. They
can't all live on living in tents on the street.
They're living in somebody's home somewhere, or they're buying a home.
And that's just the foreigners living in the US, foreigners
owning homes in the US who don't live here right,
people who are I spent I spent one time to
(13:00):
one hundred and sand as his team, and they told
me that there's hundreds of thousands of homes in Florida
that are owned by Canadians who vacation there in the summer. Overall,
between one point one to two point six percent of
all home purchases between twenty twenty and twenty twenty four
were made by non US citizens who don't live in America.
(13:20):
So one point one to two point six is not
the main driving factor as to why home prices are increasing,
but it is certainly a secondary factor. It's certainly especially
a factor in high desirable destinations like major cities like
Miami and New York or where people vacation in Florida.
There's certainly something there. And there are other factors too,
(13:41):
like the number of corporations purchasing homes, and there's a
lot to discuss with it. So I brought on an
amazing guest who really is an expert in the field,
and he's going to come on next to talk about
what's driving the housing crisis, what's driving the increase in
housing prices, and how we can fix it. Coming up next,
our guest on today's episode is ej Antoni. He is
(14:03):
the chief economist for the Heritage Foundation, and he knows
a lot about housing, so he's the guy to talk
to for this episode. EJ. Things for coming on the podcast.
Speaker 2 (14:11):
It's my pleasure. Thank you for having me.
Speaker 1 (14:14):
So I started off this podcast talking about the issue
of housing as it comes to politics. Right, the left
is really mobilized a lot of voters, especially urban voters,
over the idea that housing is too expensive, it's hard
to find a good house, and there's really been a
decline and center of living over the issue of housing.
So what I want to ask you is over the
(14:36):
topics that people blame as being the remain driver of housing,
and you could kind of explain if it is, if
it isn't, how much is contributing, So the first being inflation,
both the cost of building a house and the devaluation
of our currency, of the purchasing power of recurrency from
you overspending by the government.
Speaker 2 (14:58):
Sure, sure, it's important. And to keep in mind when
we talk about inflation, is not just the impact that
inflation has on rents on home prices, right, But then
we also have to consider what is the impact of
what caused the inflation, and we can get to that
in a second. So if we just look at the
(15:18):
inflation itself. Real quick Inflation as a monetary phenomenon is
simply a devaluing of the currency. So now it just
takes more of the currency to buy whatever it is
you're trying to buy. In that regard, inflation affects housing
just as much as it affects everything else. So, by
the official metrics, over the course of about four years,
(15:39):
the dollar lost twenty percent, or a fifth of its
value roughly. If you use some nonofficial metrics that include
other measures of purchasing power, the decrease is actually substantially
more than that. It's closer to thirty percent over the
course of four years. But whatever the case, that's inflation.
(16:01):
But you have to ask what caused the inflation, and
you already alluded to that the increase in government spending.
How was that increase in government spending actually accommodated by
the central bank? And the answer there is twofold, because
the central bank not only simply created money for the
government to spend, right, the government went out there and
(16:23):
bought all of these treasury bonds for example, or treasury bills,
treasury notes, whatever the case may be. They were buying
treasury securities in order to take that off of the
hands of private dealers like banks, so that banks then
had the liquidity to buy more government debt, so it
was an indirect purchase, you could say. However, in order
to facilitate this, they also had to keep interest rates
(16:46):
incredibly low, which also meant that the borrowing costs for
the treasury were incredibly low. In other words, the yields
on treasury again, bills, notes, bonds, everything, the yields on
all that treasury debt plummet, but those low yields were
not isolated to treasury markets. The whole quantitative versus qualitative
(17:08):
theory of credit is very very clear in that you
can never just create one kind of credit and mass
and then not expected to filter out through other kinds
of credit to the rest of the economy. This was
most infamously, perhaps illustrated in the late nineteen twenties and
ultimately helped cause the Great Depression. But you saw that
(17:30):
again with the FED creating all of this money for
the government to spend and pushing down yields on treasuries
again to facilitate government borrowing. The result of that, the
spillover of that, I guess you could say, though, was
the fact that interest rates on things like mortgages plummeted.
I mean they went to essentially never before seen levels.
(17:51):
That was also exacerbated by the fact that the FED
wasn't just buying treasury securities. They were also buying mortgage
back back securities or mbs as we commonly call them.
That was something that the FED started in the wake
of the global financial crisis and the mortgage meltdown. Everything
that really started teeing off in two thousand and five
(18:12):
but bottomed out in two thousand and nine, and ever
since that period, the FED has had a certain amount
of mbs on its books it never did previously. By
purchasing all of those mortgage backed securities, the FED increase
the demand for those mortgage back securities. Well what's the
effect of that. If you increase the demand for that
kind of financial derivative, you also increase the demand for
(18:35):
the underlying asset, which would be mortgages. So if there's
an increase in demand for mortgages, what's the incentive as
somebody who's let's say a bank, you're a lender, you
want to create mortgages, Well, now you have an increased
incentive to do that.
Speaker 1 (18:50):
So in latent terms, for those who are not economists
like myself, the low interest rates over a longer period
of time and mortgage backed securities increase the driving option,
the drive for people to jack up costs because the
front the front costs or the back costs rather, mortgages
(19:12):
were so cheap.
Speaker 2 (19:14):
Right when we look at home ownership, right, the cost
of home ownership, you actually don't care about the home price.
That sounds weird because everyone is looking at the home
price when they're buying a home, but that is only
in the context of a certain interest rate market. So
what you really care about when you're trying to buy
a home as a potential home buyer, what you really
(19:35):
care about is your monthly mortgage payment, because that's what
actually has to fit into your monthly budget. And so
by pushing these interest rates down to next to nothing,
I personally know a lot of people who have interest
rates of two percent, not an exaggeration on a thirty
year fixed I know, not even more with the two
and a half percent rate.
Speaker 1 (19:55):
I'm sorry, mine's two point nine to nine right now.
So I mean, there're guilty as.
Speaker 2 (20:01):
But what happens then to home prices and that kind
of environment they explode. So on top of the increase
in home prices that you already had from inflation, you
had this whole interest rate dynamic that was happening behind
the scenes also because of federal reserve policy, that just
made home prices absolutely explode faster than other asset classes.
Speaker 1 (20:21):
So I have a question for you, because I got
into a very heated debate with my brother about this,
and my brother said, the reason that there is that
home prices really haven't increase much more than disposable income
since the nineteen seventy and it's really disposable income. How
much disposed income we have is why home prices have increased.
(20:41):
I don't think that that's true.
Speaker 2 (20:43):
Do you know, the ratios there just don't line up. Instead,
what we've seen really since the early nineteen seventies is
this move to just financialize everything. In other words, homes
no longer are just a dwelling right. And I'm not
talking about that homes have gotten more luxurious or anything
(21:04):
like that, because from that standpoint, there's still a dwelling right.
There's still the utility of housing, in other words, is
still purely in the fact that it's a dwelling for you,
no matter how spartan or how luxurious that dwelling may be. Instead,
what has changed is the fact that housing is now
a way to protect yourself from inflation. Housing is a
(21:25):
way for you to build wealth because it's going to
inflate so much over time. And that was that's especially
been true for the boomer generation, unlike for their parents
or generations prior to that, where nobody actually looked at
a home as something that was an investment. But that's
how you look at it today. For basically all of
(21:47):
American history until the seventies, the way you looked at
a home was it's an asset class where by the
time you go to sell it, you're basically going to
get out of it exactly what you paid for it.
There was no net incre there, So what the utility
of it over time again was the fact that it
was a dwelling. It was not an investment. You were
(22:07):
not trying to get a rate of return. But because
we have financialized housing in a broader move where we're
kind of financializing everything due to interest rate manipulations, it
really has completely changed how we look at housing as
an asset class.
