Do You Need Rich Parents to Buy a Home? — with Kyla Scanlon and Aziz Sunderji

Kyla Scanlon, economic commentator and author of In This Economy?, and Aziz Sunderji, author of the Home Economics newsletter, join Scott Galloway to discuss why housing has become so expensive and what it would take to make it more affordable. They explore what’s stopping America from building more homes, how housing costs affect relationships and starting a family, and whether the policies meant to help are actually working. Follow Kyla, @kylascan. And check out her new podcast: Best of Luck with Kyla Scanlon. Check our Aziz’s work: https://homeeconomics.substack.com/ Learn more about your ad choices. Visit podcastchoices.com/adchoices Learn more about your ad choices. Visit podcastchoices.com/adchoices

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

• 0:00Speaker 00

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• 0:47Speaker 00

  Welcome to a bonus episode of the Prop G Pod. We're now bringing you an Extra Conversations episode on Tuesdays. More time with the people who help us think differently about work, life, and what matters. Today, we're joined by two guests, Kyla Scanlon, economic commentator and author of In This Economy, and Aziz Sunderji, author of The Home Economic Substack. We discussed with Kyla and Aziz why the US isn't building enough homes, how housing costs shape relationships and family formation, plus which policies would actually help. With that, we hope you enjoy our conversation with Aziz Sunderji and Kyla Scanlon.

• 1:25Speaker 00

  Aziz and Kyla, where does this podcast find you?

• 1:27Kyla Scanlon?

  Oh, I'm in Los Angeles, California, right now.

• 1:30Speaker 00

  Oh, Kyla, you're on the same. I have no right to complain. You're at 6:37 for you as well.

• 1:36Kyla Scanlon?

  Yes, sure is, right in the early.

• 1:38Speaker 00

  Are you a morning person?

• 1:40Kyla Scanlon?

  In theory, yeah. Yeah, but I had a late flight last night, so I'm, you know, a little challenged today with the timing, but that's all good.

• 1:48Speaker 00

  How about you, Aziz? Where are you?

• 1:49Speaker 02

  Yeah, I'm in Midtown Manhattan in my office. I've got nothing to complain about. It's mid-morning here.

• 1:55Speaker 00

  All right, let's bust right into it. Housing prices are at record highs, and that is great news for anyone who already owns a home, and terrible news for anyone trying to buy one. Kyla, you wrote in The Times this summer that owners need prices to rise to fund retirement, while buyers need them to fall. And Aziz, you wrote last month that the real divide on housing runs between owners and renters, more than between Democrats and Republicans. That's interesting. So some data. The median first-time buyer is now 40. That's an all-time high. The share of first-time home buyers dropped to a record low of just 21%, so four in five people buying a home have already owned one. So how would you both assess the current housing market?

• 2:36Speaker 00

  If owners need prices to rise and buyers need them to fall, whose side should policy be on? Kyla, I'll start with you.

• 2:43Kyla Scanlon?

  I mean, I think it's sort of the big question, because forever, home policy has definitely favored, or policy in general, has definitely favored homeowners. And as a renter, it can feel pretty difficult. You know, homeowner is able to write things off on their taxes. And with renting, it feels like you are just throwing money away to a certain extent, because you're not building towards equity, you're not building towards ownership. And so I think it's not necessarily that policy has to favor one over the other. I think just more equal policy would be good, like giving renters a little bit more space for tax breaks, allowing maybe a rent-to-own type model where people can start building equity earlier on would be super helpful. So I don't think it's like favoring one over the other, just making it a bit more equal.

• 3:28Speaker 00

  Aziz?

• 3:29Speaker 02

  Yeah, I think it's a tricky problem to solve for politicians, because there's kind of a symmetry in housing markets. You have, you know, 2/3 of households owning, and they certainly don't want lower prices. Like, Kyla's written about this in The New York Times, for example, that your home is a nest egg for many people, it's their major source of wealth. And it's very tricky. Like, you've heard President Trump say that he doesn't want lower home prices, he wants higher home prices. And this has happened around the world. Politicians, when they're kind of nailed down on this topic, do you want higher or lower home prices? They kind of, they panic, because there's no good answer. And to be honest, I don't think I have a good answer either. My view is that, look, it's going to take time for people to stop using, stop relying on their homes as their main source of wealth.

• 4:14Speaker 02

  We need to put in place policies that allow them to do that. And in the meantime, we can help folks who need help getting on the property ladder, and also the renters. I think renters are really struggling in this country, and we can certainly do a lot more for them, too.

• 4:29Speaker 00

  I'm surprised that the two of you, given your age, are so balanced. I see this as policy that's done nothing but transfer wealth from your generation to my generation. And that one of the, one of the biggest errors we made was taking housing permitting out of the hands of bureaucrats and putting it into homeowners, who obviously have a vested interest in seeing supply remain, quite frankly, undersupplied. Permitting costs have gone up, and the result is, young people can't start, in some ways, this major step to starting their life. They become, they feel bad about America. They start getting angry at everything and everybody. And I think even people who own homes, I would think, see this, and that it's, you

• 5:14Speaker 00

  know, we have built as much housing, or enough housing, for, you know, 2/3 of America to own a home, including the 20 million black Americans that own a home, and then we just stopped doing it for a lot of reasons. But it feels as if this has gotten to a point where it is a real social ill, and that if mom and dad's home goes down by 10%, and also, you know, the homes that would be built would be, you know, kind of on the more modest end. I'm not sure that's going to really have that big an impact on mom and dad's home. And that a lot of this is interest rates, but it's like the perfect storm for young people to not be able to kind of launch, if you will. It, to me, it feels like an enormous failure on the part of our leadership.

