Rent Control Is a Scam: Tom Bilyeu Exposes the True Cause of America’s Housing Collapse | Tom Bilyeu Deep Dive

In today’s deep dive, Tom Bilyeu tackles one of the hottest—and most misunderstood—topics in urban life: rent control. As rents skyrocket in cities like New York and San Francisco, and an entire generation struggles under crushing debt and soaring housing costs, the call for rent control has become louder than ever. But Tom asks the hard question: does rent control actually make rents more affordable, or does it trigger a downward spiral of housing shortages, urban decay, and economic stagnation? Drawing lessons from around the world and diving into the history of rent control policies in cities like New York, Stockholm, Berlin, and San Francisco, Tom exposes the hidden costs and unintended consequences of top-down economic interventions. He argues that while rent control might sound like a lifeline for struggling renters, it often backfires—making things even worse by stifling new construction, deteriorating housing stock, and trapping communities in economic hardship. Through compelling stories and insightful analysis, Tom explores why these policies persist, the powerful forces—like NIMBYism and regulatory capture—keeping housing scarce, and how cities like Houston and Tokyo buck the trend with market-driven solutions. Packed with examples, practical takeaways, and a passionate call for economic freedom, this episode is a must-listen for anyone trying to understand the real roots of the housing crisis—and what can actually be done to fix it. SHOWNOTES 06:53 Rent Control's Impact on Housing Crisis 11:59 Rent Control’s Unintended Consequences 14:07 "Emotional Economics and Policy Failures" 21:36 The Pitfalls of Populist Promises 34:11 Tianducheng: China's Paris Struggles 42:59 Free Market vs. Rent Control CHECK OUT OUR SPONSORS Vital Proteins: Get 20% off by going to https://www.vitalproteins.com and entering promo code IMPACT at check out SKIMS: Shop SKIMS Mens at https://www.skims.com/impact #skimspartner Allio Capital: Macro investing for people who want to understand the big picture. Download their app in the App Store or at Google Play, or text my name “TOM” to 511511. SleepMe: Visit https://sleep.me/impact to get your Chilipad and save 20% with code IMPACT. Try it risk-free with their 30-night sleep trial and free shipping. Jerry: Stop needlessly overpaying for car insurance - download the Jerry app or head to https://jerry.ai/impact Shopify: Sign up for your one-dollar-per-month trial period at https://shopify.com/impact CashApp: Download Cash App Today: https://capl.onelink.me/vFut/v6nymgjl #CashAppPod iRestore: For a limited time only, our listeners are getting a HUGE discount on the iRestore Elite when you use code IMPACT at https://irestore.com/impact WORK WITH TOM! 7-8 Figure Leadership Workshop: If you're a 7 or 8-figure founder struggling with employee under-performance and/or churn, join my live workshop on Tuesday, July 22nd at 1pm PT. ⁠⁠Register for free here⁠⁠ https://tombilyeu.com/leadership?utm_campaign=Podcast%20Offer&utm_source=podcast_feed&utm_medium=july_ad. Zero to Launch GPT: Stop overthinking your business ideas and get clarity in 30 minutes. ⁠⁠Access my free CustomGPT trained on my proven validation framework here.⁠⁠ https://tombilyeu.com/zero-to-launch-gpt?utm_campaign=Podcast%20Offer&utm_source=podcast_feed&utm_medium=july_ad 7+ Figure Founders Only: Ready to abandon conventional business wisdom and think from first principles? ⁠⁠Apply to work directly with me to scale your business here. ⁠⁠ https://tombilyeu.com/scale?utm_campaign=Podcast%20Offer&utm_source=podcast_feed&utm_medium=july_ad ********************************************************************** LISTEN TO IMPACT THEORY & MINDSET PLAYBOOK AD FREE + BONUS EPISODES on APPLE PODCASTS:⁠⁠ apple.co/impacttheory⁠⁠ http://apple.co/impacttheory ********************************************************************** FOLLOW TOM: Instagram:⁠⁠ https://www.instagram.com/tombilyeu/⁠⁠ https://www.instagram.com/tombilyeu/ Tik Tok:⁠⁠ https://www.tiktok.com/@tombilyeu?lang=en⁠⁠ https://www.tiktok.com/@tombilyeu?lang=en Twitter:⁠⁠ https://twitter.com/tombilyeu⁠⁠ https://twitter.com/tombilyeu YouTube:⁠⁠ https://www.youtube.com/@TomBilyeu⁠ https://www.youtube.com/@TomBilyeu Learn more about your ad choices. Visit megaphone.fm/adchoices https://megaphone.fm/adchoices See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Tom Bilyeu?

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• 0:45Tom Bilyeu?

  Their dashboard tracks what comes next based on what your business actually needs. So EIN number, registered agent, licenses and permits, bookkeeping, business banking. I tell every founder the same thing. Just make it official. Click the link in the show notes to check out Taylor Brands and get started on your business today. This is a paid advertisement. The average rent for a one-bedroom apartment in Manhattan now exceeds $4,200 per month. That's more than twice the average monthly income for a recent college graduate. In San Francisco, a person earning the median salary would need to work 161 hours a week. That's nearly 23 hours a day to comfortably afford a typical one-bedroom apartment.

• 1:30Tom Bilyeu?

