1381: The Housing Crisis | Skeptical Sunday

24:46There are costs associated with building a house. It doesn't matter how small or how simple. That includes, for example, paying for permission to even break ground on construction. So according to the National Association of Home Builders from their 2025-2026 data, regulations imposed on all levels of government account for roughly 24 % of the final price of a new single family home. So to make it into hard numbers, a$400 ,000 house is$100 ,000 in these regulatory costs before you even buy a single plank of wood, a single piece of drywall, anything. Wow. OK, so you're already in for 100 grand if your house is 400 grand before anything gets built because of building codes and zoning laws.

25:38And is that like permits and stuff in the survey where the water drains? Like, is that what we're talking about here? It is all kinds of stuff, some of which is like you're going to go, yeah, I don't think that you should be able to build a swimming pool at a child's daycare center out of uranium. There's your law against that. There's a graveyard in my backyard. I'm just going to dig up all these bodies and chuck them in the recycling bin and put in a pool. Yeah. Yeah. A lot of it is not that. A lot of it is very silly. Not silly to libertarians who think there shouldn't be any laws for anything.

26:13I think a lot of this, as we drill into it, is patently silly. Multifamily dwellings, which we're not really talking about much today, but cheap housing, well, the costs there are 40 % higher than they are for single-family homes. Even more government bloat and regulation there. mandatory lot sizes is one so if land costs two hundred thousand dollars an acre and the local zoning law says you need a half acre lot now you're buying a hundred thousand dollars worth of dirt just to build a house on you cannot build a small efficient starter cottage on a tiny slice of land because the law says the grass has to be bigger than the house essentially it bans the kinds of starter homes and bungalows and row houses that used to be the entry point for the middle class.

27:04So there's no more starter homes. There's no more places to start building equity while you save up for a bigger house and you trade up because I don't know if this is out of line, but this is what I did, right? I ended up getting super lucky on a piece of new construction where the builder fixed the price and they were basically like, this is not market price because we need to sell all of these things so we can build a subdivision. And so they basically said, instead of it being best offer, maybe it's a million plus dollars, they were like, these are all 900 grand. And you had to wait in line at five o 'clock in the morning and everything was sold.

27:39Like nobody went and looked and went, I'll think about it. Every single person was like, I want to buy this right now. And my father-in-law stood in line from five o 'clock in the morning and called us and said, get here by eight. And we showed up and we were like, here's our mortgage paperwork. and they were like, great, congrats. It was like that. Those don't exist. The reason this existed was because it was a new subdivision where, again, my father-in-law got up at 4 a.m. and went there to stand in line before anybody got to the office. Like, that's crazy. If you have to do that to get a house that's not insane, and I think for most people, 900 grand or whatever the price was is crazy, objectively.

28:14And I needed like tons of help to even get that. This is not normal. This is not a good sign for people who are like, yeah i work at a normal job and i want a nice starter home so i can have babies here like it's impossible and normal job isn't i'm a cashier a dollar general it's like okay i'm a mid-level coder or graphic designer or whatever like middle class office jobs we're not talking about the guy who changes your oil down at jiffy lube which no disrespect to that guy either but like in terms of income. Like these are middle-class jobs and they can't afford these places. Exactly. Everybody who was in line, I remember the other people because they were all my neighbors later.

28:56Almost nobody was young. And in fact, the first person who helped us when we got there said, this is incredibly rude and we stopped dealing with her immediately. But basically she said, the only reason I'm dealing with you is because your father-in-law is here. And he laughed because he's like, it's funny because you're the one with the money. And I'm like, she literally doesn't believe you. She literally doesn't believe that I'm 35 because everybody there is like 40 plus, right? Who the hell's buying a million dollar fricking condo, dude? So she was like, the only reason I'm even entertaining you is because your father-in-law standing in front of me.

29:29I was like, okay, can I deal with somebody who's not a total asshole? But yeah, like it's impossible for people to get housing in California, even when you get new construction and the prices are essentially anchored below market. So why not just pass affordable housing laws? They have those, right? They do. They're a bad idea. It's a save the puppies law that I talk about. It's that combined with electricity comes out of the wall. You say affordable housing and everyone says, great, sign me up. But here in the real world, the government cannot just wave a magic wand and create more housing that you actually are going to want to live in.

30:10Yeah, that's the rhetoric anyway, but what's the reality? Cambridge, Massachusetts passed laws in 2025 mandating that 20 % of all new construction needed to be affordable. Sounds great, right? Sure. Yeah, I don't know enough about it, but I don't know. You're probably going to explain why it's not great at all. So real estate developers exist to turn a profit. the risk, capital risk thing we talked about earlier. When you get down to it, real estate developers don't exist to build new houses. They exist to make money. And more than that, they expect a certain margin on their investment. They want a certain return.

30:50That's what they need both to keep the business running because they're not nonprofits and to make the risk of their investment worthwhile. If the return isn't worthwhile, they can just go get a job. like there's no headaches. Okay. I'll go be a property manager or wherever you pivot from being a real estate developer. You make it so there's easier ways to make money. They're going to go make money easier ways. So when your town passes affordable housing, developers are going to respond one of two ways. They are either going to pass that cost along to everyone else buying a house in town. Some people may say, great, rich people can pay more for their houses.

31:32as we've established, these are not rich people. Or they're just going to build in the town next door that doesn't have them. And by the way, absolutely no one is stopping anyone from starting a private charity to build as much affordable housing as they want. But if it were that easy, people would be doing it. It's not a simple problem with a simple solution. This is interesting, right? Because if you say, hey, rich people can pay more for housing, what you're saying is anybody who buys a house has to subsidize the other house that is the affordable part. And that's all fine and good. Let's say it's somebody like me and I got to pay 10 grand more for my place because I got to subsidize another house.