Speaker 1 (22:23):
What do you make of the claims, especially by libertarians
and very far progressives, that it's just all zoning laws,
it's the suburbs. The suburbs are the reason that we
have a housing shortage because they have strict zoning laws.
Speaker 2 (22:37):
Well, to a certain extent, I think there's some credence
to that argument. For example, if we look at the
areas of the country that have the strictest zoning laws,
that have the most localized control in terms of where
you can build and the kinds of dwellings you can build,
those are also the prices where you excuse me, those
are also the places where you find the highest price
(23:00):
is However, the idea that that's the suburbs actually isn't
the case. Where you find that the strictest controls on
housing is a lot of major city centers like New
York City specifically New York County aka Manhattan. It's Los
Angeles County out in California, much of Cook County, which
(23:20):
is where you find Chicago in Illinois. Those are the
places where you know you have the highest home prices
because you have the worst overreach in terms of those
those kinds of controls. You actually don't find the highest
prices for dwellings out in the suburbs. Now you might
you might be able to if you kind of manipulate
(23:41):
the data a little bit, say home prices are more
expensive in the suburbs because that's where you find much
bigger homes. But if you account for all those factors,
it's really just not the case that the suburbs are
the driver of home price inflation.
Speaker 1 (23:55):
Well, I think the suburbs are that are the well
the boog man because they are they're whiter than the country,
than the cities as a whole, better schools, people who
earn more incomes. Basically capitalism and white whiteness, the two
great enemies of the progressive movement is this is encompass
(24:16):
in the suburbs. A lot of people approach the issue
of housing from the issue of supply. We're millions of
houms short. I always kind of look at it from
the issue of demand as well. Right, we are driving
the demand because of mass immigration has increased the need
for housing. California would have had a net loss over
(24:37):
the last four years of almost one million people, but
they didn't because immigrants replaced Americans who left the state
because of failed policies. Sure, Am I wrong in saying
that immigration is driving the housing crisis worse?
Speaker 2 (24:52):
Well, it is certainly a huge proponent, and it's very
clear that it has had a net negative contribution. I
think you're absolutely right in that regard. If you look
at just the number of illegal aliens that we know
across the border, forget all the ones that we don't
even know about. Just the illegal aliens that we know
across the border during the four years of twenty twenty
(25:14):
one through twenty twenty four, that actually exceeds the population
of New Jersey, which is the most densely populated state
in the country. So let's just do a quick intellectual exercise.
What do you think would happen to home prices to
rents if all of those illegal aliens all went to
New Jersey. Now, for better or for worse, they were
(25:36):
spread out throughout the country, But if they all went
to New Jersey, obviously rents and home prices would explode.
So that effect has simply been diffused throughout the rest
of the country. Not perfectly. You pointed out California, and
you're absolutely right that were it not for the influx
of both legal and illegal foreign immigration, then you would
have seen populations go down much more substantially the Golden State.
(26:01):
But whatever the case, it's very clear that all of
these people are they're in need of dwellings, and so
they increase the demand for dwellings. So then you have
to ask, Okay, price is determined by supply and demand,
So what's the interplay there? Demand obviously is an increase.
What's going on on the supply side, There is no
evidence that all of those illegal aliens have in any
(26:23):
way added to the supply of housing. Now, is it
likely that some of them probably found jobs in the
home building industry. Sure, it's perfectly plausible, but there's no
certainly no empirical evidence for it. And the number of
those illegal aliens who would have had to have gotten
jobs in that industry in order to offset the additional
(26:46):
costs is so high that there's certainly no way that
there's any kind of overlap there. In other words, even
if you take a very optimistic scenario on the supply side,
it still is a smaller increase than the increase in
demand QED. There must have been a net increase on price.
That's positive.
Speaker 1 (27:05):
Well, and what you know, the city of Houston is
kind of like the Epicenter for case study that prices
have come down because they've built I think almost seventy
thousand homes in a single solitary year, which is immense
even though the population has only grown by ten thousand.
And they say, see, if we do this as the
country as a whole, then we're going to be golden.
But the populate the natural growth plus immigration of the
(27:28):
country as a whole. In order to do that over
the course of a decade, you need something like eighty
million homes or seventy five million homes, and everyone wants
to live in the same thirty metropolitan areas. No one
wants to live in the middle of the Nevada desert,
so that is or not many people rather want to
live in the middle of the Nevada desert. It becomes
a race to the bottom in my opinion, if you
(27:50):
just look at from the strict standpoint of we do
have to build more. But if you continue that, you
know into fifty years from now or forty years from now,
you're talking about, you know, living in these Chinese mega
cities where everyone lives in a cubicle and just saying, oh, well,
it's a housing.
Speaker 2 (28:08):
Well, let's let's stick with the example of Houston for
a moment, because you know, that's a place going back
to your common earlier about you know, things like zoning laws.
Houston essentially has no zoning laws, and they have historically
been one of the most affordable major metropolitan areas in
the United States in large part because of that and
(28:29):
what Houston has done as it has expanded ever outward.
You know, most cities only have one highway that runs
around it, you know, they call it a loop or
a beltway here in d C. Right, Houston has three,
and they're building more. And the reason for that is
because the city just simply keeps growing. But you will
have very, very substantial areas of Houston that you can
(28:50):
go to today that feel actually pretty suburban, not urban.
In other words, it's not just city block after city
block of nothing but apartments. Instead, you will find condos,
town homes, and even independent or separate single family homes.
So the idea that if we keep expanding cities or
we keep building, that we have to force ourselves into
(29:13):
smaller and smaller dwellings, I don't think that's the case
at all. The record of history doesn't show that. The
other issue is that if you look at a lot
of areas today that are major metropolitan areas and that
are growing incredibly quickly, sticking with Texas on Austin is
immediately coming to mind. That city is growing like gangbusters,
(29:34):
and it was actually a pretty small city relatively speaking,
not that long ago.
Speaker 1 (29:40):
And well, Houston sorry, one thing without Uston is the
third biggest land sized city in America, only behind Jacksonville
and Anchorage. I think in Alaska, like someplace like New York,
they can't grow outwards. It's a bunch of violence. So
the only way what I was thinking of, less so
(30:02):
than Houston is rather than grow, you have to grow upwards.
You have to get cubicle sized homes in those places
like that that rush up against water. I mean, you
can't build out anywhere else, Am I am? I just
wanted to clarify that what I was talking about with that, Oh.
Speaker 2 (30:17):
Sure, but I would say that there's no number one.
There's no reason why as you build up, you can't
build up in a large way. In other words, there's
no reason why as you build skyscrapers, those skyscrapers have
to all be five or six hundred square foot studio apartments. Right,
you can build three or four bedroom apartments, and there
are areas of New York like that. Now they're outrageously expensive.
(30:40):
But again this goes back to the restrictions on building.
The other thing is that there's no reason why you
have to stay on the Isle of Manhattan. There's no
reason why you can't continue building outward from there. And
we've seen this over time. Right, it's not as if
the areas the communities outside of New York City were
(31:02):
there one hundred years ago. We have been slowly expanding outwards.
And it's not just true for places where they're islands.
Speaker 1 (31:09):
Right.
Speaker 2 (31:09):
You can look at a city a little further south,
like Philadelphia. If you go to the historic areas of
Philadelphia today, including a place where Thomas Jefferson used to live.
It obviously is in the middle of downtown Philadelphia, but
at the time of our nation's founding it was considered
the suburbs. He specifically picked that small house to live
(31:30):
in for a while because it was away from the
hustle and bustle of the city. It was away from
the flies and the manure, from the horses, et cetera.
So what has steadily happened over time. Is the areas
that previously were suburbs are now just considered part of
the city, and areas that previously were rural that were
literal farms or uncleared woodlands are being cleared over time
(31:54):
and are being turned into suburbs.