  Imagine this, you go to college, as all good girls and boys are told they should do. You take on a mountain of debt, and at graduation, you move to a big city looking for the opportunity to make good on that education. Your stress levels, though, are through the roof because between your student loans and the fact that rent consumes nearly your entire paycheck, you're forced to work two jobs. And just as you're about to drown, politicians promise salvation in the form of rent control. They guarantee cheap, stable housing. It feels like a lifeline. Millennials and Gen Z are drowning in a collective debt burden of $1.7 trillion. And the national rental burden is completely out of pocket.

• 2:11Tom Bilyeu?

  54% of renters aged 25 to 34 spend more than 30% of their income on rent, officially classifying them as housing burdened, and making saving for actual homeownership essentially impossible. So you will forgive them if they reach for that lifeline of rental control. All of that explains why, from 2020 to 2023, homelessness among young adults aged 18 to 25 increased by 25% nationwide, a statistic directly linked to soaring rental prices in major urban centers. Is it really surprising that young people in that situation are desperate to elect politicians that promise a socialized command economy if it claims it can lower rent prices? It shouldn't be.

• 2:54Tom Bilyeu?

  Millennials and Gen Z are now paying 40% more in rent, adjusted for inflation, than baby boomers did at the same age, despite the fact that they earn less in real terms. So as a percentage of income, housing has become completely untenable. That's why the homeownership rate for Americans aged 25 to 34 dropped from approximately 45% in 2005 to just 39% in 2023, the lowest rate in modern American history. High student loan payments and stagnant wages are primary drivers of this problem. The difficulties that young people face today, coupled with the exploitative nature and economic illiteracy of politicians,

• 3:37Tom Bilyeu?

  leaves millennials and Gen Z susceptible to socialist rhetoric that promises rent control as a direct response to their economic anxiety. The question isn't, can we understand why they want lower rents? The question is, does rent control actually lower rents? The answer is going to shock you. It is not what most people think. Despite the economic freak show that young people are forced to deal with, rent control is not salvation. It is a trap. A trap we're going to untangle today in five crispy parts and do not- Skip part three. It is gonna make you wanna bite somebody's eyes out. But if you don't understand it, you are gonna remain trapped forever. Alright, let's get going. Welcome to part one, the dark reality of rent control.

• 4:22Tom Bilyeu?

  In New York City, sixty percent of rent-controlled apartments are in buildings over seventy-five years old. Many of them are falling apart because rent controls make it impossible for landlords to maintain the building. At the peak of New York City's rent control crisis in the nineteen seventies, the South Bronx was losing nearly thirty thousand housing units per year to abandonment and arson. That's equal to losing an entire apartment building every single day. And politicians are once again running on platforms of rent control. History really does repeat. The South Bronx and part of Harlem have already experienced severe disinvestment and abandonment due to rent controls.

• 5:02Tom Bilyeu?

  In the seventies and eighties, rent controls and related regulations made property maintenance financially impossible for landlords. And as a result, entire neighborhoods were left desolate and crime-ridden. By nineteen eighty, the Bronx had lost over three hundred thousand residents, leaving behind empty buildings, burned-out properties, and economic stagnation. Three hundred thousand people left. The story is both insane and highly instructive in terms of how to deal with the current economic and populist crisis. Starting in nineteen forty-three, New York City had implemented emergency rent controls. This is during World War II and was intended to be a temporary measure to prevent wartime profiteering.

• 5:43Tom Bilyeu?

  The regulations capped rents at artificially low levels, significantly below market value. And this absolutely battered the financial viability of owning and maintaining a building. Now, maybe it wouldn't have been a big deal had the regulations been dropped, but there's nothing quite as permanent as a temporary measure. And so, despite the post-war economic boom of the fifties and sixties, creating a massive increase in demand for housing, the regulations held. With rents artificially capped, landlords had little to no financial incentive to invest in building new rental housing. So they didn't. And consequently, supply remained stagnant despite massively rising

• 6:21Tom Bilyeu?

  Now, even if you grant that the politicians had good intentions, which may not be wise, but even if you do, these controls didn't keep rents low. Instead, they created a housing shortage and a dual housing market. It went something like this. Pre-war, rent-controlled units became increasingly rare and severely underpriced relative to market conditions. So a parallel housing market emerged. Since the small number of new units that actually managed to get built and enter the market weren't subject to the rent control regulations, they reflected the actual free market value and commanded extremely high rents. Government interventions were artificially keeping supply low, creating a massive imbalance in supply and demand.

• 7:06Tom Bilyeu?

  The severe supply shortage caused rents to skyrocket in these new units. Did people realize at this point what was going on? Namely, that housing was so limited and under-maintained due to rent control that people were willing to pay an ever-increasing fortune for a well-maintained building? Nope. The skyrocketing prices just made the public even more angry. And once again, not recognizing the actual cause of the price increases, people voted for more governmental intervention, the very thing that was causing the problem. And thus, it made the problem even worse. And so, the spiral continued. And under massive public pressure, in 1969, the city introduced the Rent Stabilization Law.

• 7:48Tom Bilyeu?

  This policy sought to also control the newer apartments that were previously avoiding the rent limitations. It was designed to be a separate, less severe form of rent control known as rent stabilization. It allowed for minor increases, but still held rents well below market rates and forced landlords to seek approval for any major rent increases, which once again stifled the income streams that are necessary for property maintenance and upgrades. And, is so often the case with emotionally-driven government intervention, the new rent stabilization law failed to actually address the root cause. Namely, the lack of financial incentive needed to propel investors to take a risk on building new housing and/or invest in maintenance.