• 5:58Speaker 00

  Instead of drill, baby, drill, it should be build, baby, build, you know, 5 to 7 million homes, tax credits, you know, YMB laws. But hasn't my generation, at the end of the day, just sucked your generation dry of all capital and opportunity? I'm not quite as elegant and balanced as the two of you.

• 6:17Kyla Scanlon?

  Aziz, your answer.

• 6:19Speaker 02

  Well, I appreciate being lumped in as a much younger generation. I feel like I might span you guys. I'm born in 1979, so I'm like, technically, I'm late Gen X, but I think, like, psychologically, I'm an old millennial, so maybe I'm kind of between you guys. But yeah, I mean, Scott, I think you're, I think you're right. You know, I come at this partly as like, an economist and data nerd, and so I would note that, like, this is, this is not uncommon, right? Like, it's always been the case that older people have more wealth than younger people. It's not totally surprising that that gap is bigger now than historically, because, you know, the stock market has gone up a ton, and the problem that we're talking about, home prices, home prices are the major asset for a lot of households, that's gone up a

• 7:05Speaker 02

  lot as well. So in a way, it kind of reflects some positive things about the country. If we were like in a huge depression, that wealth gap would be much smaller. So I think it's partly a good thing, but yes, I hear you, and I, you know, as a person spanning both generations, I have owned, I'm renting now, the rent is way too high. And I think young people are rightly very frustrated. I would, I think that, you know, the problem, and hopefully we'll get into this, but there are all kinds of problems for, for young people getting on the property ladder, and it actually starts much earlier. It starts with leaving your parents' home, or getting, you know, moving out of a house that you're renting with friends, you know?

• 7:47Speaker 02

  So it's, it's like a really, it's a deep-seated problem that starts very early in life. It's not even just about ownership, it's about just being able to move into your own household.

• 7:56Speaker 00

  Kyla?

• 7:57Kyla Scanlon?

  Yeah, I mean, I think America does have a really complicated relationship with housing, because, you know, Derek Thompson has talked about this before, housing has to be both a speculative asset and a place to live. And I think for a lot of people, a lot of their wealth is wrapped up in the house, so they're going to push back against anything that they think can threaten that. And increasingly, that's turning towards the stock market. Stock market wealth is becoming more and more of people's total net worth. But I think that for younger folks, like, when they look at the refusal to build, and when they look at older folks, you know, just saying like, no, you can't build near us, like, we don't want this housing near us. I think it can feel like everything is sort of working against you, because what you've

• 8:41Kyla Scanlon?

  been told from, since you were little, is that in order to be a successful person, in order to reach this American dream, you have to buy a house. And, you know, I'm 29, and I don't, I don't know when I'm going to be able to buy a house. And I know a lot of people in the situation, and more and more people are starting to lean on their parents for financing a home, or leaning on some sort of outside help. And I think that's the really hard part, is that housing is the foundation of the economic ladder, and if people feel like they can't climb up of it, they're just going to be like, well, you know, maybe it doesn't make sense for me to work really hard at my job, and it doesn't make sense for me to get married, it doesn't make sense for me to build this economic future, because I don't feel stable.

• 9:22Kyla Scanlon?

  And I think for older folks, they were able to benefit from the post-World War II boom, you know, I feel like there was just so much policy that worked in their favor, and that's why people over the age of 55 have so much wealth in the United States. I think the thing that is going to be challenging, and I'd be curious for Aziz's thoughts on this eventually, too, is that, you know, 1 in 5 Americans are going to be over the age of 65 by 2030. And so we have, in 1920, it was 1 in 20? And so if you think about the demographic profile of the United States, it's an aging population, but eventually, this population is going to have to pass these homes on to somebody, and then we might have a structural oversupply, and then home prices might have to go way down.

• 10:05Kyla Scanlon?

  And then younger folks who did get into the housing market are going to be screwed that way, too. And so it just feels like sort of an impossible push and pull, and policy, I think, could really help with improving zoning regulation, allowing people to build multifamily properties, this missing middle that we often talk about. But yeah, I think that it makes total sense that young people are frustrated, I'm frustrated, and we could do a whole lot more to help people get their foot on this first rung, the ladder, so they feel like they have a place within the economy.

• 10:33Speaker 00

  Yeah, there's a, you know, a lot of times when I speak to a wealthier, older generation about how much wealth they've aggregated relative to young people, and they say, yeah, but the young people are going to get it, you're going to see, I don't know, I've heard everything from $60 to $120 trillion is going to be inherited. I'm convinced these people are never going to die. If you have two people living in a house, the reality is that generational wealth isn't going to pass down to the generation until likely the kids are 60. And then, okay, great. It does feel, I mean, I think it's one of the bigger issues of our time right now.

• 11:17Speaker 00

  And if you look at my generation, three and four of us felt good about America when we were your age, now it's one in four. And let's talk a little bit about, Aziz, you wrote last month that the crisis is most acute in desirable cities that attract highly skilled, high earning people. Your data shows a Detroit household earning $50,000 can keep housing under 30% of income, while in San Francisco it takes more than 100K. Shocked it's that low. How split is the housing market right now? Is this just another example of the K-shaped economy and sort of a bifurcation where there's a small number of super cities that are astronomical? I've always said in New York, we all have that moment, Kyle, I'm sure you have it in LA, where you look around on 11 on a Wednesday and it seems like everyone has enough money

• 12:02Speaker 00

  to buy a $12 latte and the places are packed and you think, what on earth do these people do? That's the app. What does this person do where you can hold up and find out how they're actually affording to live here? Is this the K-shaped economy? Nobody has a birthright to live in LA or New York, but what's going on geographically and regionally here, Aziz?