Speaker 1 (31:57):
Okay, I have two questions left for you, so one
being what do you make of the allegation. Not the
allegation it is real, but what do you think of
the whole premise of corporations buying housing as a main
driver in the increased cost of it. Is that as
real as what people claim it is or is that
hyperbole really for political points.
Speaker 2 (32:19):
If it was as real as a lot of the
politicians claim it is, then you would have seen, just
as you would see a huge reduction in the supply
of homes available for sale, you should have seen a
huge increase a corresponding increase in the supply of homes
for rent, because those businesses are not simply buying the
(32:41):
homes to sit on them. They're not buying the homes
for them to be vacant or for the CEO to
go live in them, right, They're buying them so they
can turn around and rent them out, but you're not
seeing that dramatic increase in the supply of rents, which
would then obviously put downward pressure on rent prices. The
(33:01):
dynamic just simply isn't there. Now. Is it true that
we've seen an unusual amount of investors buying housing over
the last several years. Absolutely, and that's been due to
the fact that interest rates were kept so obscenely low
for so long, because not only did that reduce mortgage rates,
(33:22):
but it also reduced rates again for general borrowing. And
you don't have to pay the same interest rate when
you're a large investment corporation, a large investment house buying
up a ton of housing as somebody who's you know,
an individual trying to get trying to get that thirty
year fixed mortgage. Those rates are not the same. And
(33:44):
because they were so much lower for those those major brokers,
those major investors, the result was they could buy up
much more housing than people could could get could get
mortgages to buy those homes.
Speaker 1 (33:57):
So that dynamic there understoning is like for all the
you know times that Black Rock is buying property, most
of the corporate purchasing is just LLCs that individuals are doing.
Like you know, if someone's owns a summer house or
a vacation home or a second home to rent, it's
usually donder An LLC, and that is responsible for a
(34:17):
large chunk of all corporate purchasing. But I wanted your
opinion on that, So you don't think that the.
Speaker 2 (34:22):
Median the median age of somebody buying a home today
is like fifty something years old. In other words, these
are people who already have homes and they're getting a
second home. They're getting like you said, they're getting that
shore home which they're only going to use sometimes and
the rest of the time that they're airbing being it
or you know whatever they case may be renting it
(34:43):
out right. The for a first time home buyer, the
average age is like thirty eight. But if you if
you don't limit it to just first time buyers, if
you're looking at anybody buying a home today, I mean
it's it's basically all baby boomers and they're getting second homes.
Speaker 1 (35:00):
You're gonna that's like a meme right there. Okay, So
if you if you were to advise some politicians, both
federally and locally right on how to relieve the thing
if you wanted to be if a Republican went up
to you and saying, I understand this is a major
motivator for progressive politicians. How do I address a reasonable
alternative that sounds good and will actually drive down a
(35:23):
home prices? What do you say to somebody on the
federal level, and when you say somebody on the local
or state level.
Speaker 2 (35:29):
Well, regardless of whether it's a Republican or a Democrat,
I would honestly tell them exactly the same thing. Which
let's start with the local level, although it's somewhat true
for the federal level as well. You got to reduce regulations.
You got to reduce spending at the local level. If
you reduce spending, you can reduce property taxes, sometimes sales taxes,
(35:49):
but it's locals almost always disproportionately rely on property taxes.
Getting those property taxes down helps reduce the cost of
ownership because again that directly ties in to the monthly
mortgage payment, which is what we said has to fit
into the potential home buyer's monthly budget. So that's a
big component. Get the spending down, get the regulation down,
(36:10):
so you can reduce the cost of home ownership reduce
the cost of building new homes as well. At the
federal level, similarly, there are plenty of federal regulations that
drive up home prices nationwide. You got to get rid
of those. They're just they're inefficient. They don't protect homeowners
like they say they should, so they're not worth it.
They impose costs without imposing commissary benefits. And then you've
(36:34):
got to get the spending down, because the spending is
what drives the barring, which is what drives the FED policy,
which is what drives the interest rate manipulations, and has
contributed to this massive mess in the first place, and
completely frozen over the housing market. You're in this bizarre
situation today because of excess government spending, where people are
sitting like yourself, are sitting on a two point nine
(36:55):
to nine percent mortgage. Why on earth would you sell
your home today, lose that mortgage and have to get
a new one at seven or eight or even nine percent.
In some markets, you'd have to downsize. You can't afford
the same home anymore. Your monthly payment would absolutely explode,
So you've frozen over the existing or used housing market.
(37:15):
At the same time, costs for home builders are at
a record high because of inflation, and they can't afford
to borrow money because of today's higher interest rates. So
you've also drastically decreased the supply that's coming online in
terms of new construction. So all in all, it has
completely frozen over the housing market because the government just
couldn't get control of its spending.
Speaker 1 (37:37):
Spending is deficit. Spending is the hidden sacks, and no
one sees So ej Antoni, thank you so much for
coming on this podcast. Where can people go to read
more of your stuff.
Speaker 2 (37:46):
The best place to find me is on x and
the handle there is at real EJ.
Speaker 1 (37:50):
And TONI thank you so much for coming on. Now
it's time for the Ask Me Anything segment of the show.
If you want to of the Asking Me Anything segment,
email me Ryan at Numbers Gamepodcast dot com. That's Ryan
at numbers Plural gamepodcast dot com. I've had a backlog.
I've been very successful in working that down. We only
(38:12):
have a few emails left, so if you email me now,
I will get to it on the show on a
pretty quick manner. So this email comes to Matthew Schinzing.
I hope I got the name right, he says, Ryan,
I quite enjoy your show and always find it enlightening
and informative. My question is how important are pro gun
voters in the Republican Party voting coalition. As it always
(38:32):
seems the Republican politicians ignore gun rights issues to the
pro gun base. Yet I hear pro gun people saying
to each other at extremely important parts of the base.
How does it make sense if they constantly feel ignored
by the Republican Party. Okay, this is a great question,
Thank you so much, Matthew. So when it comes to
gun rights, they're about forty two percent of Americans live
(38:55):
in a home where someone owns a gun, and about
thirty three percent actually own the gun themselves. And there's
big differences in the population. For example, older voters older
Americans have more likely to own a gun than younger Americans,
white Americans more than Hispanic or Black Americans, rural Americans
more than urban Americans. YadA, YadA, YadA. Gun rights are
(39:18):
interesting because the opinion of them sways very significantly from
both those who don't own a gun and those who
only own like one gun. Right. Among people who only
own one gun or maybe less, there are a very
big support for what they say is quote unquote common
(39:39):
sense gun laws. Right. Policies that are more restrictive, like
preventing people from mental illness from purchasing guns has like
an eighty nine percent approval rating among Republicans, even who
own guns. Increasing the minimum age to buy a gun
has sixty nine percent support among Republicans. Then there's issues
like banning assault style weapons, which is like, you know,
it's a ridiculous term, this was such thing as assault style weapon,
(40:01):
but even that has forty percent support. And then there's
issues like allowing teachers to carry guns, which is a
seventy five percent support among Republicans, and issues like allowing
people to have concealed carrying more places has a seventy
one percent. It's a very splintered position, right. Not everyone
who owns a gun is supportive of all expansive and
(40:22):
more permissive gun laws, and not everyone who doesn't own
a gun is not supportive of all restrictive gun laws. Right,
So it's very it's not one or the other, it's
kind of a mixture of both when it comes to
the vote of gun owners right, specifically gun owners. In
twenty seventeen, Nate Cohen from The New York Times did
(40:43):
a breakdown of all the states in the country boased
on gun owners and how they voted. There was only
one state in the entire country where a majority of
gun owners voted for Hillary Clinton, and that was Vermont
Vermont in twenty sixteen, Hillary won Vermont's gun owners fifty
(41:04):
one forty two. Every other state in the country California,
Trump won gun owners by twelve points. New York Trump
won gun owners by thirty points. Florida Trump one gun
owners by thirty four points. In Texas, Trump one gun
owners by thirty six points. Forty nine out of fifty states,
gun owners voted for the Republican. What about non gun owners?