• 8:31Tom Bilyeu?

  The additional layer of complexity brought on by two types now of rent control also served to confuse the market even further, discouraging new development and perpetuating the chronic housing shortages and deterioration. So, say it with me now, the despiral continued at an accelerating pace. In 1971, under Mayor John Lindsay's administration, New York City extended stringent rent control rules, significantly limiting landlords' ability to increase rents even when properties required major repairs or capital investments. And guess what happens when you do that? Landlords, who found their maintenance costs regularly exceeding the allowable rent income, decided not to make even basic repairs, because if they did, they were going to go bankrupt. This only worsened the housing crisis.

• 9:17Tom Bilyeu?

  In response, in 1974, New York established the Division of Housing and Community Renewal, introducing even tougher enforcement mechanisms for regulated rents. Because, well, the beatings will continue until morale improves. Unfortunately, that kind of strict enforcement and those penalties only further discouraged landlords from investing in regulated properties as profitability was now extremely limited. This caused property values to decline yet again, and the abandonment rate on buildings began to rise even faster. So, by the mid-1970s, despite capped rents, property taxes and utility costs soared. This placed enormous additional financial pressure

• 10:01Tom Bilyeu?

  on the landlords, who were already in dire straits. And to make this situation even more impossible, high taxation rates were combined with high inflation at the time, dramatically increasing maintenance and operating costs, driving even more landlords to abandon their buildings. That's the unfortunate cause and effect of policies like rent control. When landlords become unable to cover the escalating costs of their buildings due to frozen or minimally increasable rents, more and more of them will be forced to abandon their properties or reduce maintenance significantly until everyone is living in slum-like conditions. By the late 70s, many landlords, faced with ridiculous regulations and financial hardship, resorted to not just intentionally neglecting the properties or outright abandoning them,

• 10:44Tom Bilyeu?

  In some cases, properties were deliberately burned for insurance compensation, since insurance payouts became more financially viable than trying to work with regulated rental income. Arson rates surged dramatically, with up to 40% of the fires in the Bronx being attributed to arson. Forty percent! Entire neighborhoods became characterized by burned-out buildings, abandonment, and severe urban decay. But if you've been iced out of the housing market and can tell the game is rigged against you, you're understandably going to sour on capitalism. Because people don't map the physics of money, the nature of supply and demand, and the complexity of the economy at large. They are inevitably going to fall back on what they do understand: politicians.

• 11:24Tom Bilyeu?

  So in 1977, yet another attempt at federal intervention was made, called the Community Reinvestment Act. This is getting crazy. The CRA was designed to encourage banks to provide loans to maintain properties despite the rent controls. Unfortunately, due to local regulatory hurdles, limited market incentives, and financial constraints that come with rent stabilization, the CRA's impact was initially limited, and of course, failed to reverse the decay. With decades of failed interventionist policies, New York fell into a financial crisis, and the city was forced to make substantial cuts in municipal services like the fire department, the police department, and sanitation.

• 12:06Tom Bilyeu?

  The South Bronx and Harlem were particularly hard-hit, with a massive acceleration of property abandonment. The effects of these policies were devastating. Neighborhoods were left economically desolate and crime-ridden, creating conditions often described as "economic ghost towns." By 1980, nearly half of the housing units in the South Bronx had been abandoned or destroyed, largely as a direct consequence of regulatory decisions. Economic stagnation became entrenched, with unemployment in the Bronx exceeding 25%.

• 12:40Tom Bilyeu?

  And this kind of self-inflicted wound isn't unique to New York. It's seen all over the world. Stockholm had a housing crisis. Their rent control policies created an 11-year waiting list for a basic apartment by 2022. Severe shortages led many young people and families to live in overcrowded housing or remain with parents into their late 20s and 30s. Additionally, property owners stopped investing in the housing stock, leading to visible deterioration. San Francisco also had their own major problems. Their long-term rent control policies led directly to a 15% spike in housing shortages between 2015 and 2023, dramatically reducing availability and driving up market rents for newer tenants. Stanford researchers found that San Francisco's rent control

• 13:25Tom Bilyeu?

  caused landlords to withdraw from the market or convert units into condos or short-term rentals. In 2020, Berlin ran into similar problems when they imposed stringent rent controls, freezing rents at June 2019 levels, and within a year, new rental housing permits declined by nearly 40%, exacerbating shortages and making housing even less accessible for new renters. The exact opposite of the desired outcome. Santa Monica also implemented strict rent controls in the late 1970s. And guess what? By the early 90s, research showed that these controls significantly reduced the housing supply and increased rental costs for non-controlled units, pricing out young professionals, and contributing to the economic stagnation in the area.

• 14:10Tom Bilyeu?

  Post-World War II rent control policies also battered the UK, resulting in severe underinvestment in housing maintenance. By the late 1970s, significant portions of the UK's rental stock were classified as unfit for human habitation. If this pattern of governmental intervention, creating the very problem it's trying to solve, is happening all over the world, what is going on? That which is predictable should be avoidable.

• 14:38Tom Bilyeu?

  Hold tight, we're gonna take a quick break.

• 14:42Tom Bilyeu?