• 12:22Speaker 02

  A lot of people, when they, when they look at, you know, one way of looking at this, this K-shaped economy is, you know, which homes are selling? Is it more expensive homes? Is it cheaper homes within each market? And it's a little tricky to measure because home prices are going up or even if they're going up very slowly, they have been going up for many years. And so there's a tendency to think that, you know, as homes are shifting into higher-priced buckets, it looks like everything's shifting towards luxury. So I did this analysis a little while back and I looked at, I sort of pegged prices at 2019 and kind of set that threshold there for what constitutes luxury and crept up that threshold in line with local home, home price appreciation. And that gave me, I think, a much cleaner look on which, how markets are shifting, which

• 13:05Speaker 02

  ones are going towards luxury and the opposite. And actually, my findings were like pretty contrary to what has been widely reported in the sense that there's really only a few cities where we see luxury properties taking a larger share of all transactions. So that's Miami. Miami's gotten a ton of wealth recently, partly coming from places like New York City, a lot of finance business moving down to Miami. And, and San Francisco, unsurprisingly, and the AI boom. New York, to some extent, is also shifting towards more higher-priced homes, changing hands. But most cities are pretty stagnant. And then you have a whole bunch of cities where actually you're seeing more sales at the lower end.

• 13:47Speaker 02

  So this is like a Pittsburgh, an Atlanta, Cleveland, these kinds of places. So the majority of cities are actually not shifting in either direction, but you can certainly see the kind of wealth gap, the growing wealth gap in this country when you look at like a San Francisco versus, you know, an Atlanta, for example.

• 14:06Speaker 00

  Kyle, anything to add to that?

• 14:08Kyla Scanlon?

  Yeah, I mean, I think that there was a piece called Negative Yield New York a couple of years ago that talked about, so this is sort of tangential to the question, but it, it talks about how there are these like epicenters where people want to move to because it's where a lot of jobs are, it's where a lot of opportunities are. Like, for example, I left Kentucky to go to LA because that's where the, my finance job was when I graduated school. And so like housing in these cities that people, as Aziz pointed out, wanted to move to are more expensive because there's more demand. Like, everybody kind of wants to be in these big cities, see if it works out, and then maybe they go back home, right? And there's a lot of opportunities in the smaller cities too, but the big cities are

• 14:52Kyla Scanlon?

  where most of the big businesses are. And so this piece in Negative Yield New York was talking about how, because housing has gotten so expensive in these big cities, it's harder and harder for people to move there. It's harder and harder for the culture to be established. And so I think that it is pretty painful in big cities and it sort of creates this reverberation across the economy where people aren't able to take on as much risk, they're not able to take these big swings because the housing is so expensive. And so I think that's definitely one of the complications. Like, I remember when I moved to LA in 2019, on my starter salary, it was very, very, very, very painful. I could barely afford rent and I was paying like $2,000 a month, and this was 2019, for a 300 square foot studio. It was so tiny.

• 15:37Kyla Scanlon?

  And so if we think about that and if we think about the opportunities that people want in these bigger cities, just to like take a big swing, be around these bigger businesses, bigger corporations, you know, I think it creates these downstream effects that we don't totally understand quite yet. So again, a little bit of a tangent, but I think it's important that there is affordable housing in the places where people want to move to take these bigger risks.

• 16:01Speaker 00

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• 16:43Speaker 00

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• 17:28Speaker 00

  There's going to be a couple of points of discovery that will legitimately move into your selection set and you may end up making, quite frankly, just a better decision because you'll have more data points and things you probably wouldn't have included again in your opportunity set. So all this with Yahoo's AI-powered answer engine, Yahoo Scout. You can start exploring at scout.com. I want to try and get to the core of the problem and get your thoughts on where I have it wrong and whatever nuance you want to add, but every market has a demand side and a supply side. Let's talk about the supply side. The US completed about 2.1 million homes, privately owned homes in 73, 1973, when the

• 18:12Speaker 00

  population was roughly 211, so millions, approximately 1% ratio of houses built to population. In 2024, the US completed about 1.6 million with a population of more than 340 million. If I'm doing my math right, that's about 0.5%. So the ratio of new homes being built to population has been cut in half. Duplexes, triplexes and fourplexes accounted for 7% of new homes in 1979 versus 1.1 in 2025. And then to make things worse, it feels like the programs are all on the demand side, low, trying to keep interest rates artificially low or lower than they should be. First-time home buyers tax credit, low-income housing tax credit, which puts more money

• 18:56Speaker 00

  in the home, in the pockets of buyers, but without an increase in supply, all that does is take prices up. It feels as if there's just a basic understanding of the economics and then we cosplay concern with programs that ultimately just take prices up. Your thoughts? I'll start with you, Kyle.

• 19:17Kyla Scanlon?

  Yeah, I mean, I think that's, I interviewed Wally Eddy Emo a few years ago now, who is the deputy secretary of the Treasury in the Biden administration under Janet Yellen. And that was one thing that he really talked about is that it's very hard to do much about supply, so all you really can do is the demand side, so the financing side, that's what a lot of, it's a little simpler to pass policy on mortgage rates and support for first-time home buyers than it is to fix zoning laws, for example. And so I think for a lot of big governments in these cities, you know, they're just looking towards the demand side subsidies, but of course, if there's not enough supply and then everybody has a little bit more money to spend, home prices are going to go up.