32:11Okay, whatever. Them's the breaks. But what if the difference is now I can't afford to buy a house because I have to subsidize. So there's all these people who are kind of like right on the line who are not in the D bag one percenter lucky guys, dudes like me who lucked out and started a company that actually took off. They can't afford a house. So they're going for the affordable housing. So the demand is got to be through the freaking roof for the houses that are essentially subsidized. And I remember we had that in our neighborhood. There was a house where we had an HOA, which was funny. That's a whole different show.

32:45But we were like, who are the people that have like five dogs in crates all day long for 20 hours a day in their garage and there's no room for a car and they never seem to be anywhere but home. But the dogs are always locked up and barking. And it was like, who are these people? And it was like, oh, actually, they got the subsidized unit. And we kind of felt bad because it's like, are we just picking on the people who couldn't afford to buy a house here? But it's like they're breaking all of these HOA rules and they're like dog breeding in their garage, but like in a way that was really gross and smelly and loud.

33:20And we're like, this can't be legal at all. And it was like, yeah, we can't do shit about that. Basically, we can't do anything about it because we're all subject to HOA rules, but they kind of can go, what are you going to do about it? And the answer is not much because their housing was essentially subsidized. That's a California thing. I don't think anybody who gets subsidized housing is automatically some kind of weird criminal, but we just got unlucky with that. Anyway, I want to go back to this regulatory floor issue because I think it's a really tangible way for people to understand how regulations are impacting construction of new housing, as well as the cost of houses.

33:56So it varies what the regulatory floor is from place to place as one would expect, but the national average floor is$94 ,000. It's simplifying it, but basically it's illegal to build a house that costs less than$94 ,000. And the average house in America has$94 ,000 baked into the cost that's all going to regulations. That's the thing is people, I think when they hear about, oh, regulations increase the cost of housing, they're thinking it's making my quarter million dollar home cost$260 ,000. And it's like, no, it's making your quarter million dollar home cost$344 ,000. In high regulation states like Washington, those regulatory costs are going to be over 200K.

34:46In California, it's over 150K. And for multifamily dwellings, again, which this isn't really about, but it does inform the discussion because it's like, if I'm not going to build a house with$94 ,000 baked in, I'm sure not going to build a multifamily building in Los Angeles or San Francisco where there's a million dollars baked in. And that's what you're looking at in L.A. and San Francisco is about a million dollars. That's crazy. So the higher the regulatory floor, the more expensive the cheapest house in any given area is going to be. And obviously, this isn't the only reason that L.A. is expensive.

35:26I mean, lots of people want to live there, but it is a driver for why so many people can't afford any kind of house anywhere in the Los Angeles metro area. There's also what's known as the delay tax because a lot of these houses are built with borrowed money. So the developer pays interest every month. The house isn't completed and sold. And that can be tens of thousands of dollars every month, depending on that. It's a lot of money. It's not pennies. Atlanta is a really good example. In 2025, their permit approval took 40 weeks and surrounding counties took four weeks. Now, permitting, you're going to say, well, it's related to safety.

36:07Do you really believe that the houses in Atlanta are 10 times safer than the houses in surrounding counties? Because it's 10 times the weight. It's not the difference between four weeks and 40 weeks. So that 36-week government delay difference, that adds$20 ,000 to$40 ,000 to the cost of every single house in the Atlanta city limits. Because you got to pay the interest in the whatever, the taxes and stuff. I feel like I'm just being a snobby complainer on this episode, but my house took something like it was either four or six months to get permits and inspections. Look, part of that was covid.

36:44That's not normal. But guess who had to pay essentially the rent and the mortgage and the property tax and the loan payments and all this stuff during the time when the city of San Jose sent the dumbest idiots, literally stoned inspectors over who would forget paperwork and have to come back four weeks later with the right documentation. They should have had the first time because they were high and have five functioning brain cells. And then they'd go like, cool, bro. Yeah, it looks fine. And then they would stamp something. And I'm like, cool, that just cost me$8 ,000 or 18 ,000. If you count the full wait time, like it's infuriating, really, there's no other way to explain it.

37:24The total impact is that new construction under a quarter million dollars is gone because anything below that just isn't going to be profitable. So you don't build those. You build a half a million dollar home or in California, a two or three million dollar luxury home because that's where the money is. We went looking for a conspiracy. Turns out it's just math, incentives, and a bunch of city council meetings you didn't even go to. We'll keep unpacking that, but first, sponsors. We'll be right back.

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39:17I think something important to remember about the regulations is they have an impact beyond just the building of individual houses. You know, what you have is years of this building up. So all the supply of housing is clustered outside the reach of most Americans. And the supply of housing that is available to the middle class is limited and dwindling. Right, because the houses don't last forever. they don't build them like they used to i know that in my town i don't know a single person who's happy with their new construction house that's where i live the best and brightest do not live here i'll just put it that way but they don't build them like they used to you could look at things like the sizes of studs and support stuff it's just the houses are not really built to last the way that they used to be the housing market never really recovered from the 2008 crash so So the country has been underbuilding for almost two decades, and we're really starting to see the long-term effects of that.

40:12It's a total collapse in the supply of housing. I think it's important that we also talk a bit about the ways in which the private sector makes this worse, because it's not really about greedy developers. It's about HOA busybodies. Okay, I want to get back to HOA busybodies. My earlier story, this guy was like, I can't have a bandsaw in my garage to do woodworking, which is my job. But these people can freaking breed pit bulls in the garage, which is like illegal. And we're not going to do anything about that. I took Jen to France because I had a conference and I was like, let's go to Paris. Right.