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• 15:27Tom Bilyeu?

  or go to quince.com. Get free shipping on your order and 365 day returns. It's now also available in Canada and the UK. And when Quince asks where you heard about them, make sure you tell them that it was on Impact Theory. That's the best way to support the show. Let's talk about something that genuinely keeps me awake at night. My team at Impact Theory gets hit with phishing scams from bad actors pretending to be me all the time. And they keep getting more sophisticated attacks with details specific enough to look legit. AI has made a lot of things possible, including scams like this, but AI still needs raw material. It gets it from data brokers who sell your name, address, phone number to anyone willing to pay.

• 16:12Tom Bilyeu?

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• 16:58Tom Bilyeu?

  Alright, we're back. Let's get into it.

• 17:02Tom Bilyeu?

  So, welcome to Part 2. How did we get here? Over the past century, more than 50 countries have attempted a top-down command economy with central planning, and exactly 100% of them have failed to deliver long-term prosperity, and over 70% have delivered total collapse. From the Soviet Union in Mao's China, to Cuba, Venezuela, Cambodia, North Korea, and more, it's all bad all the time. But humans have a nature that makes history repeat itself. Due to evolution and our biology, we act and react in fairly predictable ways. From over-focusing on short-term rewards and a desire to punish our perceived enemies, to an intense feeling "we alone know what's best",

• 17:48Tom Bilyeu?

  and the desire to elect an invincible bully to protect us, no matter what the cost is to other people. Human behavioral economists like Daniel Kahneman and Richard Thaler have repeatedly demonstrated in peer-reviewed research that humans consistently make horrible economic decisions when acting emotionally, are under pressure, or driven by immediate short-term incentives. Exactly the kind of circumstances people are under when rent control and similar policies gain popularity. Despite the eternal failings of command economies, humans simply cannot decide if they want freedom and its consequences, or a babysitter and the resulting tyranny. Economic historian Robert Higgs extensively documents

• 18:31Tom Bilyeu?

  the predictable outcomes of these failed top-down economic experiments, noting that centralized economic control has consistently produced shortages, corruption, and economic stagnation, rather than long-term stability or prosperity. The Heritage Foundation's Index of Economic Freedom and the Fraser Institute's Economic Freedom of the World Report have consistently documented the strong correlation between economic freedom (market-based economies) and higher GDP growth, prosperity, and quality of life, while demonstrating over and over again how command economies consistently rank among the poorest, most oppressive, and most unstable nations.

• 19:15Tom Bilyeu?

  Top-down planning breaks economies, and ironically, makes stability at any level other than grinding poverty impossible.

• 19:25Tom Bilyeu?

  Leading to the famous quote, "The inherent vice of capitalism is the unequal sharing of blessings. The inherent virtue of socialism is the equal sharing of miseries." It's from Churchill. It's not that capitalism doesn't have problems. It most certainly does. As Thomas Sowell has so eloquently pointed out, "There are no solutions, only trade-offs. In a free market, you get innovation and efficiency because each entrepreneur competes with the other to win the customer's business. This leads to innovation and rapid economic growth. But, personal freedom and responsibility come at a cost. When you fail, it's on you. You can rise up, you can also fall down." That's the trade-off. And it's a trade-off that many find intolerable in times of plenty.

• 20:10Tom Bilyeu?

  When things are going well and the economy is booming, people just lose sight of how hard entrepreneurship actually is. They begin to believe that economies are the result of a well-structured government instead of realizing that governments function best when they guarantee law and order, stop monopolies from forming, and then get out of the way. That's why capitalism has been the single most effective tool for lifting people out of poverty that humanity has ever seen: capitalism. Even China, the previous undisputed heavyweight champion of command economies and all of its death and destruction, realized that to get rich is glorious. That's a quote from Deng Xiaoping.

• 20:51Tom Bilyeu?

  Before the post 1978 economic reforms that opened China up to the free market, Mao's command economy starved north of 45 million people to death. Under Deng Xiaoping, collectivist farming was terminated and farmers were finally allowed to sell surplus crops on the free market. Private ownership was introduced, international investments were encouraged, and China began competing in the open market and ultimately became an economic powerhouse. Privatization, deregulation, and relaxation of old restrictions incentivize entrepreneurs to innovate and make investments. This in turn sparked massive productivity increases and the outcomes were nothing short of miraculous. Poverty in China fell dramatically

• 21:36Tom Bilyeu?

  from 88% of the population living below the international poverty line in 1981, under a command economy. Down to less than 1% by 2021, under a free market economy, lifting roughly 800 million people out of poverty, the largest poverty reduction in human history. China's GDP growth averaged approximately 9.5% annually from 1978 to 2018, creating the world's second-largest economy and making China the primary driver of global poverty reduction for decades. Per capita income in China increased over 25-fold from approximately $229 in 1990

• 22:21Tom Bilyeu?

  to over $12,000 by 2022. India has followed a similar course post their 1991 reforms. They were facing a severe economic crisis as well, but instead of trying to control everything, they too went the opposite way, relaxed regulations, and implemented major economic liberalization policies under their new finance minister. By doing so, poverty rates declined massively from roughly 47% in 1990 to just 10% by 2019, lifting hundreds of millions out of severe poverty. India's GDP growth rate averaged 6% annually between 1991 and 2022, transforming India into the world's fifth-largest economy by GDP. The middle class in India expanded dramatically, increasing from approximately 50 million people in 91

• 23:06Tom Bilyeu?

  to over 350 million by 2020. And GDP per capita increased over 7-fold from around $375 in 1990 to approximately $2,600 by 2022. While freedom can be scary, as Milton Friedman said, "A society that puts equality before freedom will get neither. A society that puts freedom before equality will get a high degree of both." As I've said, though, freedom does come with trade-offs. With open markets, in addition to all good things, among other things, you also get inequality. There will be winners and losers. You will also get the risk of instability. Markets can fluctuate, and when they do, voters and politicians will be tempted to call for a bailout.