• 20:00Speaker 00

  Aziz, any thoughts?

• 20:01Speaker 02

  Yeah, so it's hard to boost supply, as Kyler said. This is not just a US thing. It's hard to boost supply in any big dense city. The conversation, especially for the past maybe five years or so, has really centered on zoning. The sort of conventional story is that NIMBYs took over and they captured local governments and they're standing in the way of more home building because they don't want the value of their homes to fall and they don't want their neighborhoods to change. And there's definitely a ton of truth in that.

• 20:42Speaker 02

  I think that that is true and you're seeing moves to shift governance from the local level up to higher levels of government that oversee the broad population and can make decisions that help everybody, not just those in certain neighborhoods that don't want to change. But what I think is kind of lost in that conversation is that there are all kinds of reasons it's hard to build and it's not just zoning regulation. Like in New York City, this is a very, very dense place. We have a lot of regulation. Some of that is because they don't want places to change. I live on the Upper West Side in a big building. The rent's too high. People don't want that neighborhood to change. A lot of it is landmarked. So that's part of the issue, but the other one is that this is just a very, very dense place.

• 21:27Speaker 02

  And for example, if you look at permitting times, how long does it take to get a permit through to build an apartment building? It correlates very closely with density because it's very tough to build in a dense spot. You have to, you know, here in Manhattan, there's almost no vacant land. If you're building a new building, you're knocking down the existing building, which is very expensive. And then you're going to build high, presumably higher than the building you're knocking down. It's very expensive to build high. Like a 12-story building costs like 40% more on a price per square foot basis than a three-story building. And then there's the thick of regulations, some of which are NIMBYism and some of which are just the regulations that you need in a big dense place. So, yeah, I mean, to your question, Scott, I think supply is where we should be focusing.

• 22:11Speaker 02

  It's a really tough thing to address, but I think we need to take it on, not just through zoning, but also other measures that can help builders build homes more cheaply.

• 22:21Kyla Scanlon?

  So Aziz, I was at a housing conference in New Hampshire and I was talking about housing, right? And somebody came up to me and he was a local builder and he was like, "It's the sewage systems. Like, we just don't, if we build more houses, the sewage is going to explode out of the pipes." And so I'm curious how you think about the underlying infrastructure of the cities too? Like, are we even able to support more build out with the public services?

• 22:46Speaker 02

  Yeah, that's a really good point and I think that's like kind of what I'm getting at here with this. You know, when people say, "Well, like, why is it so hard to build in dense places? Like, you know, you should be able to do it." I think this is part of the reason. There's all this like shared infrastructure and it's very, very complex to build in these places. That builder may be totally correct. Like, maybe where they are trying to add density requires more of a public infrastructure upgrade. So, like, one of the problems is that behind all of these challenges, and like, you know, environmental review is another example of this, there are like real reasons to do these things. There are like real reasons we've put in place regulations. We need regulations. There are real challenges to building. There are like strains on the infrastructure.

• 23:30Speaker 02

  People talk about traffic, for example. The problem is that a lot of people who don't want their neighborhoods to change have weaponized these reasons. They're like, "Oh, we can't possibly change because there'll be too much traffic." Actually, you just don't want your neighborhood to change. That's the real reason. So it's like, that's really muddied the waters where there are real concerns around this, but often it's just weaponized by people who don't want change in their neighborhoods.

• 23:52Speaker 00

  Sewage, that's a new one. Some of the other ones you hear a lot is these unexploded IEDs called low mortgages that have been taken out where it's literally impossible for someone to move. Weirdness like tax policy. I own a home in Florida. I'm really reticent to sell it because if I were to try and buy back in anywhere in Florida, my tax basis for, or my basis for the assessment of taxes would probably double or triple. So there are all these weird, exogenous events keeping people in their home. In the UK, something like 40% of homes have two or more spare bedrooms, but people don't want to leave because they're locked in because of interest rates.

• 24:33Speaker 00

  So let's get to solutions and I'm curious if there are any sort of non-traditional solutions you can think of. A couple I've heard. Manufactured houses, that basically onsite, on-premise building is twice as expensive as homes that are manufactured and then assembled. And they're actually quite nice. You hear that and you think, "Oh, it's going to look like a Lego box or something." It's not. They're actually quite nice. And also, unincorporated areas, where you're just trying to get a mess of young people with, you know, tattoos and skateboards and all of a sudden you have this cool little area. And young people, the density of young people has a tendency to create an interesting area.

• 25:16Speaker 00

  And all of these, you've seen one in Florida, a bunch of VCs are talking about one. I don't know if it's actually happened in the Central Valley, where the reason they create a city is so they don't have to put up with any regulations. They can just build like crazy. Any other non-traditional ideas that you've heard of that you think are interesting we should consider? I'll start with you, Kyler.

• 25:38Kyla Scanlon?

  Yeah, I mean, so to the point about, you know, in the UK that there's two spare bedrooms empty, you know, boomers do own most of the three to four bedroom homes in the US. They own about 30% versus millennials with kids own about 15%. I think that's a stat from Redfin. And I think that there could be policies where we help boomers downsize. Like, you know, I think a lot of people have a big house that they've held on to, their kids are out of the nest and they don't want to move because it's a family house, they can't afford to move because of the high rates. And so I think there's a way where we could help boomers refinance into a smaller house and then help people with children move into, or whoever it may be, into these bigger homes.