40:47I've never been there. We took a tour of these fancy areas where we were on bikes. And this guy explained, this is where the aristocrats used to live. And there used to be soldiers guarding this neighborhood. And there's this giant statue of Napoleon on a pillar in the middle of this neighborhood in France and like everything around it. It's sort of this OG luxury area. I guess you would say like there's a Rolex store and like all these different jewelers have their building there. And it's kind of any jeweler worth their salt has a building here where they have their office and they're designing things.

41:17And it was basically like the king's crowns were designed by one of these jewelers and they're still there. It's like that kind of place in Paris. And I said, surely not all of these are offices. Some of these look just like fancy residential. And the tour guide goes, oh, yeah, this is some of the most expensive real estate anywhere. This is where the aristocrats used to live. This is old money. Anybody who lives in this building has some sort of royal title from an age gone by. Right. This family used to live in Versailles and now they're nephews and nieces and grandnieces, whatever. They live here.

41:49And I said, how much is this? And he goes, oh, yeah, I looked this up recently. In U.S. dollars, it's about 15, whatever. And he told me the same price per square foot as my fricking normal ass neighborhood in Saratoga, California. And I was like, wait, wait, I could buy that penthouse right there and it would be cheaper than the house I live in that has plastic grass in California. And he was like, wow, you're probably overpaying for your housing, pal. My neighbor could have been the princess of Monaco or whatever. And instead, it's, I don't know, Hildy's pretty cool. But still, come on, man.

42:27That shows you where the market is here in California when you could live cheaper in the nicest part of Paris. Tell me about the HOA thing, because I would think that the HOA would affect the environment that you live in only after you buy a home. I'm lost on how it's going to impact the cost of new construction, especially for places that don't have an HOA, because not everybody has one of these. Can you explain what an HOA is, by the way? I don't think everybody knows what these are, especially people who don't live in the States. Yeah, it's a homeowners association. I don't even really get it.

42:55I just know they have a bunch of rules and everybody hates them. It's basically like if you live in a neighborhood and the neighborhood is all, I don't know if it's only condos, but mostly usually they're condos. I can't really tell. Anyway. They're zoned as condos. I know that. My parents live in an HOA or did. And it was a house, but it was zoned condos. They could have an HOA. Yes. So basically what this is, it's a think a board, a committee. It's made up of your neighbors in the builder might have a person on the HOA or whatever, at least in the beginning. And they say, OK, there's no overnight parking in the guest spots.

43:31There's no dogs allowed on the common area grass because kids play there. We're going to take certain amount of HOA fees and we're going to turn this part into a playground. All right. Who wants to build a pool? Okay, a majority does. Here's where the pool's going to go and how much it's going to cost. Oh, we don't want noise louder than X at night, so people who have a saw in their garage can't use it. People were getting pissed off about all this stuff because it's democratic, but it's also like, hey, this one rule really only affects me. You can't use power tools after 8 p.m. And this guy's like, I got a side hustle as a woodworker.

44:05I'm working till 10 p.m. using my band saw. and people with babies are like, please don't do that. And you get into this big kerfuffle or a guy who has the dog breeder guy. He would get into it with the HOA because he didn't have room for his cars in his garage because he had dogs in there. So he parked his cars permanently in the guest spots. Now there were no guest spots because he was an inconsiderate a-hole. And so the HOA was like, we're going to fine you into oblivion. And he was like, I don't care. I'm not paying for this housing. It was like that. So it was a whole thing. And if you don't pay and you do enough HOA screw ups, you can lose your house.

44:40They can fine you. And if you don't pay the fine, they can foreclose your property. So it's like when you say HOA Karen, it's not just somebody who's sending you nasty letters. They can actually cause you a huge amount of expense and hassle. Jen had problems with her HOA because this woman was like, don't open the garage unless you're moving a car through it. No walking through the garage, even though it was the fastest way in from the road, because it does wear and tear on the motor system. So you end up with these people that have nothing better to do than find imaginary violations. No kids can play with a drone because it could be used to spy on people.

45:13And it's like, nobody's spying on Hilda laying on her roof deck fully clothed. No one's spying on you. The kids are flying their toy planes. They're against the rules now. Thanks a lot. So there's lots of stuff like, don't put your garbage out until Tuesday night after 8 p.m. if you put it out at 6 because you're leaving town you're going to get a letter. And if you do it again, it's 100 bucks. It's that kind of crap. Yeah. So the HOA thing is complicated with regard to housing prices. It goes beyond the HOA proper and into how things are going to be built in municipalities generally. Something to remember is that city governments tend to be responsive to their communities in a direct way that the federal government is not, especially in smaller communities.

45:58It's just an issue of scale. I see my county supervisor at the gym almost daily. And when there was gravel all over my road, I was like, hey, man, there's gravel all over my road. And he said, OK. And then literally that day, there were like street cleaners cleaning all the gravel off of my road. Not going to happen in San Francisco. No, you'd have to do an environmental study about brushing it to the side of the road. Environmental impact study on removing the gravel. So city governments, especially in small cities like you live, it's a gym conversation instead of, like you said, you don't have to vote somebody in in three states in order to get them to do something.

46:36That seems like a pretty uncontroversial take. Well, the flip side of that is that bad ideas are also more likely to get run up the flagpole. And there are tons of bad ideas making housing less affordable. Brick or better ordinances. I mean, this is where we get into like, oh, I thought zoning and building codes just kept people from storing toxic waste in their garage. No, it says that you can't have vinyl or metal siding in a community because brick or better looks more appealing, increases curb value. Like a lot of NIMBY, not in my backyard policies, I understand the motivation for this. It doesn't matter how nice your house is.