• 23:50Tom Bilyeu?

  That is only going to make things worse. The question isn't, are there going to be trade-offs? Of course there are. The question is, which system has the better balance between what you get and what it costs you? In a command economy, you get a lot of promises and not a lot of results. You're promised stability and security, but what you get in reality is more like predictable shortages. You're promised social equality, but what you get in reality is a corrupt group of elites that run the country through force and intimidation, and everyone else who's equalized but at zero. And despite the big promises, the reality of a command economy is simple. Economic inefficiency and waste, corruption and cronyism, innovation stagnation, reduced personal freedom,

• 24:35Tom Bilyeu?

  and economic distortions caused by central planners who inevitably misjudge supply and demand, causing shortages or surpluses, distorted incentives, and ultimately systemic failures. The historical outcomes of command economies are so consistent. Total collapse or severe underperformance over the long run. See the Soviet Union, Cuba's ongoing stagnation, Venezuela's economic collapse, Zimbabwe and/or Argentina for the 100 years leading up to Millais' incredible turnaround. History is absolutely dripping with examples like these. It's actually kind of startling that we have to keep trying these ideas out

• 25:17Tom Bilyeu?

  despite how relentlessly they fail. But that's what happens when populism kicks in. People get economically disenfranchised, inequality grows out of control, resentment takes hold, and people start voting emotionally for whatever politician promises to get them more free stuff. So of course, politicians promise things like free transportation, free daycare, city-run grocery stores, and rent control. But you are going to pay one way or the other. So I hope you're asking yourself, what would the alternative look like? Well, welcome to part three. Why on God's green earth does the government limit the number of homes? In San Francisco, for every eight jobs created in the last decade,

• 25:59Tom Bilyeu?

  only one new home was built, forcing thousands of workers into brutal commutes.

• 26:06Tom Bilyeu?

  Or homelessness, yet local laws still make it illegal to build apartments on over 75% of the city's residential land. From 2010 to 2020, London's population grew by almost 1 million people. But the city only built enough housing for less than half of that number, resulting in skyrocketing rent and prices. When you start looking at the numbers, this stuff is absurd. Due to ridiculous zoning regulations in Toronto, over 70% of the residential land is zoned exclusively for single-family detached homes, severely limiting housing supply. Despite recent population surges, not to be outdone,

• 26:50Tom Bilyeu?

  New York City would have had to build 560,000 new housing units by 2030 just to meet existing demand. There's no signs of them doing anything like that. Zoning restrictions currently make building even modest multi-unit houses illegal in most residential areas. All while people are screaming for rent control. You wouldn't have to control the rent if you would just let the free market do what it does. Find the right price by allowing people to play the game of risk and reward. Let entrepreneurs build to fill demand. It really is that obvious. But if it really is that obvious, why doesn't it happen? The answer's going to surprise you.

• 27:33Tom Bilyeu?

  It's because of the American dream. It might be dead, but it's still fucking people up. Housing is the one asset that people understand intuitively. You can't live inside of a Bitcoin. You can't create memories with your kids inside of a share of Tesla stock. You can't grow old together with your wife in a 401K. But you can do all of that and more in a house. For that reason, most homeowners consider their house to be their biggest asset. And they don't want any of you pleads lowering their property values with your hideous apartments. Now, in fairness, it's that and a lot more. We'll be back in a moment.

• 28:19Tom Bilyeu?

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• 29:02Tom Bilyeu?

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• 29:23Tom Bilyeu?

  All right, let's pick up where we left off.

• 29:27Tom Bilyeu?

  So here are the top six reasons why expanding the housing supply to meet demand is so difficult, even though the outcomes are horrific. Number one, fewer houses means higher property values. Current homeowners want to make sure that their property values go up. Local homeowners will often aggressively lobby local officials to limit development, preventing any decrease in their own property values. This is exactly what's going on in San Francisco, where homeowners have actively opposed new apartment buildings, citing concerns over property value preservation, effectively keeping housing supply restricted. Two, NIMBYism, which stands for not in my backyard. Local residents, especially in affluent neighborhoods,

• 30:12Tom Bilyeu?

  resist new developments, often multifamily housing or affordable housing, because they fear increased congestion, strain on infrastructure, changes to neighborhood character, or socio-economic diversity. Wealthy neighborhoods are often politically influential, allowing residents to successfully block new housing. Housing projects through zoning boards, community boards, and political donations. In Manhattan's Upper West Side, residents repeatedly blocked zoning changes that would have allowed increased density despite the acute housing crisis in New York City. Three, regulatory capture and political influence, favoring established developers. Large real estate developers and property owners can use absurdly difficult zoning regulations strategically to reduce competition.

• 30:56Tom Bilyeu?