• 26:20Kyla Scanlon?

  And that's not necessarily a non-traditional policy, but I think that these people being stuck, these sort of golden handcuffs with housing, is definitely one of the biggest problems. I mean, you talk to a lot of older folks, like, I wrote this New York Times piece and a lot of the comments were like, "I can't afford to move. I'd love to move. I hate my house and I'd love to have a younger person live in it." And so I think policies around that, like, how do we help people get out of the house could be really helpful.

• 26:43Speaker 02

  Yeah, so I think part of the problem that's overlooked is that the people who build, the companies that build housing, need to achieve certain returns. So if you look at Austin, for example, we had like, you know, boom really across the Sun Belt of apartment building. And so why did that happen? Does that kind of lead the way forward? Is that a solution for the country? Well, I think these builders were responding to, one, rock bottom interest rates during the pandemic. And then, two, the fact that these rents across the Sun Belt were soaring. So like, there's a lot of focus on how Sun Belt rents have come down because of all this building and that's true. But that building was unlocked firstly by zoning. You can't build where it's illegal. But secondly, by these conditions where interest were low, but rents were really, really

• 27:27Speaker 02

  high and that sucked in all this development. And that led to today where rents are much lower. So, you know, and again, if you look at what's happening in Austin today, these builders have pulled back now at these lower rents. You know, rents have fallen a ton, like, you know, 20, 21% in real terms in places like Austin. That's great for renters for now, but it also means that builders are pulling back because they're like, "I'm not going to make any money in this market anymore." And what I'm worried about is that it's going to take higher rents again in places like Austin for builders to come back to the market. And so it kind of speaks to the problem that builders need to make a return. And I think that we need to find ways to lower that return that they need. That's a major lever on affordability in a lasting way.

• 28:10Speaker 02

  So for example, Fannie Mae, Freddie Mac, they're huge players in the residential mortgage market. They, you know, they buy up, they securitize residential mortgages. They're not very active in the market for loans for constructing apartment buildings. And they very well could be if they got into that market and provided cheaper financing. The government is able to finance cheaply, much more cheaply than the private sector. You could lower the rates of return that builders need and you could have building at lower rates of rent growth.

• 28:40Speaker 00

  But at the end of the day, that's a subsidy. It might be the most efficient one, but it's a subsidy to encourage building, right?

• 28:45Speaker 02

  It is a subsidy, but it's a relatively good one. You know, a lot of the measures that we talk about are subsidies. They all have leakages. They all, they're all bad. They all have downsides in various ways, but this one is less bad. The incidence of this subsidy falls in a way that it actually gets better results than many other approaches.

• 29:04Speaker 00

  So on the show, we talk a lot about young people and relationships and specifically how hard it's become for them to hit a milestone or the milestones that the parents took for granted, finding a partner, a home, a family. And housing sort of sits at the middle of that. 80% of married adults own a home versus 48% of never married adults in 2021 data. Among first time buyers, 50% are married couples, 25% single women, 11% unmarried couples, 10% single men. There are now more single women who own homes than single men. How does housing? Well, the question I would have, and it's a genuine question, not a comment. What came first? A lack of relationships or formation of relationships?

• 29:48Speaker 00

  Or the fact that people can't buy homes, which creates another barrier to forming a long lasting relationship? Any thoughts on the connection between housing and relationships? Aziz, I'll start with you.

• 30:01Speaker 02

  Yeah, so I think it goes both ways. If you look at people coupling up less than they did historically or doing that at older ages. If you look at the drop in fertility, that's happening all over the world. It's happening in all kinds of places, even those where home prices have not gone up that much. So there's something there that is distinct from housing. But I think in a place like the US, those two issues are really tangled up. As I was saying earlier, I did some work trying to trace, where is it going wrong for young people? Like, if you look at how many young people at the age of 30 own their homes versus baby boomers when they were 30, that's like an 18 percentage point gap between the two.

• 30:46Speaker 02

  And I was trying to trace out, like, where does that go wrong? Is it, if you think about the different steps you have to, the hoops you have to jump through to get to owning your own place, you're living with your mom and dad or with roommates, you gotta move out, get your own place, you might get married along the way, and then you might buy a home. And the big leakages, that 18 percentage point gap between boomers and millennials at age 30 in terms of homeownership, a ton of it is coming just from kids not even moving out of their parents' home. So like, a third of millennials at age 30 live with their parents. The number for boomers was 19%. And then even contingent on moving out, marriage rates are much lower. If you look at the number of millennials who, there's the share who are in their own

• 31:31Speaker 02

  home and married, they actually own homes at a rate that's not that much lower than boomers did. But this leakage is happening much earlier. And I think part of it is cultural. People are doing all this stuff later in life. The good news is that by age 40, that gap shrinks, that 18 percentage point gap drops to eight percentage points. So it does get better over time. And part of this is just delays in life, but also part of it certainly probably is that culture has changed and housing is more expensive. And so even just getting out of your parents' home, getting out of a home you're sharing with roommates and heading your own household, even as a renter, is much tougher than it was historically.

• 32:09Speaker 00

  Kyla?

• 32:10Kyla Scanlon?