47:17If you live next door to something that looks like a crack house, your property value is going to take a hit because people don't want to live next door to something that looks like a crack house. Some municipalities, this is especially true of the South and Midwest, they require between 60 and 100 percent masonry on all four sides of the house. That's going to increase the cost of housing between 15 and 25 thousand dollars. It is a luxury tax on housing because your neighbor doesn't want to look at vital siding. so i don't care i love my neighbors and there's old ass houses here with like cars on the lawn and stuff and then there's rich people that live down the road that have three-story baller pads i don't care about this stuff at all maybe i'm the exception to the rule as long as my neighbors are nice and they're cool and they're not literally like letting giant bull mastiffs run around the neighborhood with no leash on even then like people's dogs run around and they crap in our yard and then they come and clean it i don't care like i just am i the weirdo here like i just don't care about any of this stuff because i'm not going to sell my house next year i live here if they're cool we're cool i just don't throw beer bottles onto my driveway after you're done partying i don't care i'm actually gonna be the snob here oh thank god yeah like i don't care about vinyl siding but i'm basically on the side of the hoa busybodies i think it's good for communities to have standards.

48:45The same time, it's like, I understand that this comes with cost, not an intangible social cost, like a dollars and cents cost. I don't know about specifically the brick or better rules or anything like that. But when I lived off grid, weirdly is the only time I've ever had to deal with a property owners association, which was just an HOA for where I lived and they had rules like, actually, corrugated steel is not a fence. You want to put a fence around your property, it's going to be a real fence. And it was like, yeah, I like that rule. You know why? Because this whole town is going to be a meth lab if we don't have rules in place that make people respect the community at large.

49:29And I'm so much more amenable to communities passing laws like this because, okay, I don't like that rule. Okay, I'll just go buy property five minutes down the road where they don't have that rule. It's not like a federal law. You don't like it. Leave the country. I'm not going to leave the country, but I can buy property 10 minutes away. That's not a massive hardship. That's true. It depends. Those rules are reasonable. I think sometimes they become unreasonable. Like, again, Jen can't use the garage to get out to the road in a hurry. She has to go around the whole building because somebody's like, the chain's going to wear out.

50:08It's like, calm down, Becky. The chain's going to be fine. And also it's a hundred bucks and you have to replace it every 10 years instead of every 15. Just stop. Why is home ownership a social good? I guess I understand why it would be bad if lots of people are homeless or houseless. Why does it matter if people are renting instead of buying though? It's a question of skin in the game. People who own property are necessarily more invested in society on average than those who don't. Homeowners have a direct financial motive to monitor local government. Okay, so is there evidence for that? Yes, quite a bit actually.

50:49Homeowners are consistently 15 to 20 percent more likely to vote in local elections than renters. Homeowners are significantly more likely to attend city council meetings or join neighborhood associations. They also stay put longer. The median tenure for a homeowner is roughly 13 years. That's compared to two years for a renter. It's a big difference. Longer tenure correlates to higher social capital metrics like knowing your neighbors, volunteering for local nonprofits, joining local religious groups, involvement in your community. So basically homeowners are more involved in their communities because they directly suffer if they're not and they can't just pick up and leave and they lose money if they do, et cetera.

51:37Yeah. And it's not bougie HOA busybody types either. Low income homeowners in developing neighborhoods are actually the most invested of all. They often work harder to solve local problems because it is so much harder for them to just pick up and start over somewhere else if things go south. But that type of civic engagement can also get directed toward the kind of regulations that we've been talking about that make homeownership more expensive, right? They could lobby to make this even harder. Sure. To be clear, the regulations that you're highlighting aren't really tied to safety. Like you're not talking about fire codes.

52:16You're not talking about making it against the law to build a children's daycare center out of depleted uranium, like you said before, right on a cliffside that's about to fall into the ocean. It's not that level of importance. It's sort of nitpicky. Yeah. A lot of this is not anything to do with safety. A lot of these local building codes and zoning laws just take HOA style rules and then enshrine them into law. Okay. Like saying all your windows have to be painted white or whatever. Yes. There's a bunch that are just purely aesthetic and go way beyond And corrugated steel is not a fence, which is an aesthetic judgment, but I think is a good one because it's going to degrade the entire area.

52:59And controversial thing that not everybody would agree with, but broken window policing did a lot for New York City. When you tolerate things like corrugated steel fences, broken windows, whatever the case may be, you're signaling to people that you will tolerate things and they will take license with that. And it begins to degrade your community over time, in my opinion. But I think there's evidence for that, but it's not the subject we're talking about today. Examples of aesthetic judgments being enshrined into law are things like there's municipalities that ban houses with flat roofs because they're boring looking.

53:37Now, if you live somewhere where I grew up in the Northeast, a flat roof is a very bad idea. It's dangerous because the weight of the snow on the... You're going to die. Yeah, it's dangerous. Everywhere else, someone just decided that they'd rather look at gables, and that's a more important thing to them than there being affordable housing in their town. Yeah, okay, I get that. Gables are pointy parts of the roof? Is that what that is? Yes. Okay, and so what about the gables again? There's municipalities that mandate a certain number of gables. I see, and it's more expensive than just building a flat roof.

54:17Is that the idea? Yes, by tens of thousands of dollars. So a simple box is the cheapest and most efficient way to build a house. And in a large part of our country, that's against the law. Not because you're going to get a ton of snow over there in Arizona. Same with a vinyl siding. It's just about aesthetics. But the problem is, yeah, cha-ching. Yeah. And it gets a little crazier because some cities have a city architect or design review board whose job it is to review the plans for each and every house. Yeah, and not for safety, right? They're not looking to make sure it's not going to collapse on you.