  With restrictive zoning, it makes it much harder to build, and so the builders who learn to navigate these difficult regulations can use them as a moat to keep other developers out. This allows them to control the supply and benefit from rising rents and values. Los Angeles has seen major developers consistently lobby against zoning changes that would otherwise create competition, resulting in sustained housing shortages. Four, local governments want high taxes per unit. Local governments are incentivized to get the most tax revenue per unit. This means they want expensive units, luxury and commercial properties, and not lower-income housing, which generates less property tax per unit.

• 31:40Tom Bilyeu?

  Mo people equals mo problems. You see this a lot in places like Silicon Valley. Cities like Palo Alto and Cupertino favor office and commercial development while severely restricting residential housing, intensifying local housing crises. Five, infrastructure and public services concerns. Cities and local governments often cite concerns about strain on infrastructure, schools, roads, public transit, stuff like that, and how more units means increased spending. And if you're going to have increased spending, you need high property values to bring in those delicious tax dollars. If you restrict the supply and keep it to single-family dwellings, you limit the number of people and maximize the tax revenue per unit. Six, environmental concerns, both real and manufactured.

• 32:25Tom Bilyeu?

  Established residents often claim environmental protections as reasons for restrictive zoning. While sometimes legitimate, these arguments are frequently used to mask the fact that fewer houses means higher property values. Property values. You see this in Marin County, California, where they've been using environmental zoning regulations to severely limit development and control population density, creating some of the highest property values in the country. So, everyone's in on it, huh? Everywhere you look, everybody is trying to keep per-unit costs high, supply tight, and the problem pervasive. The government wants a high tax-to-person ratio. No one wants a bunch of poor people in their neighborhood. Homeowners want property values to go up and to the right, and politicians want those lobbying dollars to keep coming in.

• 33:10Tom Bilyeu?

  Well, what is a girl to do? Is there really nowhere that has solved this problem? There is actually. Enter our boys in Texas. Since 2010, Houston has built more new housing units than San Francisco, Los Angeles, Boston, and Washington DC combined. And, as you would expect, that has kept Houston's average house price low, less than half of the other cities. In 2023, the median home price in Houston was approximately $270,000, compared to $1.3 million in San Francisco and $950,000 in Los Angeles. This discrepancy is not an accident. It can be directly attributed to Houston's uniquely minimal zoning

• 33:54Tom Bilyeu?

  and high levels of housing supply. This is great news for people trying to get on the property ladder and terrible news for people who already own homes and want to see their biggest asset skyrocket in value. And that's the conundrum. How do you balance the two? Actually, it's called the free market. Here's how it goes. COVID hit Austin housing prices harder than an obese grandmother. Pre-COVID, the city was already growing fast, but COVID sent prices to the moon. The shift to remote work caused a huge surge of migration, particularly from high-cost areas like California, San Francisco, Los Angeles, Silicon Valley. And as people fled draconian lockdowns and absurd tax rates for a more business-friendly environment, they found one. Overnight, Austin became one of the top relocation cities

• 34:39Tom Bilyeu?

  for remote workers, significantly increasing housing demand. The sudden spike in demand rapidly outpaced available housing inventory. Homes were receiving multiple offers above asking price, often within days of listing. From early 2020 to mid 2022, Austin's median home price surged nearly 50%, peaking at around $670,000 in May of 2022, nearly doubling in just three years. Rents were also off the charts, increasing by over 30% in just two years, driven by increased demand and limited housing stock. But it didn't stay that way, because the free market will do its thing if left alone. The market correction was swift.

• 35:22Tom Bilyeu?

  Builders and developers responded aggressively to the surge in demand by rapidly expanding housing construction. Between 2021 and 2023, Austin ranked as one of the top US metros for issuing residential building permits, dramatically increasing new home construction and normalizing the supply. Didn't need to be controlled from the top down via command economy. Let entrepreneurs do what they do best, risk their own money to compete with each other in the marketplace in an attempt to win your business. As this played out in Austin, the housing market stabilized and corrected down from its peak. Median home prices declined, stabilizing at approximately 550,000 by late 2023. Rents also stabilized, as supply caught up with demand, slowing the dramatic price

• 36:05Tom Bilyeu?

  appreciation and returning to something more sustainable. The temptation to try and control all of this is understandable. Nobody likes these peaks and valleys. But in wildly complex systems, the best answer is almost always to stay out of the way and let the system heal itself. They have corrective mechanisms. Now, humans are incredible, but we are also notorious for doing too much. Case in point, welcome to part four, the disaster of China's command economy housing policies. China built somewhere between 65 and 80 million apartments that now sit completely empty. That is insane. That's enough empty units to comfortably house every single person in the entire country of France.

• 36:49Tom Bilyeu?

  China has had so many wins opening up to the free market forces, but this is an unforced error of biblical proportions, brought on by humans who trust their ability to get things just right way too much. The Chinese Communist Party killed empty millions of people through malevolence and a never-ending cavalcade of stupid top-down policies like forcing farmers across the entire country to plant the same crops regardless of local climate. Insert mass starvation here. The answer? Deng Xiaoping, as mentioned earlier, embraced the free market. The irony that even communist countries can only escape poverty by embracing the free market is not

• 37:30Tom Bilyeu?

  lost on me, but it does seem lost on China because did they look around and say, hey, all of the things that are going well in our country are from the parts we've allowed to run free? No, they did not. They looked around, saw successful entrepreneurs getting up, and kidnapped them. I'm not kidding. Reeducated them and then gave them quotas to hit. That was the housing model. The CCP gave regional governments strict annual targets for GDP growth and urban construction. This created powerful incentives to build even though there was no actual market demand. The National New Type Urbanization Plan from 2014 to 2020 mandated construction of new urban areas, infrastructure, and millions of residential units.