  Yeah, I think that people are getting into homes later, like Aziz is saying. And even when you look across generations, so like Gen X and boomers were in homes at the age of 20, a much higher rate than Gen Z is now, right, who are 20 years old. So I think there was a faster track. It almost feels like I've heard before that 25 is the new 18, that everyone is just pushing things off a couple of years. It makes sense with all the longevity technology, people are living a whole lot longer and a whole lot healthier. And so it makes sense that there is this delayed life cycle. But I don't know if the way that we talk about that has quite caught up yet, as people

• 32:52Kyla Scanlon?

  are taking a little longer to age into the economy and to find their stable footing, to find partners. But it does seem, yeah, like Aziz said, that they eventually find their path. But it definitely is taking a whole lot longer than it used to.

• 33:06Speaker 00

  So recently, Zeran Mamdani, the mayor of New York, ran on freezing the rent. Last Thursday, that freeze went into effect on roughly 1 million rent stabilized apartments in New York City and made an ongoing lawsuit made by a group of landlords. Curious to get your thoughts, and I'll start with you, Kyla, on the thoughts of a rent freeze as a solution.

• 33:27Kyla Scanlon?

  Rent control definitely tends to complicate the supply and demand mechanics, to Aziz's point about people wanting some sort of return. Landlords want a return too. They want to match the market forces that are happening in a city. So I think that the rent freeze is an attempt to address how painful housing is, especially in a place like New York. But the economics of it are quite complicated and it can end up exacerbating existing problems.

• 33:59Speaker 00

  Aziz?

• 34:01Speaker 02

  If you look at the policies to help renters, there are two big policies that most economists feel very differently about. There's rent control or rent freezes. And I think there's a very strong consensus among economists that that's not a great approach for the reasons that exactly that Kyla mentioned. I would add also that it's a little bit unfair, like, the distribution of rent controlled apartments, it's kind of arbitrary and it's kind of unfair. And also disincentivizes supply. So you have all these problems with it that leads to that policy really being viewed pretty negatively by most economists.

• 34:44Speaker 02

  On the other hand, you have Section 8, which I think we just don't talk about enough. Section 8 vouchers, which are not arbitrary, they're given out according to need. The problem with Section 8, and just to be clear about what Section 8 is, it says that if your income is too low, if you're struggling with housing, the federal government will give you a voucher that pays such that you pay 30% of your income towards housing and the government picks up the rest of it. That is a policy that I think is widely, and people who certainly disagree with it, but it is, compared to other policies, much more highly regarded than rent control. The problem with Section 8 is that it's just underfunded.

• 35:25Speaker 02

  Like, we have this program here, it could be very helpful for all kinds of people, but only one out of four, roughly one of four, one out of five people who qualify for it get these vouchers because it's simply underfunded.

• 35:36Speaker 00

  I appreciate how measured you are. My sense of rent control makes absolutely no fucking sense and does the exact opposite of its intended outcome. My rent control story is when I was your age or Kyla's age, even younger, my friend said, there's a place, a rent control place, I was living in LA, that's just come up for rent in Santa Monica, let's go fill out an application. We went down and there was a line of about 25 people outside waiting to fill out applications for this rent control house. The person had died. The same people had been in there for like 30 years, you know, they weren't going to leave.

• 36:18Speaker 00

  And the broker, whoever was taking the applications, were like, this is ridiculous, and said, well, you have a good shot, the two of us are going to move in together, me and my friend Leos, because you're an investment banker and you work in finance. And, okay, rent control is meant to help anyone but us. Yeah, right? We were making, I was working at Morgan Stanley, he was working at Great Western, we were there just to arbitrage this weirdness called rent control. And the reason why we might have gotten, we didn't, but the reason why we might have, we had a shot at getting it, was because we were, quite frankly, these white yuppies that didn't need rent control. It was exactly, it was doing exactly what it was not supposed to be doing.

• 37:03Speaker 00

  And the Section 8 thing, I hadn't heard that. I think that is actually really interesting. And I'm trying to think, nothing's perfect, right? I immediately started thinking that, discourage people to not report their full income, or are they not as ambitious? But you're right, anything is going to have a certain, you know, a certain externality. If there was one program, each of you had a magic wand around, that you think could help young people or accelerate the launch, if you will, as it relates to housing, what would that one program be? Kyla, I'll begin with you.

• 37:38Kyla Scanlon?

  So I think that if there was one policy, and I'm sort of curious for Aziz's thoughts on this, because I think you might disagree, zoning, I think, is a really big issue. Like, there's all sorts of headaches with like sidewalk and just how, where the house can be, yard size. So I think that really complicates the housing picture, just like where you can build, what you can build. And I just, whenever I talk to housing experts, like, that's one thing that they always advocate for, is we just have to change some zoning laws, we have to change the regulations, and that'll free up a lot of space for builders to build. But Aziz, do you disagree with that?

• 38:15Speaker 02

  No, no, no, not at all. I don't know why you'd think I disagree.

• 38:18Kyla Scanlon?

  Oh, sorry, okay.

• 38:19Speaker 02

  Yeah. No, I am like all for changing zoning regulation. I just don't, I just don't think it's the only thing. It's the very start of the process, right? Like, we have to make building legal, otherwise you can't build, right? Like, it seems fairly straightforward, but I just don't think it's enough. It's just not nearly enough. One thing I would point out, can I read you guys something from the New York Times?

• 38:45Speaker 00

  Of course.

• 38:46Speaker 02

  Okay.