54:51They're just being dicks about everything. Yeah, they just want to make sure that the look of your home matches the look of the community. Yes, they want to mandate things like, I don't know, window trim, expansive front porches, which is going to make the actual house that gets built more expensive, stuff like that. It's going to add$10 ,000 to your home, Which$10 ,000 to your home is not very much. I just got a$250 ,000 home and now it's$10 ,000 cheaper. Maybe$250 ,000 monthly mortgage was all I could afford. Now I get nothing. Turns out you don't need a conspiracy when incompetence does the job just fine.

55:31Anyway, let's pay some bills. We'll be right back. This episode is brought to you by Progressive Insurance. Do you ever think about switching insurance companies to see if you could save some cash? Progressive makes it easy to see if you could save when you bundle your home and auto policies. Try it at Progressive.com. Progressive Casualty Insurance Company and Affiliates. Potential savings will vary. Not available in all states. Support for this podcast comes from Progressive, America's number one boat insurer. We've all made mistakes on the water, but there's one mistake you shouldn't make. Being uninsured.

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56:29Thank you for listening to and supporting the show. It is your support of our sponsors that really does keep the lights on around here and keeps my HOA fees paid. All of the deals, discount codes, and ways to support the show are searchable and clickable over at jordanharbinger.com slash deals. If you can't find a code, email me. I'll happily dig it up for you. It is that important that you support those who support the show. Now for the rest of Skeptical Sunday. Yeah, I've got a buddy who lived in San Francisco. He was in Candlestick Park, which was a stadium. I think they got rid of the stadium and built a bunch of homes there, but it was also a neighborhood around where the stadium was, okay?

57:04So he's like, oh, it's an amazing house. I live next to this park and it's on the edge and I got views out of the bay or whatever. And then he's like, I want to redo some stuff because I got these icky single pane windows and it's kind of loud because there's a road out there and I want to build some upgrades to this house, this nice house. So he puts in windows and then this committee was like, you didn't wait for our decision and we're offended by that. And these windows don't exactly match the other windows in Candlestick Park. and it's going to change the appearance. And he's like, the appearance to what?

57:36The oil tankers that are in the bay? Who's looking at these windows? And he's like, they're like, people will walk by and people can see them from the highway. And he's like, yeah, with binoculars. And they're like, we don't care, remove the windows. And also you have to undo this other thing that you did. And he's like, I just put$30 ,000 or maybe it's$130 ,000 into upgrading this house. You want me to rip that out and then put in more expensive upgrades? I'm not doing that. And they were like, I can't remember if they wouldn't let him like occupy the place or they were like fining him. And he basically went, here's what I'm going to do.

58:10I'm going to move to Mexico and I'm not going to pay any of the bills or any of the HOA fees. And I'm going to abandon the property and you can now deal with it. And they were like, well, wait a minute, you're going to lose your property. And he was like, good. I don't care. The bank's going to take it and you guys can have an abandoned property. And they're like, you better cut the lawn. And he's like, LOL. no, you are going to pay for that now. So now his neighborhood is stuck with an abandoned property that's going through litigation for the next decade. And the bank is foreclosing on it and it's all overgrown.

58:41And the HOA has to pay for the maintenance and the upkeep because they wouldn't let him use the brand new windows he put in because they were like the wrong shape. Really? I'm not exaggerating. No, I don't think you're exaggerating one little bit at all. Yeah. These people are just asking to get punched in the face, by the way. Who are these tyrants, these petty tyrants? Yes, exactly. Sometimes the buildings are rejected, not because they failed to meet any objective criteria. It's vibes. Yes, it's vibes. The windows don't create visual interest. The rhythm of the facade is off. Exactly. But it's like, how am I supposed to correct that?

59:18Read your mind and know what the rhythm of the facade is going to vibe with you. Exactly. This is what I'm talking about. This is people like punched in the face. Now people know what I'm talking about. Yes, exactly. Imagine getting a bill or a demand to undo a hundred grand worth of stuff and redo it with 150 grand worth of stuff because the rhythm of the facade is off. What do you mean by that? Eh, eh, eh, eh, that doesn't create visual interest. Sorry, Mike. What do you mean by that? Ah, you know what? When you see it. Okay, no, I didn't. Yeah, exactly. Yeah. So on the one hand, it sounds like a nightmare for developers and buyers alike.

59:53On the other hand, I know some people don't want their neighborhoods being filled with, what was it, vinyl siding because they're massive snobs. Clearly, some people think this is important. Again, I really don't. I think these laws sound really dumb to me. Yeah, put me in the massive snob department because I don't want to live next to a guy who doesn't cut his lawn. No, but I feel like you're strawmanning this. Yes, you should have to cut your lawn. And do you care what shape your neighbor's windows are? Like, there's just got to be a line somewhere. No, I agree with you that there's a line somewhere.

1:00:21I'm just saying that if the response is there shouldn't be any standards in any community whatsoever, we can all just live in dilapidated RVs, which I used to live in, or shipping containers or whatever. Yes, I got a friend who's in the New Hampshire state legislature and he's been fighting the fight for years against laws that make it so you can just buy 50 acres or whatever it is in some town that nobody lives in in New Hampshire and throw a bunch of RVs on them. And all of a sudden you've got a new housing development. He wants them to have to actually build a real house there. And I get it.