• 38:15Tom Bilyeu?

  And this caused go cities to spring up. Entire cities built complete with apartment buildings, malls, roads, public transport, you name it, despite the fact there was no demand. This is what happens when your foundational belief is that economies can be controlled. Economies can be influenced if you focus on creating the right environment, but the second you try to impose a specific outcome, you create a cascade of horrific problems. Take the city of Ordos in Inner Mongolia. It was built for 1 million residents, but only reached approximately 10% occupancy, leaving huge residential complexes in commercial areas empty.

• 38:56Tom Bilyeu?

  Or Tianjin, the Paris of the East, a literal replica of Paris, built near Hangzhou, intended for tens of thousands of residents. After nearly a decade of sitting almost entirely empty, it's only now beginning to show signs of life. The consequences of this kind of massive overconstruction can't be overstated. Ordinary Chinese citizens invested heavily in real estate as their primary savings vehicle. Everyone believed, largely because the government encouraged them to, that prices would For ever, this created a speculative mania that inflated housing prices. Evergrande, one of China's largest real estate developers, aggressively pursued expansion through the accumulation of massive debt.

• 39:41Tom Bilyeu?

  By 2021, Evergrande held over $300 billion in liabilities, which is more debt by a private company than is held by many nations around the world. Now, as I hope will surprise exactly no one, given the massive debt, combined with the lack of real demand, starting in 2021, Evergrande began defaulting on bond payments, triggering a massive financial panic with cascading defaults across China's entire property sector. The collapse in turn sparked investor panic globally, affecting markets all over the world. And given that property and related sectors now account for approximately 25% to 30% of China's GDP, many believe that we've only just begun to see the real impact

• 40:23Tom Bilyeu?

  of China's housing crisis brought on by a command economy. In the aftermath of Evergrande's default, China's real estate sector saw numerous other developers facing severe financial stress and potential default. The hard truth is that while top-down control makes humans feel good, command economies are bound to fail for several reasons. One, centralized government planning is terrible at judging actual consumer demand, leading to chronic over or undersupply, severe resource misallocation, and catastrophic financial consequences. Two, it creates a lack of accountability and fosters corruption. When governments use taxpayer dollars to paper over bad decision-making, no one is ever held accountable for their poor decision-making. In the free market, people go out of business when they make bad decisions.

• 41:08Tom Bilyeu?

  But when the government is in control, taxpayers are made to foot the bill. Three, there is no incentive for innovation. Whether we like it or not, people are motivated by incentives. When hard work leads to getting ahead, people will work hard and try to out-innovate the competition. And when that happens, we all win. On the other hand, when governments try to control everything from the top down, they inevitably strip the incentives out of the system by making it impossible to respond intelligently and with ingenuity to the signals from the buying public. For poisonous resentment lurks in the desire for control. Many of the policies in a command economy aren't driven by the love of the poor.

• 41:52Tom Bilyeu?

  They're driven by a hatred of the wealthy. Look at the senseless murders of the successful Russian farmers that led to the Ukrainian famine, or the exact same thing in Zimbabwe. Be very, very suspicious of anyone who wants to over-regulate the economy. The odds that they're the bad guy border on 100%. And if they're not evil, they're essentially guaranteeing bad results anyway. Top-down economic control consistently creates inefficiencies, corruption, systemic financial risk, and eventual economic collapse or severe stagnation. Now, returning to China for a second. The IMF and other major global banks like Goldman Sachs and JP Morgan Chase have warned that China's property market instability poses a significant global economic risk, all because

• 42:37Tom Bilyeu?

  people think they know better than the free market, or because they hate the uneven results that the free market delivers. But the reality is that nothing, and I mean nothing, has pulled more people out of poverty than the free market. So, given all of that, what do we do now? In an era where socialists who actually want command economies, again, are gaining traction inside of major political parties the world over. So what's the play? Welcome to Part 5, The Only Real Path Forward. In 2024, Buenos Aires ended rent control, and within a year, available housing tripled. Tripled. Rents plummeted by 50%, and the city experienced its largest construction boom in decades.

• 43:19Tom Bilyeu?

  If we've learned one thing from history, it's that no government can effectively control the complexity of the economy. Even attempts at things as simple as rent control have created shortages, skyrocketing rents, and exacerbated poverty and economic stagnation. We need to stop all of the interventionist policies. Economies have physics. They are complex ecosystems where a change in one variable has knock-on consequences. There's no way to stop the laws that govern economies from playing out, even when we're offended by the results. The only way to equalize everyone is to equalize them at zero. And the only way to do that is to bring the hammer of the state down on them and break their will. If you want to understand the horrors that that approach brings,

• 44:02Tom Bilyeu?

  read Mao the Unknown Story, The Gulag Archipelago, Tombstone, and The Red Famine. All books that catalog the unimaginable cataclysmic S-tier misery that results from handing unchecked control to the state and asking them to make everything fair. It is absolutely soul-wrenching and insane. So instead of going down that well-tread path of suffering, let's turn our sights back to housing and look at the examples that history has to offer of times where the free market was eventually allowed to correct traumas of a command economy. Consider Argentina, which I did a full deep dive on that you can see here. After 100 years of lunacy that saw Argentina go from one of the most prosperous nations on Earth