(41:26):
A majority of non gun owners in forty nine other
fifty states coincidentally voted for the Democrat. The only state
where Trump won a majority of non gun owners was
West Virginia, which he won by fourteen points. But you know,
go to the red estates in the country. Go to Arkansas,
Trump lost non gun owners by eleven points. Mississippi, Trump
(41:49):
lost non gun owners by forty eight points. Go to Tennessee,
Trump lost non gun owners by fifteen points. Nothing divides
voters like a gun and the Republican Party cannot win
without gun owners. There's just no way gun owners are
They make and break and they turn states red. And
gun ownership is on the rise and it's becoming more diversified.
(42:12):
There are more black and female and Latino gun owners,
which has made the issue change the issue. But I
think when it comes to the question do they feel
do gun owners feel like their rights are being disrespected,
it really depends on who you talk to. The idea
of constitutional carry was considered a very weird issue in
(42:35):
the year two thousand and the year two thousand, only
one state had constecial carry and that was Vermont. And
now more than half the states in the country of
constitual carry. That's an immense change and I think an
immense culture war win for the Republican Party more than
anything else. And look if you look at where they
spend so much of their time in the judiciary trying
to get conservative judges, there's no place they have fought
(42:58):
harder for than on second mement rights. So so yes,
gun owners extremely important for the Republican Party. Can't own
without them. Forty nine out of fifty states gun owners
a majority gun owners voted for the Republican presidential candon
in twenty sixteen. Forty nine and fifty states they voted
for the Democrat non gun owners did in twenty sixteen.
(43:19):
But as far as feeling disrespected, I think it's really
a question of who you ask. But great question, Matthew,
and I hope that that was insightful to how gun owners.
You know, they make or break the Republican Party, and
we need her Second Amendment for more than one reason.
But politically, the Republicans definitely need people to own guns.
So thank you for listening, Thank you for your question.
I'll be back on Thursday. Please like and subscribe on
(43:40):
the iHeartRadio app Apple Podcasts for regulus en podcasts. I'll
see you later this week.
Welcome back to a Numbers Game with Ryan Grodowski. Thank
you for being here again. I really have to just
take a minute and thank everybody who listens to this
podcast religiously. July was my best month so far. It
was better than June, which is better than May. Every month.
The show is growing, and I'm really building the show
with you and for you, and I want to thank
you for spending ninety minutes a week with me. I
(00:25):
genuinely truly appreciate it from the bottom of my heart.
If you want to help me continue to grow this podcast,
please like and subscribe if you feel very generous, give
me a review on Apple or Spotify, orever you listen
to this podcast, So just thank you, all right. The
theme of this episode is I've been thinking a lot
about Zoram Mandani and his rise and the anxiety is
(00:47):
fueling left wing populism. Now part of that is fueled
by race based ideology, right. You see the people who
brazenly push left wing racism, people like Sonny Haustin from
the view who's like the most openly racist person on television,
or Joy Read formerly from MSNBC, where everything in her
eyes was based on race and all laws should be
used for promote anti white racism. And while those people
(01:10):
are black and so specifically two people, a lot of
people who do promote this kind of stuff are white,
and they have this shared ideology that is anti white racism.
There's also those who are just mindwashed, people who are
brainwashed rather brainwashed completely, and they just believe in things
like releasing criminals and redistributing wealth and legalizing drugs and
(01:31):
pushing critical gender theory that's transing the kids. I remember,
back in twenty twenty three, there was a man named
Ryan who lived a couple miles from me. His name
is Ryan Carson. And despite having a lot on paper
that we are similar on, we're both around the same age,
we're both white guys, you know have We lived within
a few miles of each other, our names were both Ryan.
(01:52):
We were a world apart politically. Ryan Carson was an
Antifa activist who had just genuine hate in his heart
for conservatives in a way that I don't have for
democrats or progressives. He tweeted celebratory messages when rush Limba died.
When the BLM riots destroyed police stations, he called police
sub human. He just was bathed in far left ideology
(02:16):
over policing and race. And on October fourth, twenty twenty three,
at four am, he saw a young black man having
a psychotic breakdown. This is the kind of man who,
in a normal society should have been in a mental hospital,
whether he liked it or not. And Ryan approached the
man trying to help him, and instead of just calling
the police, and the man responded by stabbing Ryan Carson
(02:36):
to death in front of his girlfriend. Friends of Ryan
Carson responded by saying that he would have felt sorry
for the killer even after the crime and viewed him
as just a victim of a broken system. But Ryan
Carson was in fact the victim of a of not
just a cold blooded killer, but of a broken system.
He was bathed in victimhood. Ideology of liberalism was to
(03:00):
and he believed the lie of race and poverty in crime.
And he just was a broken person or broken system.
You can't help those kinds of people, you know. Even
after he was murdered, his girlfriend, who was witnessed his murder,
campaign for Zora Mandani because she was equally as brainwashed.
She's going to create more victims like Ryan Carson, and
(03:24):
she doesn't view what she's doing as being, you know,
negative towards the community at all. She thinks what she's
doing is healthful for people who are poor, people who
are who need policemen, people who need the system to work.
You genuinely have to just kind of let those people go.
They're not capable of winning, and you just have to
make sure those kinds of people never hold genuine political power,
(03:46):
which might happen in New York City, and that's horrifying.
But that's not all them. A lot of these new
supporters who are in their teens and twenties and even
in my generation in their thirties, they're not all blue hairs.
They don't you know, they don't only have blue hair.
They don't all dream of defunding the police. Some are
just really angry at long standing obstacles to achieve the
American dream. And I might make this a longer series
(04:09):
in the podcast and break it down issue by issue,
But some of the things that come off the top
of my head that are driving people to join progressive
populist movements are things like housing and healthcare and the
cost of education. If we're being totally honest with ourselves,
Republicans and conservatives haven't done enough to properly explain why
(04:29):
prices in these areas have gotten so out of hand,
and realistic public policy can address them. For today's episode,
I want to talk about housing specifically, and let's talk
with some numbers so we're all on the same page.
According to the Federal Reserve Bank of Saint Louis and
the website Zillow, which tracks us, the average home price
in the United States in twenty twenty five was five
(04:50):
hundred and twelve eight hundred dollars. Now, of course, that's
not the same everywhere, right. If you look at the
top twenty five metropolitan areas, the average is lightly higher
at five hundred and forty six thousand, two hundred, and
that's really weighted down heavily by some very inexpensive metropolitan
areas like Detroit, where the average home price is two
(05:11):
hundred and fifty four thousand, Saint Louis it's two hundred
and sixty two thousand, and Euston is three hundred and
thirty seven thousand. Houston is an interesting case study because
it's virtually no zoning laws allowing for massive construction. You know,
you could have a a strip club, next to a
gun shop, next to a church, next to an apartment building,
next to a single family house on one block if
(05:31):
you wanted to. It's also the third largest city geographically
in size. I think the only two that I don't
think I know the only two that have a larger
physical size with a population of over one hundred thousand
people are Anchorage, Alaska and Jacksonville. It's an immense physical
piece of land, so there's a lot of places to build,
(05:53):
and you can find neighborhoods like South Belt Ellington where
homes on the market can go for as low as
one hundred and twenty two thousand dollars, or Astrodome Area,
which is even cheaper than that, but it's nowhere near
midtown Houston. Areas like Westmoreland will run you close to
a million dollars. Other areas like Katie, the Woodlands, river
Oaks are equally as expensive, if not even more expensive.