1:00:57But the number of gables and stuff. No. I'm off on the number of gables I'm off on the color of the window trim I'm off on is it the vibe all that stuff but the idea of there being any kind of visual or aesthetic or quality standard in a community I'm sympathetic to that but again we need to be clear that this is going to increase the cost of housing our neighbor has an ugly yellow house and we're just like what the hell were you thinking but you know what like not really the end of the world and i doubt anyone's looking at our house if say we're selling it and goes you know what i'm not living next to that yellow house i can't do that i'm not doing it it's three houses down it's just hopefully they'll repaint that so the thing about zoning laws is they suck but without them there's nothing stopping someone from building a pork processing plant next to your neo-victorian luxury home yeah by the way this is one of the oldest forms of law is saying that you can't do stuff like that.

1:02:02This goes back to like pre-modern England, that there'd be like, they have laws going back forever about this because people understand there's externalities involved that need to be managed. You don't hand wave them away and you don't allow the zoning laws to be like, nothing can be built anywhere because somebody is going to be unhappy about it. You find where the rubber meets the road and you make a law for that. And I think that local communities are much more capable of sorting this out in a way that works for, if not everyone, then almost everyone, then regulators in Washington are going to be.

1:02:38Yeah, I think having your pad above a pork processing plant nowadays is peak hipster shit, and you'd be able to charge a premium for something like that. I think it's, in New York, it's like, oh, are you downwind from the wastewater treatment plant? Oh, that's going to be a premium. You got to be able to say you live in a gritty area. My former in-laws actually live near a pork processing plant and it's dank yeah i don't want to know exactly all the details about what goes on at a pork processing plant but you're throwing out a lot of parts and there's probably a lot of excrement and stuff too and it's just yeah that's icky so please tell me though there are not cities that require people to build i don't know in-ground swimming pools no but there's tons demanding you have a two-car garage or a certain number of mature trees on the lawn which geez That's going to add 30 grand of the cost of a house.

1:03:28But hey, developers already don't want to build anything under 250K. So I don't know. Maybe it's not a big deal. It seems like there's a cascading effect, like that. It's not just one thing. It's the cumulative cost of all these things together. You asked me to put three mature trees up. That's going to be expensive. But if I have to do that and gables and a certain kind of window and a certain kind of, I don't know, gravel or whatever. And the driveway has to be concrete and not asphalt because they like the lighter. like all that stuff, that's where you start getting into the tens of thousands.

1:03:57Yeah. People want a magic bullet that's just going to undo this Gordian knot of problems that it doesn't exist. Yeah. Excellent mixed metaphor, by the way. I'm not trying to suggest there's no real problem here, but I do think it's reasonable to suggest that maybe the internet is making people feel worse about a real problem than maybe they might otherwise. I guess a good place to start with is how many people prefer to rent rather than to buy. We have some good data on this. In any of this data, though, I always want to know what the percentage of people saying they don't want to rent a home because they don't think they can actually have one is.

1:04:33Yeah. The people that are kind of coping, essentially, because it seems totally out of reach forever. I don't want somebody to say, oh, I don't want to buy. Why? Because I don't want to spend 10 million dollars and be in debt slavery. Okay, that's not exactly the same thing as you not wanting to own a home. There's no real way to know this, but I think it's fair to say that it's non-trivial. A good example of this manifesting is the always renters. Roughly 12 to 15 % of millennial and Gen Z renters now say they always plan to rent. That's a nearly 50 % increase from a decade ago. I think this is a really telling insight into what you said.

1:05:10It doesn't actually say that they prefer to rent. It just says that they always plan to rent. And I think it's safe to assume that at least some part of that is pure, unadulterated despair over the housing market and the rising housing costs. A clear stat is a 2025 survey where 72 percent of Gen Z adults viewed renting as financially smarter than buying in the current economy. I'm obviously way outside of Gen Z, but this is where I live. I've loved to own a home again, but I just don't think it's a smart financial decision in the current environment. mostly because of interest rates. Among high-income earners, that's over$150K.

1:05:48Renters by choice grew 20 % between 2023 and 2026. These are people who prefer to keep their capital in the stock market rather than a single illiquid asset like a house. So it's not just that everybody is giving up and saying they never plan to buy a house. There are lots of people who genuinely prefer to rent over buying and could conceivably own a house if they actually wanted to. Yeah, that's a fair assessment. I guess the question is why? You mentioned they want their capital to be more liquid. Maybe there's more going on than just that. I don't know. Maybe if you're a person who changes job locations all the time, you work on oil rigs and they're always moving you all over the place.

1:06:25Like you don't know where you're going to live in two years. I would rent if that were the case. We do know that more younger people are freely deciding that they don't want to own a house. 83 % of younger people cited mobility as a reason. Like you said, they just want to be able to pick up and move. For what it's worth, my wife is over a decade younger than I am, and she doesn't want to buy a house in the town we live in because we're going to leave when my son grows up. She doesn't want to have to own a house in this town that we're going to leave. So people, particularly young people, are saying they don't want to buy because owning a home ties them to a specific place, whereas renting means they can pick up and move.

1:07:01That totally makes sense to me. 75 % said that renting was just less stressful than owning. and there's a point there. You're renting and the house needs a new roof. It's not your problem. Pipes break in winter, not your problem. My fridge broke, not my problem. Really? Your landlord takes care of your fridge? That's actually unusual, I think. It's the law. If it comes with an appliance, it's his responsibility. No way. So that's interesting, because every place I've ever rented, they're like, you need to buy a refrigerator. And I was like, why would I buy a fridge that only fits in this one specific spot?

1:07:34I'm not going to move it when I move. that makes sense because then it's their responsibility. So they're trying to get around that by making me buy a fridge. Okay. Yeah. Like I know a guy who rents a property here that when he gets a new tenant, he sells them the fridge for a dollar. That seems legit. Okay. I'm not trying to work my way around this, but here's a$1 brand new Samsung refrigerator. Sure. So home ownership means there's no one to call when the plumbing breaks. You're just the guy who deals with it. Yep. It's also one of the best times ever to rent instead of buying just from a financial point of view, isn't it?