• 44:46Tom Bilyeu?

  to an economic backwater, Argentina finally removed rent control laws in 2024 under President Javier Malley. The transformation occurred almost immediately. Housing availability exploded by 300%. Rents dropped in half, and new construction soared to historic levels. Or take Japan. They introduced nationwide zoning deregulation. And despite Tokyo's massive population growth and density, housing prices have remained notably stable, making it one of the most affordable major cities in the world. Or how about Auckland, New Zealand? They addressed their severe housing shortage by implementing sweeping zoning reform in 2016, allowing multi-unit dwellings throughout residential areas. The result? New housing supplies skyrocketed,

• 45:29Tom Bilyeu?

  significantly moderating previously out-of-control rent increases, creating genuinely affordable housing options. How about in the US? We've already talked about Houston and Austin, but what about Raleigh, North Carolina? They also implemented major zoning reforms, substantially reducing restrictions on housing density and construction in 2013.

• 45:48Tom Bilyeu?

  The result was increased affordable housing, rapid economic growth, and significant population expansion. Vienna, Austria, they embraced market incentives with robust public-private partnerships rather than rent control, and their reward has been the creation of one of the most stable affordable housing markets in all of Europe. By relying on free-market principles and deregulation, Montreal has bucked the Canadian trend of absurdly high home prices. Their strategy has maintained housing affordability compared to other major Canadian cities like Toronto and Vancouver, which have some of the most out-of-reach housing markets on planet Earth. Since 2018, Seoul, Korea has also significantly relaxed zoning density policies, sparking a rapid surge in new housing construction. The result?

• 46:31Tom Bilyeu?

  It's been a supply finally able to meet demand and the resulting stabilization of housing prices despite strong population and economic growth. Berlin, Germany, they provide a particularly striking example. After strict rent controls were ruled unconstitutional in 2021, Berlin returned to market-driven development. The results were immediate: increased housing availability, stabilized rent, and renewed confidence in the housing market. I could go on and on, but the bottom line is clear: there are proven, verifiable examples around the world of how deregulation and the opening up of housing markets directly leads to increased availability, affordability, and robust economic growth.

• 47:16Tom Bilyeu?

  Don't get me wrong, free markets are not perfect, no system is, but some systems are clearly much better than others when the goal is a robust, middle-class, social mobility, and access to homeownership. The choice we face isn't between a socialist utopia where everything is curated and perfect and the evils of capitalism. It's a choice between a messy system that actually works in reality and a system that sounds good but reliably leads to disaster. The free market is flawed, but effective at pulling people out of poverty and making homeownership Affordable. Rent control and other top-down planning strategies, on the other hand, interrupt the delicate and complex economic ecosystem

• 47:59Tom Bilyeu?

  and replace it with shocking levels of corruption, supply shortages, and economic stagnation. We see it time and again all around the world. Policies like rent control appeal to the deep populist resentments that occur when people are disenfranchised from a positive economic future by debt and a housing market that makes homeownership impossible. Politicians promise a quick fix, but instead destroy communities, shrink the housing supply even further, and turn once-thriving neighborhoods into economic ghost towns. It's very understandable why people are resentful right now, especially young people. But when we're angry, our thinking becomes punitive and short-term. We don't parse the problem effectively,

• 48:42Tom Bilyeu?

  and we vote for things that harm ourselves in the long run. Rent control is a symptom of a deeper problem, namely that as you hollow out the middle class through terrible economic policies, you accelerate populism and usher in authoritarian rule. And over and over again, history proves that this is always going to backfire. No matter how thirsty you are, drinking seawater only accelerates your dehydration. That's exactly what rent control policies are. They sound like they're going to fix the problem, but in reality, they make everything worse. The choice is ultimately ours. Demand a historical, illogical, temporary relief that feels good but accelerates our decline, or address the underlying cause of our problems. I wish there were easier answers,

• 49:27Tom Bilyeu?

  but at least there really is an answer. And it goes like this. Get the country out of debt. Get people out of debt. Stop issuing government-backed debt for college. Let people discharge their student debt in bankruptcy court to force discipline on the industry. Make housing affordable through deregulation, so it's once again subject to market forces and incentives. Focus obsessively on eliminating policies that hollow out the middle class. Increase the housing supply, decrease costs, and never vote for anyone that thinks a command economy will solve our problems. The exact opposite is true. Now, I don't know that we can save everyone, but I know we can save each other. Focus on yourself, your friends, your family. Let change ripple out from there.

• 50:10Tom Bilyeu?

  All right, guys, if you want to see me explore ideas like this live, be sure to join me on my YouTube channel, Wednesdays and Fridays at 6:00 a.m. Pacific time. Till then, my friends, be legendary. Take care. Peace. Let's talk about a pattern that is guaranteed to be killing your progress. You know what you need to do. You need consistent nutrition. We all do. You need vitamins, probiotics, greens. We all know that we should be doing more of it. When your morning gets chaotic, you skip it. When you travel, you skip it. When your routine breaks, everything tends to break, and that inconsistency compounds against you every single day. AG1 is designed to solve the execution problem. One scoop, eight ounces of water, and you're done. You're getting 75-plus ingredients,

• 50:53Tom Bilyeu?

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