(06:15):
But I want to get to Houston in a little
bit because I think it's an important case study about
how to drive down housing prices in the way that
a lot of libertarians that they're and say this is
the answer to our problems. But let's get back to
the numbers nationwide are there is a housing shortage in America,
but it's unclear on how much that shortage is depending
(06:35):
on who you ask. According to the National Association of Realtors,
that numbers two point five million units, so we're short
two point five million units. Freddy max is three point
seven million, Zilo says it's four point five million, The
Brookings Institute says it's actually four point nine million, and
American Enterprise Institute says six million. So it really runs
(06:57):
the gamut from two point five million to six million.
Now let's just call it, say it's four to four
to point five million. Let's say Zillo is the most correct.
Why don't we just build more houses? That seems like
the obvious answer. Well, we do build a lot of
houses in America from twenty twenty to twenty twenty four,
an average of one point four to six four million.
(07:18):
One point four to six four million new homes. We're
being in construction every single year. But the US needs
one point six million to address the housing shortage, according
to the estimate by the National Association of Realtors. And
remember that's the group that said there's only two point
five million. If you go with Zillo or Freddie Mack
or the Brookings Institute number, you need closer to two
(07:39):
million new homes every year. Clearly, this is a supply issue,
and and you know when demand outstrip supply, prices go up.
Over the last fifteen years, home prices have gone up
one hundred and one percent in the top twenty metropolitan areas.
During the same period, hourly wages have gone up only
thirty three percent nationally in about forty percent in those
(08:01):
top twenty metropolitan areas. So prices for houses for homes
are growing more than twice the weight of wages. I
got into a huge debate with my brother about this
the other day. We were texting NonStop, and he was saying,
is actually that disposal income is growing on par with
home median home prices? And he pointed to Chad Gpt,
(08:22):
which is this is why I hate AI. Chad Gpt
said that home median home prices had grown fourteen times
over since nineteen sixty nine to twenty nineteen, while disposal
income income grew thirty thirteen point two seven times over. Now,
that's one answer is why home prices are growing. And
I think it's sophomoric, but it's there. It's just that
(08:43):
we have more disposal income, so therefore, you know, home
prices are going up. But I think that's I think
you can't argue from that standpoint because it's too long
of a time period, and we essentially have been two
different countries by that period. When you wait inflation in especially,
and you look at real disposal income from two thy
(09:04):
to twenty twenty five, real disposal income has only grown
by forty nine percent, while home prices have grown by
eighty four percent, So it's a much much different number.
Another argument, aside from home price is growing in line
with disposal income and the housing supply shortage, you know
what else is causing home prices to grow? What else
(09:25):
are the other two other other major issues aside from that, Well,
part of the answer could be that the cost of
building a home has risen so much. The cost to
build a new home is up twenty percent since twenty twenty.
It's partially because of the labor costs have gone up,
which will come down as the industry continues to mechanize,
but we're not there yet. But the other part is inflation.
(09:47):
The dollar is weaker in value as far as purchasing
power goes, and it's down significantly since COVID. According to
the Saint Louis Fed from twenty twenty to twenty twenty four,
the dollar has lost about twenty percent of its nomine
purchasing power. That means one hundred dollars in twenty twenty
is worth about eighty three dollars and thirty three cents
in twenty twenty four. Then there's the issue of zoning.
(10:10):
Most single family homes in America are built in areas
that you can't up zone, and it's very difficult, meaning
that you can't have like a twenty story apartment building
where a one family house currently exists in most cities
in this country. Now, this is the argument that progressives
and libertarians love the most to talk about. We have
to word of zoning, We have to word of zoning.
We have to get rid of zoning. You will hear
(10:31):
them say this till they're blue in the face. Progressives
love this idea because it means you can flood cheaper
housing in mostly pristine suburb areas or mostly pristine areas
of cities where people spend generations maintaining a good quality
of life and good schools. To them, those places like
the suburbs are the great evil in society because they're
(10:52):
usually whiter, they're wealthier, they have better school systems. It's
just it's capitalism and whiteness, and every bad thing in
one bubble is marked up in zoning laws. For libertarians
and the free market ILK and the GOP, it's the
chance to maximize growth and profits and desirable areas where
single family homes exist. And because they don't care about
(11:13):
maintaining cultural integrity or the fabric of society that generations
spend time building, why not destroy it. That's the libertarian argument.
I mean libertarians. I'll say this, growth for the sake
of growth is the ideology of cancer cells and libertarians.
They are equally on the same playing field when it
comes to that. But what we haven't talked about, and
(11:34):
what most people will not talk about, is the demand side. Now.
I hate to be the guy who constantly brings up
immigration all the time, but it is a key factor
in our housing crisis. From twenty twenty to twenty twenty five,
the US both eight point four to five million new homes,
while the population saw a natural increase of three point
(11:55):
sixty six million people, three point sixty six million people,
eight point four to five million homes. Housing prices should
be declining, But that's where immigration comes in. Immigration plays
a huge factor. Between twenty twenty and twenty twenty five,
four point seven million foreigners received legal permanent residence. That's
legal immigration, it's not illegal. That's nothing to do with
(12:17):
illegal immigration. That's legal immigrants. Four point seven million over
four and a half years. Then during Biden's presidency, you
add the four point five million illegal aliens who enter
the country, plus the known godaways, which is as many
as two million, plus those who are here on a
visa system, and you get a housing shortage. And while
(12:39):
they're not all buying homes, they're going somewhere. They have
to runs an apartment, they have to live somewhere. They
can't all live on living in tents on the street.
They're living in somebody's home somewhere, or they're buying a home.
And that's just the foreigners living in the US, foreigners
owning homes in the US who don't live here right,
people who are I spent I spent one time to
(13:00):
one hundred and sand as his team, and they told
me that there's hundreds of thousands of homes in Florida
that are owned by Canadians who vacation there in the summer. Overall,
between one point one to two point six percent of
all home purchases between twenty twenty and twenty twenty four
were made by non US citizens who don't live in America.
(13:20):
So one point one to two point six is not
the main driving factor as to why home prices are increasing,
but it is certainly a secondary factor. It's certainly especially
a factor in high desirable destinations like major cities like
Miami and New York or where people vacation in Florida.
There's certainly something there. And there are other factors too,
(13:41):
like the number of corporations purchasing homes, and there's a
lot to discuss with it. So I brought on an
amazing guest who really is an expert in the field,
and he's going to come on next to talk about
what's driving the housing crisis, what's driving the increase in
housing prices, and how we can fix it. Coming up next,
our guest on today's episode is ej Antoni. He is
(14:03):
the chief economist for the Heritage Foundation, and he knows
a lot about housing, so he's the guy to talk
to for this episode. EJ. Things for coming on the podcast.
Speaker 2 (14:11):
It's my pleasure. Thank you for having me.
Speaker 1 (14:14):
So I started off this podcast talking about the issue
of housing as it comes to politics. Right, the left
is really mobilized a lot of voters, especially urban voters,
over the idea that housing is too expensive, it's hard
to find a good house, and there's really been a
decline and center of living over the issue of housing.
So what I want to ask you is over the
(14:36):
topics that people blame as being the remain driver of housing,
and you could kind of explain if it is, if
it isn't, how much is contributing, So the first being inflation,
both the cost of building a house and the devaluation
of our currency, of the purchasing power of recurrency from
you overspending by the government.
Speaker 2 (14:58):
Sure, sure, it's important. And to keep in mind when
we talk about inflation, is not just the impact that
inflation has on rents on home prices, right, But then
we also have to consider what is the impact of
what caused the inflation, and we can get to that
in a second. So if we just look at the
(15:18):
inflation itself. Real quick Inflation as a monetary phenomenon is
simply a devaluing of the currency. So now it just
takes more of the currency to buy whatever it is
you're trying to buy. In that regard, inflation affects housing
just as much as it affects everything else. So, by
the official metrics, over the course of about four years,
(15:39):
the dollar lost twenty percent, or a fifth of its
value roughly. If you use some nonofficial metrics that include
other measures of purchasing power, the decrease is actually substantially
more than that. It's closer to thirty percent over the
course of four years. But whatever the case, that's inflation.