1:08:07Yeah. So in the top 50 metros in the United States, it's$900 a month cheaper to rent and buy. This is maybe the metric that's most indicative. If this factor were different, I might buy what we discussed earlier, but the zoning laws, other factors making it difficult to build new housing. The housing market sucks. And that's part of what makes renting more attractive to young people, correct? Yeah. The other two main drivers don't have anything to do with housing policy. Opportunity cost, very real. All the money that you're putting into saving for a house is money that you're not putting into the market or other investments.

1:08:45I guess if you're saving for a house, you could put it into a CD or something, but I know what you mean, right? You're not putting it into an index fund and letting it sit there. Whoopty, a CD, I'm going to get 1%. Yeah, well now, yeah. It sounds like a lot of people, especially younger people, are at least semi-content with not owning a home. But what What about the people who are struggling with feelings of inadequacy about not being able to buy a home? The Internet really seems to exist to make people feel worse about their otherwise good lives. And I'm guessing there's a lot of people doom scrolling Zillow and despairing because they're not living in a million dollar home in Bel Air at age 25.

1:09:18I don't think a million bucks is going to get you a lot in Bel Air these days, man. No, maybe you should add a zero. Probably not. You're right. But is there any data about the people who aren't buying houses that actually want to buy a house? We call this person the trapped renter. 86 % of current renters say they would like to buy a house. Remember the stats from above were mostly about Gen Z. And man, if you want to feel old, the oldest Gen Z person is about to turn 30 this year. Jeez. Okay. Yeah, that makes me feel old for sure. My wife, who is definitely not Gen Z, didn't know what a rotary phone was.

1:09:54How is that possible? I'm not that old. Are we? She didn't know how they worked. It was like a to her. It's like an old timey crank phone where you're like, get Agnes on the line. St. Louis. Agnes John Smith in Slidell, Louisiana. And they're like, oh, well, there's only one of those. Let me put the cords into the right holes. Yeah, man. You must feel so old every day if you're living with somebody who's in that position. Mostly because of my creaking bones, actually. Pre-COVID, 17 % of these trapped renters could afford a home. it has now dropped to 12.7%. Damn, that wasn't that long ago. Plus, you'll have maintenance costs on top of the mortgage, and the cost of ownership can be a significant premium on renting.

1:10:38Nationally, it costs 108 % more per month to own than to rent. In high-cost frozen markets like Orange County or parts of the Bay Area, the cost of ownership premium can exceed 300%. That sounds right to me. So if you live where I live, owning is going to cost three times more than just renting. Yeah, I could see how people would prefer to rent. And these are comparable properties too, is the thing that's worth saying. If you get a house that's three times as much, it's like this is a comparable property. There are markets where the reverse is true, where it's better to buy than to rent. Flagstaff, Arizona is a really good example.

1:11:16It's like two hours from me. And the rental market there is horrible because it's a college town. But if you buy a house, you get a really nice house for not a ton of money. People who live in Flagstaff are going to be like, what? And it's priced out houses in Flagstaff. They're really not that bad. But that gap in cost can be a driver of despair because you might actually want to own a home, but the market is pricing you out. I say that you prefer to rent because it's cheaper, but if it were cheaper, you'd want to own a home. 49 % of Americans believe that it is unrealistic that they will ever own a home.

1:11:47See, this is where we start seeing the despair, right? The hopelessness about ever buying a home. Yeah. But what surveys like this don't tell us is whether or not these people can buy a home, and if not, why they can't. If it's income, that's a cost issue. If it's credit, you know, I got a 550 credit score. Whose fault is that? Lifestyle changes are a very easy barrier to overcome in that regard. Getting your credit moving is actually a lot easier than you think. I've raised mine like 120 points in less than a year just by paying down debt. Speaking of credit scores, what role do mortgage rates play in keeping people out of homes?

1:12:27Well, like I said, mortgage rates are my reason for not wanting to buy a home. The estimate is that 6 % is the sweet spot where people are going to start looking again. Anecdotally, I've spoken to realtors and people are not jumping at 6 % that we're at right now. It needs to be sustained as part of the issue. People have lived through fluctuations in the credit market. so they're going to want to see 6 % hold for a while, especially if all they're going to qualify for is a variable interest mortgage. I'm waiting for 5%. For me, it's not about income. 6 % is nuts to me. I'm a child of 4 % interest rates.

1:13:05Sure. Yeah, I get that. I remember there was a proposal during the 2024 election to create some kind of grant for people to buy a house, and I know you're probably opposed to that, but what I want to know is why, beyond some kind of hand-wavy thing about how the government is bad and it's immoral for the government to do anything. Why is it bad to create a grant for people to buy a house? So I think what you're specifically talking about was a$25 ,000 grant proposed by the Harris campaign for first-time homebuyers. The issue here beyond my usual philosophical gripes is that the government would again be stepping in to increase demand for housing without increasing the supply.

1:13:43I'm not really sure what it would have accomplished beyond making every house in America$25 ,000 more expensive. And the thing is, we don't have to resort to abstract reasoning to get to this conclusion. We have an example from California. Of course we do. Okay. Yeah. The California Dream for All Act offered 20 % down payment assistance. It was a$288 million program, and it was all tapped out in 11 days. Wow, they blew through that pretty quickly. So what were the tangible effects of that? Housing prices in California went up by 10 percent in a single year because all that it accomplished was spiking demand of a limited resource.