• 38:48Speaker 02

  Here we go. This is the season. Okay, the article is called High Rents. This is the season of the year when the people of New York break out in loud complaints about the rise of rents, the scarcity of houses, and the impossibility of making both ends meet while landlords demand such exorbitant rates for their tenements. So that last word might give you a clue about when this is from. This is from 1856. So aside from the word tenements, you could kind of just copy and paste that onto New York Times today and it would read pretty accurately. So my point is that this is like, this is a big, this is a big crisis. It's happening around the world, especially in these big productive cities where the economic opportunities

• 39:32Speaker 02

  are, and it's been happening for a long time. So I think we should stay very humble about our ability to influence this. I think if I could choose one thing that is driving it that we don't talk about enough, it's income inequality. You know, the fact is that you have some people, like Scott, as you were, working at a bank. And when I moved to New York, I was also working at an investment bank. They come to the city and they earn these high salaries and they're competing with everybody else, teachers and, you know, all kinds of people who don't earn high incomes for the same parcels of land. Housing is a positional good. We're all competing for it. And I think inequality is a huge engine explaining the fact that we've been in a housing crisis around the world and clearly

• 40:14Speaker 02

  for like hundreds of years. So I, you know, I don't know if there's any like silver bullet for it. I honestly don't have a good answer to your question, Scott. I think it's, it's a whole bunch of different things in tandem. It's zoning reform. We have to build out infrastructures so that, so that, you know, people can commute from further out in reasonable times. Kids are coming out of school with more debt. A lot of people are like completely debt laden. And I, my worry is that this is all going to get worse because Scott, you were talking about how, you know, eventually the people who own these homes will die and pass them on. And maybe it'll be late. Maybe it's when we're all like 60, or when I'm 80 and Kyla 60. But, you know, when that happens, it's not going to be an even distribution.

• 40:59Speaker 02

  It's not going to be like sprinkled across the population according to need. It's gonna, it's gonna engender exactly-

• 41:03Speaker 00

  Dynastic wealth. It's gonna make things worse.

• 41:06Speaker 02

  It's gonna just reinforce the inequality lines that we have already in society. So I, to be honest, I don't have a good solution, but I think it's going to require a whole bunch of different approaches.

• 41:17Speaker 00

  We'll be right back.

• 41:21Speaker 03

  Support for the show comes from Yahoo Scout. All day, every day, we're making decisions from the big ones like should I move cities to the smaller ones like where do I get lunch? Sometimes we need a little help. That's where Yahoo Scout comes in. It's the new AI-powered answer engine that you can confidently turn to for life's questions, both big and small. Yahoo Scout doesn't simply tell you what to do. It gives you reliable information with context and sources so you can make the most informed decisions tailored to your life. So if you're just starting your career, Yahoo Scout can help you research your industry, prepare for interviews, learn how to manage your finances, and more. I've been using Yahoo's personal finance page as my starting page on the internet. I've started using Yahoo Scout. I find the interface very user-friendly and approachable, and I think the answers,

• 42:04Speaker 03

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• 42:19Speaker 00

  We're back with more from Aziz and Kyla.

• 42:23Speaker 00

  Let's move on to listener Q and A. We asked our audience to submit their questions ahead of time on housing. First question, what about home sizes? Wouldn't it be easier just to build more if we built smaller? Kyla, I'll start with you.

• 42:35Kyla Scanlon?

  I mean, we have a lot of issues building starter homes. I think, you know, there's a lot of demand in the market, says Aziz's point about wealth inequality for these gigantic homes. And so you see like a lot of big old homes being built, whereas the starter home is having a little bit of a struggle in terms of being built because, as Aziz's point also about a builder's rate of return, they make a little bit more money when they build bigger. And so we could certainly build more starter homes. And that's definitely, I think, what the market needs is cheap places for people to start building equity. But the builder's incentives are a bit misaligned to that.

• 43:12Speaker 02

  Yeah. So we, we actually are, over the past decade, so for decades and decades, builders were building bigger and bigger homes. And then about 10 years ago, it shifted, we hit an inflection point, and, and home sizes started to come down. To me, that's a sign of, of a market in crisis. I think that part of the problem is that minimum lot sizes have been put in place about 75 years ago. And so that's prevented how small homes can get. As home prices go up, as land prices go up, you're incentivized to build a bigger home on the existing lot of land. That's changing though. So, so now, hopefully we'll have more reversals of these minimum lot sizes and we'll be able to subdivide.

• 43:55Speaker 02

  You're seeing a lot of legislation in places like New York and California to allow people to subdivide their lots. And I think that's a good thing. And you are seeing builders respond to, to that, to the housing crisis by building smaller. So my hope is that this continues. We're actually seeing a reversal, surprisingly, in that trend that's lasted for a long time. We may see even smaller homes like, you know, 10 years from now.

• 44:16Speaker 00

  On to our next question. The question was how much are Wall Street landlords really to blame? What do you think of this law that's been, I think it's been passed actually, that private companies can't own more than, I think it's 25 or 30, single-family homes? Kyla, any thoughts?

• 44:34Kyla Scanlon?

  I mean, in terms of the Wall Street landlords, they're not that big of a part of single-family rentals. This is something that I get a lot of comments about whenever I talk about housing, that it's really the Wall Street landlords. But they don't own that many at the national level. But they do own quite a bit in some cities, like I think it's quite high in cities like Atlanta and Jacksonville. So I think that it, it tends to be a scapegoat for this much broader problem. And I also think they're trying to buy up more and more properties. So like the rate rather than the level might be the issue here. But yeah, the Wall Street landlords, they're not as big of an issue at the moment.

• 45:18Kyla Scanlon?

  That could change as people make it out to be.