(16:01):
But you have to ask what caused the inflation, and
you already alluded to that the increase in government spending.
How was that increase in government spending actually accommodated by
the central bank? And the answer there is twofold, because
the central bank not only simply created money for the
government to spend, right, the government went out there and
(16:23):
bought all of these treasury bonds for example, or treasury bills,
treasury notes, whatever the case may be. They were buying
treasury securities in order to take that off of the
hands of private dealers like banks, so that banks then
had the liquidity to buy more government debt, so it
was an indirect purchase, you could say. However, in order
to facilitate this, they also had to keep interest rates
(16:46):
incredibly low, which also meant that the borrowing costs for
the treasury were incredibly low. In other words, the yields
on treasury again, bills, notes, bonds, everything, the yields on
all that treasury debt plummet, but those low yields were
not isolated to treasury markets. The whole quantitative versus qualitative
(17:08):
theory of credit is very very clear in that you
can never just create one kind of credit and mass
and then not expected to filter out through other kinds
of credit to the rest of the economy. This was
most infamously, perhaps illustrated in the late nineteen twenties and
ultimately helped cause the Great Depression. But you saw that
(17:30):
again with the FED creating all of this money for
the government to spend and pushing down yields on treasuries
again to facilitate government borrowing. The result of that, the
spillover of that, I guess you could say, though, was
the fact that interest rates on things like mortgages plummeted.
I mean they went to essentially never before seen levels.
(17:51):
That was also exacerbated by the fact that the FED
wasn't just buying treasury securities. They were also buying mortgage
back back securities or mbs as we commonly call them.
That was something that the FED started in the wake
of the global financial crisis and the mortgage meltdown. Everything
that really started teeing off in two thousand and five
(18:12):
but bottomed out in two thousand and nine, and ever
since that period, the FED has had a certain amount
of mbs on its books it never did previously. By
purchasing all of those mortgage backed securities, the FED increase
the demand for those mortgage back securities. Well what's the
effect of that. If you increase the demand for that
kind of financial derivative, you also increase the demand for
(18:35):
the underlying asset, which would be mortgages. So if there's
an increase in demand for mortgages, what's the incentive as
somebody who's let's say a bank, you're a lender, you
want to create mortgages, Well, now you have an increased
incentive to do that.
Speaker 1 (18:50):
So in latent terms, for those who are not economists
like myself, the low interest rates over a longer period
of time and mortgage backed securities increase the driving option,
the drive for people to jack up costs because the
front the front costs or the back costs rather, mortgages
(19:12):
were so cheap.
Speaker 2 (19:14):
Right when we look at home ownership, right, the cost
of home ownership, you actually don't care about the home price.
That sounds weird because everyone is looking at the home
price when they're buying a home, but that is only
in the context of a certain interest rate market. So
what you really care about when you're trying to buy
a home as a potential home buyer, what you really
(19:35):
care about is your monthly mortgage payment, because that's what
actually has to fit into your monthly budget. And so
by pushing these interest rates down to next to nothing,
I personally know a lot of people who have interest
rates of two percent, not an exaggeration on a thirty
year fixed I know, not even more with the two
and a half percent rate.
Speaker 1 (19:55):
I'm sorry, mine's two point nine to nine right now.
So I mean, there're guilty as.
Speaker 2 (20:01):
But what happens then to home prices and that kind
of environment they explode. So on top of the increase
in home prices that you already had from inflation, you
had this whole interest rate dynamic that was happening behind
the scenes also because of federal reserve policy, that just
made home prices absolutely explode faster than other asset classes.
Speaker 1 (20:21):
So I have a question for you, because I got
into a very heated debate with my brother about this,
and my brother said, the reason that there is that
home prices really haven't increase much more than disposable income
since the nineteen seventy and it's really disposable income. How
much disposed income we have is why home prices have increased.
(20:41):
I don't think that that's true.
Speaker 2 (20:43):
Do you know, the ratios there just don't line up. Instead,
what we've seen really since the early nineteen seventies is
this move to just financialize everything. In other words, homes
no longer are just a dwelling right. And I'm not
talking about that homes have gotten more luxurious or anything
(21:04):
like that, because from that standpoint, there's still a dwelling right.
There's still the utility of housing, in other words, is
still purely in the fact that it's a dwelling for you,
no matter how spartan or how luxurious that dwelling may be. Instead,
what has changed is the fact that housing is now
a way to protect yourself from inflation. Housing is a
(21:25):
way for you to build wealth because it's going to
inflate so much over time. And that was that's especially
been true for the boomer generation, unlike for their parents
or generations prior to that, where nobody actually looked at
a home as something that was an investment. But that's
how you look at it today. For basically all of
(21:47):
American history until the seventies, the way you looked at
a home was it's an asset class where by the
time you go to sell it, you're basically going to
get out of it exactly what you paid for it.
There was no net incre there, So what the utility
of it over time again was the fact that it
was a dwelling. It was not an investment. You were
(22:07):
not trying to get a rate of return. But because
we have financialized housing in a broader move where we're
kind of financializing everything due to interest rate manipulations, it
really has completely changed how we look at housing as
an asset class.
Speaker 1 (22:23):
What do you make of the claims, especially by libertarians
and very far progressives, that it's just all zoning laws,
it's the suburbs. The suburbs are the reason that we
have a housing shortage because they have strict zoning laws.
Speaker 2 (22:37):
Well, to a certain extent, I think there's some credence
to that argument. For example, if we look at the
areas of the country that have the strictest zoning laws,
that have the most localized control in terms of where
you can build and the kinds of dwellings you can build,
those are also the prices where you excuse me, those
are also the places where you find the highest price
(23:00):
is However, the idea that that's the suburbs actually isn't
the case. Where you find that the strictest controls on
housing is a lot of major city centers like New
York City specifically New York County aka Manhattan. It's Los
Angeles County out in California, much of Cook County, which
(23:20):
is where you find Chicago in Illinois. Those are the
places where you know you have the highest home prices
because you have the worst overreach in terms of those
those kinds of controls. You actually don't find the highest
prices for dwellings out in the suburbs. Now you might
you might be able to if you kind of manipulate
(23:41):
the data a little bit, say home prices are more
expensive in the suburbs because that's where you find much
bigger homes. But if you account for all those factors,
it's really just not the case that the suburbs are
the driver of home price inflation.
Speaker 1 (23:55):
Well, I think the suburbs are that are the well
the boog man because they are they're whiter than the country,
than the cities as a whole, better schools, people who
earn more incomes. Basically capitalism and white whiteness, the two
great enemies of the progressive movement is this is encompass
(24:16):
in the suburbs. A lot of people approach the issue
of housing from the issue of supply. We're millions of
houms short. I always kind of look at it from
the issue of demand as well. Right, we are driving
the demand because of mass immigration has increased the need
for housing. California would have had a net loss over
(24:37):
the last four years of almost one million people, but
they didn't because immigrants replaced Americans who left the state
because of failed policies. Sure, Am I wrong in saying
that immigration is driving the housing crisis worse?
Speaker 2 (24:52):
Well, it is certainly a huge proponent, and it's very
clear that it has had a net negative contribution. I
think you're absolutely right in that regard. If you look
at just the number of illegal aliens that we know
across the border, forget all the ones that we don't
even know about. Just the illegal aliens that we know
across the border during the four years of twenty twenty
(25:14):
one through twenty twenty four, that actually exceeds the population
of New Jersey, which is the most densely populated state
in the country. So let's just do a quick intellectual exercise.