1:14:25This is called inelastic supply. It doesn't matter how much money the taxpayers fork over. It is not going to magically increase the supply of housing. Yeah, that makes sense. That explains why my property got more valuable and I didn't do anything but live in it. Okay. At least in part because of local zoning laws and regulations that make building more expensive. Yeah. If you think more people who want to own homes should be able to purchase them is a worthy goal. And by the way, I do. What you need to do is make building houses cheaper. That means a lot of legislation to undo existing legislation.

1:15:03And most of it is going to have to take place at the local level. The federal government can't just slap a bandaid on it because for the most part, the root of the problem exists at the local level. Huh. Okay. Couldn't they just ban a bunch of the onerous zoning laws that we've been talking about? You said it's a Gordian knot, but some of it seems like you could just undo some of that crap. I don't know. Clearly, I'm fit to run for office. Just control Z on a bunch of that stuff. Come on. Yeah, I have an extreme lack of faith in the federal government to decide what zoning laws and building codes are appropriate for Boise, Idaho.

1:15:38Okay, so what about lowering interest rates? I kind of know why this might be a bad idea, but I'll ask you anyway. Why not just lower interest rates? I'm sure that lowering interest rates would make more people interested in and more capable of buying, but there's problems that come with that. Like the interest rates were raised for a reason. What reasons are those in case people listening to this don't follow American finance? One big reason is that the housing market was just out of control. Lowering the interest rates is another solution that increases demand while doing nothing about supply.

1:16:12According to the National Association of Realtors in early 2026, every one percentage point drop in mortgage rates. So dropping them from six to five, for example, that brings an estimated 5.5 million additional households back into the buyer pool. Which is going to make prices go up because now all kinds of people are going to buy houses and the supply hasn't exploded along with the demand. So the people who are locked in at a 3.25%, they're not going to sell unless they can get a competitive rate, which means rates have to be cut almost in half before those people are going to start to look to move and free up those houses.

1:16:52So, yeah. So if you just lower rates, it's like, all right, we can borrow more cheap money. Great. OK, so now there's 10 times as many people looking for the exact same amount of houses. Yikes. Yeah. And the 3 % interest people still don't want to sell. The problem of new construction is not solved, et cetera. If the Fed cuts rates too fast, they could trigger a new round of 9 % inflation. Forecast from Morgan Stanley and Redfin says 6 % is the new normal and that 3 % is not coming back. Huh. Not good news for you personally if you're holding out for 5%. Maybe not, but my wife doesn't want to buy here anyway.

1:17:25I'm pretty happy renting. I got a nice house. It sucks to pay someone else's mortgage, but it is what it is. I will say that the one place where lower rates can help buyers is that it can make construction in general and construction of less expensive houses in particular more attractive. Developers usually build these houses on credit, so the interest rates could potentially have a ripple effect. I see. So where does that leave us? Don't ask me, man. I don't have any answers, just complaints. That's on brand. Yeah. All right. We started today looking for a villain in a black suit from private equity firm, but it turns out the call is coming from inside the house.

1:18:01Scarcity is a policy choice. We've created a system where we treat housing like a high yield investment account for existing owners. But then we act shocked when the buy in price for the next generation is a quarter million dollars higher than they can actually afford. And look, I get it. If you own a home, you want the value to go up. But we have to be honest, you can't have affordable housing and housing as a guaranteed wealth builder both at the same time. One of those things has to give. Thanks to Nick Pell for helping us put a roof over this conversation. And thanks to you all for listening.

1:18:34Topic suggestions for future episodes of Skeptical Sunday directly to me, Jordan at JordanHarbinger.com. Advertisers, deals, discounts, ways to support the show, all at JordanHarbinger.com slash deals. This show is created in association with Podcast One. My team is Jen Harbinger, Jace Sanderson, Tata Sidlowskis, Robert Fogerty, Ian Baird, Gabriel Mizrahi. Our advice and opinions are our own, and I'm a lawyer, but I'm not your lawyer. Also, we try to get these as right as we can. Not everything is gospel, even if it's fact-checked. Consult a qualified professional before applying anything you hear on the show, especially if it's about your health and well-being.

1:19:07Remember, we rise by lifting others. Share the show with those you love. If you found the episode useful, please share it with somebody else who could use a good dose of the skepticism and knowledge we doled out today. In the meantime, I hope you apply what you hear on the show so you can live what you learn. And we'll see you next time. You may think you don't have an accent, which is exactly what your accent wants you to think. Every voice carries clues about class, identity, and belonging, and why what sounds intelligent, trustworthy, or normal often has more to do with power and familiarity than language itself.

1:19:37Every person has an accent. But what really is driving our attitudes towards what's a beautiful language and what's not is our familiarity with that language. So the more familiar a language is or an accent is, the more we tend to like it, but also our beliefs about the speakers of those languages. And that is like 50 percent of what drives our attitudes towards language. When we're talking about someone speaking a different dialect, what we're talking about is that they're using differences at many levels of linguistics, not just sound. So they're saying syntactic or sentence structure differences.

1:20:11They might be adding different endings or deleting endings. That's morphology. They might be using different vocabularies. But an accent refers to only differences at the level of sound. So when we're attending to accents, we're attending to sound differences. And with that general description of the difference, it shows you there are so many different things you have to learn when you're learning a new language. There is more cognitive processing power when you hear a foreign accent. You have to recruit more neurons to unpack what you're hearing because it's less familiar. So you are exerting more processing effort.

1:20:46A lot of people actually experience that as something more difficult and unpleasant. But in other contexts where paying attention is important, it probably actually does help you. But you are actually using more processing power. Here's a great piece of evidence of how much our speech says about us without us being aware of it. Listen to linguist Valerie Friedland on episode 1349, and you may never hear anyone, including yourself, the same way ever again.

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