What do you think would happen to home prices to
rents if all of those illegal aliens all went to
New Jersey. Now, for better or for worse, they were
(25:36):
spread out throughout the country, But if they all went
to New Jersey, obviously rents and home prices would explode.
So that effect has simply been diffused throughout the rest
of the country. Not perfectly. You pointed out California, and
you're absolutely right that were it not for the influx
of both legal and illegal foreign immigration, then you would
have seen populations go down much more substantially the Golden State.
(26:01):
But whatever the case, it's very clear that all of
these people are they're in need of dwellings, and so
they increase the demand for dwellings. So then you have
to ask, Okay, price is determined by supply and demand,
So what's the interplay there? Demand obviously is an increase.
What's going on on the supply side, There is no
evidence that all of those illegal aliens have in any
(26:23):
way added to the supply of housing. Now, is it
likely that some of them probably found jobs in the
home building industry. Sure, it's perfectly plausible, but there's no
certainly no empirical evidence for it. And the number of
those illegal aliens who would have had to have gotten
jobs in that industry in order to offset the additional
(26:46):
costs is so high that there's certainly no way that
there's any kind of overlap there. In other words, even
if you take a very optimistic scenario on the supply side,
it still is a smaller increase than the increase in
demand QED. There must have been a net increase on price.
That's positive.
Speaker 1 (27:05):
Well, and what you know, the city of Houston is
kind of like the Epicenter for case study that prices
have come down because they've built I think almost seventy
thousand homes in a single solitary year, which is immense
even though the population has only grown by ten thousand.
And they say, see, if we do this as the
country as a whole, then we're going to be golden.
But the populate the natural growth plus immigration of the
(27:28):
country as a whole. In order to do that over
the course of a decade, you need something like eighty
million homes or seventy five million homes, and everyone wants
to live in the same thirty metropolitan areas. No one
wants to live in the middle of the Nevada desert,
so that is or not many people rather want to
live in the middle of the Nevada desert. It becomes
a race to the bottom in my opinion, if you
(27:50):
just look at from the strict standpoint of we do
have to build more. But if you continue that, you
know into fifty years from now or forty years from now,
you're talking about, you know, living in these Chinese mega
cities where everyone lives in a cubicle and just saying, oh, well,
it's a housing.
Speaker 2 (28:08):
Well, let's let's stick with the example of Houston for
a moment, because you know, that's a place going back
to your common earlier about you know, things like zoning laws.
Houston essentially has no zoning laws, and they have historically
been one of the most affordable major metropolitan areas in
the United States in large part because of that and
(28:29):
what Houston has done as it has expanded ever outward.
You know, most cities only have one highway that runs
around it, you know, they call it a loop or
a beltway here in d C. Right, Houston has three,
and they're building more. And the reason for that is
because the city just simply keeps growing. But you will
have very, very substantial areas of Houston that you can
(28:50):
go to today that feel actually pretty suburban, not urban.
In other words, it's not just city block after city
block of nothing but apartments. Instead, you will find condos,
town homes, and even independent or separate single family homes.
So the idea that if we keep expanding cities or
we keep building, that we have to force ourselves into
(29:13):
smaller and smaller dwellings, I don't think that's the case
at all. The record of history doesn't show that. The
other issue is that if you look at a lot
of areas today that are major metropolitan areas and that
are growing incredibly quickly, sticking with Texas on Austin is
immediately coming to mind. That city is growing like gangbusters,
(29:34):
and it was actually a pretty small city relatively speaking,
not that long ago.
Speaker 1 (29:40):
And well, Houston sorry, one thing without Uston is the
third biggest land sized city in America, only behind Jacksonville
and Anchorage. I think in Alaska, like someplace like New York,
they can't grow outwards. It's a bunch of violence. So
the only way what I was thinking of, less so
(30:02):
than Houston is rather than grow, you have to grow upwards.
You have to get cubicle sized homes in those places
like that that rush up against water. I mean, you
can't build out anywhere else, Am I am? I just
wanted to clarify that what I was talking about with that, Oh.
Speaker 2 (30:17):
Sure, but I would say that there's no number one.
There's no reason why as you build up, you can't
build up in a large way. In other words, there's
no reason why as you build skyscrapers, those skyscrapers have
to all be five or six hundred square foot studio apartments. Right,
you can build three or four bedroom apartments, and there
are areas of New York like that. Now they're outrageously expensive.
(30:40):
But again this goes back to the restrictions on building.
The other thing is that there's no reason why you
have to stay on the Isle of Manhattan. There's no
reason why you can't continue building outward from there. And
we've seen this over time. Right, it's not as if
the areas the communities outside of New York City were
(31:02):
there one hundred years ago. We have been slowly expanding outwards.
And it's not just true for places where they're islands.
Speaker 1 (31:09):
Right.
Speaker 2 (31:09):
You can look at a city a little further south,
like Philadelphia. If you go to the historic areas of
Philadelphia today, including a place where Thomas Jefferson used to live.
It obviously is in the middle of downtown Philadelphia, but
at the time of our nation's founding it was considered
the suburbs. He specifically picked that small house to live
(31:30):
in for a while because it was away from the
hustle and bustle of the city. It was away from
the flies and the manure, from the horses, et cetera.
So what has steadily happened over time. Is the areas
that previously were suburbs are now just considered part of
the city, and areas that previously were rural that were
literal farms or uncleared woodlands are being cleared over time
(31:54):
and are being turned into suburbs.
Speaker 1 (31:57):
Okay, I have two questions left for you, so one
being what do you make of the allegation. Not the
allegation it is real, but what do you think of
the whole premise of corporations buying housing as a main
driver in the increased cost of it. Is that as
real as what people claim it is or is that
hyperbole really for political points.
Speaker 2 (32:19):
If it was as real as a lot of the
politicians claim it is, then you would have seen, just
as you would see a huge reduction in the supply
of homes available for sale, you should have seen a
huge increase a corresponding increase in the supply of homes
for rent, because those businesses are not simply buying the
(32:41):
homes to sit on them. They're not buying the homes
for them to be vacant or for the CEO to
go live in them, right, They're buying them so they
can turn around and rent them out, but you're not
seeing that dramatic increase in the supply of rents, which
would then obviously put downward pressure on rent prices. The
(33:01):
dynamic just simply isn't there. Now. Is it true that
we've seen an unusual amount of investors buying housing over
the last several years. Absolutely, and that's been due to
the fact that interest rates were kept so obscenely low
for so long, because not only did that reduce mortgage rates,
(33:22):
but it also reduced rates again for general borrowing. And
you don't have to pay the same interest rate when
you're a large investment corporation, a large investment house buying
up a ton of housing as somebody who's you know,
an individual trying to get trying to get that thirty
year fixed mortgage. Those rates are not the same. And
(33:44):
because they were so much lower for those those major brokers,
those major investors, the result was they could buy up
much more housing than people could could get could get
mortgages to buy those homes.
Speaker 1 (33:57):
So that dynamic there understoning is like for all the
you know times that Black Rock is buying property, most
of the corporate purchasing is just LLCs that individuals are doing.
Like you know, if someone's owns a summer house or
a vacation home or a second home to rent, it's
usually donder An LLC, and that is responsible for a
(34:17):
large chunk of all corporate purchasing. But I wanted your
opinion on that, So you don't think that the.
Speaker 2 (34:22):
Median the median age of somebody buying a home today
is like fifty something years old. In other words, these
are people who already have homes and they're getting a
second home. They're getting like you said, they're getting that
shore home which they're only going to use sometimes and
the rest of the time that they're airbing being it
or you know whatever they case may be renting it
(34:43):
out right. The for a first time home buyer, the
average age is like thirty eight. But if you if
you don't limit it to just first time buyers, if
you're looking at anybody buying a home today, I mean
it's it's basically all baby boomers and they're getting second homes.
Speaker 1 (35:00):
You're gonna that's like a meme right there. Okay, So
if you if you were to advise some politicians, both
federally and locally right on how to relieve the thing
if you wanted to be if a Republican went up
to you and saying, I understand this is a major
motivator for progressive politicians. How do I address a reasonable
alternative that sounds good and will actually drive down a
(35:23):
home prices? What do you say to somebody on the
federal level, and when you say somebody on the local
or state level.
Speaker 2 (35:29):
Well, regardless of whether it's a Republican or a Democrat,
I would honestly tell them exactly the same thing. Which
let's start with the local level, although it's somewhat true
for the federal level as well. You got to reduce regulations.
You got to reduce spending at the local level. If
you reduce spending, you can reduce property taxes, sometimes sales taxes,
(35:49):
but it's locals almost always disproportionately rely on property taxes.
Getting those property taxes down helps reduce the cost of
ownership because again that directly ties in to the monthly
mortgage payment, which is what we said has to fit
into the potential home buyer's monthly budget. So that's a
big component. Get the spending down, get the regulation down,
(36:10):
so you can reduce the cost of home ownership reduce
the cost of building new homes as well. At the
federal level, similarly, there are plenty of federal regulations that
drive up home prices nationwide. You got to get rid
of those. They're just they're inefficient. They don't protect homeowners
like they say they should, so they're not worth it.
They impose costs without imposing commissary benefits. And then you've
(36:34):
got to get the spending down, because the spending is
what drives the barring, which is what drives the FED policy,
which is what drives the interest rate manipulations, and has
contributed to this massive mess in the first place, and
completely frozen over the housing market. You're in this bizarre
situation today because of excess government spending, where people are
sitting like yourself, are sitting on a two point nine
(36:55):
to nine percent mortgage. Why on earth would you sell
your home today, lose that mortgage and have to get
a new one at seven or eight or even nine percent.
In some markets, you'd have to downsize. You can't afford
the same home anymore. Your monthly payment would absolutely explode,
So you've frozen over the existing or used housing market.
(37:15):
At the same time, costs for home builders are at
a record high because of inflation, and they can't afford
to borrow money because of today's higher interest rates. So
you've also drastically decreased the supply that's coming online in
terms of new construction. So all in all, it has
completely frozen over the housing market because the government just
couldn't get control of its spending.
Speaker 1 (37:37):
Spending is deficit. Spending is the hidden sacks, and no
one sees So ej Antoni, thank you so much for
coming on this podcast. Where can people go to read
more of your stuff.
Speaker 2 (37:46):
The best place to find me is on x and
the handle there is at real EJ.
Speaker 1 (37:50):
And TONI thank you so much for coming on. Now
it's time for the Ask Me Anything segment of the show.
If you want to of the Asking Me Anything segment,
email me Ryan at Numbers Gamepodcast dot com. That's Ryan
at numbers Plural gamepodcast dot com. I've had a backlog.
I've been very successful in working that down. We only
(38:12):
have a few emails left, so if you email me now,
I will get to it on the show on a
pretty quick manner. So this email comes to Matthew Schinzing.
I hope I got the name right, he says, Ryan,
I quite enjoy your show and always find it enlightening
and informative. My question is how important are pro gun
voters in the Republican Party voting coalition. As it always
(38:32):
seems the Republican politicians ignore gun rights issues to the
pro gun base. Yet I hear pro gun people saying
to each other at extremely important parts of the base.
How does it make sense if they constantly feel ignored
by the Republican Party. Okay, this is a great question,
Thank you so much, Matthew. So when it comes to
gun rights, they're about forty two percent of Americans live
(38:55):
in a home where someone owns a gun, and about
thirty three percent actually own the gun themselves. And there's
big differences in the population. For example, older voters older
Americans have more likely to own a gun than younger Americans,
white Americans more than Hispanic or Black Americans, rural Americans
more than urban Americans. YadA, YadA, YadA. Gun rights are
(39:18):
interesting because the opinion of them sways very significantly from
both those who don't own a gun and those who
only own like one gun. Right. Among people who only
own one gun or maybe less, there are a very
big support for what they say is quote unquote common
(39:39):
sense gun laws. Right. Policies that are more restrictive, like
preventing people from mental illness from purchasing guns has like
an eighty nine percent approval rating among Republicans, even who
own guns. Increasing the minimum age to buy a gun
has sixty nine percent support among Republicans. Then there's issues
like banning assault style weapons, which is like, you know,
it's a ridiculous term, this was such thing as assault style weapon,
(40:01):
but even that has forty percent support. And then there's
issues like allowing teachers to carry guns, which is a
seventy five percent support among Republicans, and issues like allowing
people to have concealed carrying more places has a seventy
one percent. It's a very splintered position, right. Not everyone
who owns a gun is supportive of all expansive and
(40:22):
more permissive gun laws, and not everyone who doesn't own
a gun is not supportive of all restrictive gun laws. Right,
So it's very it's not one or the other, it's
kind of a mixture of both when it comes to
the vote of gun owners right, specifically gun owners. In
twenty seventeen, Nate Cohen from The New York Times did
(40:43):
a breakdown of all the states in the country boased
on gun owners and how they voted. There was only
one state in the entire country where a majority of
gun owners voted for Hillary Clinton, and that was Vermont
Vermont in twenty sixteen, Hillary won Vermont's gun owners fifty
(41:04):
one forty two. Every other state in the country California,
Trump won gun owners by twelve points. New York Trump
won gun owners by thirty points. Florida Trump one gun
owners by thirty four points. In Texas, Trump one gun
owners by thirty six points. Forty nine out of fifty states,
gun owners voted for the Republican. What about non gun owners?
(41:26):
A majority of non gun owners in forty nine other
fifty states coincidentally voted for the Democrat. The only state
where Trump won a majority of non gun owners was
West Virginia, which he won by fourteen points. But you know,
go to the red estates in the country. Go to Arkansas,
Trump lost non gun owners by eleven points. Mississippi, Trump
(41:49):
lost non gun owners by forty eight points. Go to Tennessee,
Trump lost non gun owners by fifteen points. Nothing divides
voters like a gun and the Republican Party cannot win
without gun owners. There's just no way gun owners are
They make and break and they turn states red. And
gun ownership is on the rise and it's becoming more diversified.
(42:12):
There are more black and female and Latino gun owners,
which has made the issue change the issue. But I
think when it comes to the question do they feel
do gun owners feel like their rights are being disrespected,
it really depends on who you talk to. The idea
of constitutional carry was considered a very weird issue in
(42:35):
the year two thousand and the year two thousand, only
one state had constecial carry and that was Vermont. And
now more than half the states in the country of
constitual carry. That's an immense change and I think an
immense culture war win for the Republican Party more than
anything else. And look if you look at where they
spend so much of their time in the judiciary trying
to get conservative judges, there's no place they have fought
(42:58):
harder for than on second mement rights. So so yes,
gun owners extremely important for the Republican Party. Can't own
without them. Forty nine out of fifty states gun owners
a majority gun owners voted for the Republican presidential candon
in twenty sixteen. Forty nine and fifty states they voted
for the Democrat non gun owners did in twenty sixteen.
(43:19):
But as far as feeling disrespected, I think it's really
a question of who you ask. But great question, Matthew,
and I hope that that was insightful to how gun owners.
You know, they make or break the Republican Party, and
we need her Second Amendment for more than one reason.
But politically, the Republicans definitely need people to own guns.
So thank you for listening, Thank you for your question.
I'll be back on Thursday. Please like and subscribe on
(43:40):
the iHeartRadio app Apple Podcasts for regulus en podcasts. I'll
see you later this week.
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