• 45:21Speaker 02

  Yeah, I would, I would agree with that. There, I don't think they're, they're a huge chunk of the market. They're, they're very like visible and very easily vilified group, you know, like who, who likes, who likes Wall Street investors? Like, it's a pretty, dunking on them is pretty safe politically. But like, I just don't think it's, I think it's a huge factor in the market.

• 45:42Speaker 00

  There seems to be a general, I mean, people want to simplify the thought process. I mean, you just, you just gave an example, you know, Wall Street bad. I think I bought an apartment from Colony Capital. A big hedge fund came in and bought a ton of real estate in Florida in the odds, and it ended up being a very bad idea. And I remember the broker telling me that the best sellers are these big hedge funds because they just want to get rid of the places. So, you know, it's, they're a different type of owner. But, you know, anytime you have ownership in renters, you're going to have a similar dynamic. How should we, one of, one of the other ways that I think people try to simplify the market is they say, oh, blue state versus red state. Red state, it's build, baby, build,

• 46:25Speaker 00

  you know, a lack of regulation. And a blue state, it's, everything's a historic district. And if there's some muskrat that was seen here, we need to do a study on it. Is it really that simple? Are we really seeing that kind of bifurcation in the ability to build between traditionally blue and traditionally red states?

• 46:46Speaker 02

  So you guys know the book Abundance, right? By Ezra Klein and Derek Thompson came out a few years ago, right? And one of the arguments, or maybe the central argument they made was that our failure to build is a function of regulation, which itself is downstream of politics. And in particular, that blue states put in place all this regulation that makes building slow and leads to higher home prices. And I think that argument is, is not, it doesn't survive the data. It's just not right. Okay. So if you look at a place like New York, there's a whole constellation of, you know, characteristics about a place like New York. It is, it is, the people who live here are quite highly skilled, highly

• 47:29Speaker 02

  educated, high earning. It's very productive. GDP per capita is really high. It's very, very dense. These are some of the most like dense, even San Francisco, which people accuse of not being that dense, it's still pretty dense in a global perspective. They're also, you know, New York is hemmed in by water. So it can't really expand outwards. These characteristics, it's like this whole constellation of characteristics that you could say that about almost every big city in the world that has become really expensive. It's true about San Fran. It's true about Seattle, Miami. It's true about, you know, Paris and London and Copenhagen and Sydney. These are, these are characteristics you see around the world. And actually, in all these places, they may not be democratic voters, but they're,

• 48:13Speaker 02

  they're lefty. And so, you know, what, what Ezra Klein and Derek Thompson did was they, they like, they wove a very compelling narrative out of this. They, they picked out a few variables and they said, blue equals regulation equals slow building equals expensive housing. And I don't think that's correct. I think it's density. It's really hard to build in dense places. And dense places happen to be the ones that attract highly skilled people who tend to be lefty. So, you know, I'm Canadian. I can't vote in this country, but I, if I could, I'd be a Democrat. And my worry is that the kind of vilification on like, you know, weak empirical grounds is turning a bunch of people away from Democrats when

• 48:55Speaker 02

  it's partly their fault. Maybe Democrats do regulate a little bit more, but a lot of it is just the fabric of these big, dense cities full of people who earn very high incomes.

• 49:05Speaker 00

  And Kyla, before you weigh in here, isn't some of it also that-

• 49:11Speaker 00

  Young people, I don't think we can really ever appreciate the impact that Instagram is having on the world. And that is, people see a life and think, that's not a 0.01% life, it's aspirational. That is a normalized life that I should have access to. And everyone aspirational I know is either living in LA and going hiking in Runyon Canyon and going to Nobu Zuma, or they're in New York, living in the West Village. And I should and deserve to have access to that. And young people flood into these cities and the prices go

• 49:52Speaker 00

  up. I couldn't, you know, when I was your age, I remember thinking, I can't, you know, I left New York because I just couldn't afford it. And that was sort of a natural part. And now I hear just young people say, you know, New York or die. It's isn't, is we're a memetic species. Isn't some of this just a general expectation amongst young people that they failed if they aren't living, if they aren't living in Beverly Hills or Soho? Or am I, I say this stuff and I realize how boomer I sound. I want to acknowledge that I think housing is a huge issue and we have an obligation to shove more capital into the hands of younger people. But I get the sense that I wonder what percentage

• 50:35Speaker 00

  of people, young people now feel that a normal life is to live in the West Village or to live in Beverly Hills versus my generation?

• 50:44Kyla Scanlon?

  I mean, you see the stats on how much money younger folks feel like they need to be successful. It's like double, I think, even millennials need. I think part of that is inflation. I think part of that is inflated expectations. We have two types of inflation there. But I don't know if all of what's going on in the housing market is, you know, people going on Instagram and seeing influencers, you know, rent out homes and rent cars and pretending that they own them. I mean, I think that definitely complicates the picture. And there is this sense that you should be able to move to a city and it should be cheap and it should be accessible. I think it could be cheaper and more accessible. Like

• 51:27Kyla Scanlon?

  my rent's extremely high in LA and sometimes I'm like, why is this so high? Like, what is, you know, the power goes out all the time. Like, what am I paying for? And so I think that's also part of it, is that it's almost like so high to the point that it doesn't even make sense. But I don't know if aspiration is like the core driving force behind some of the dynamics. I think it complicates the picture in terms of financial knowledge and people believing in their economic future. But yeah, Aziz, what do you think?

• 51:58Speaker 02

  Yeah, I think, I think part of it, like, to be fair, to the folks who do want to live in the West Village or New York City or San Francisco or wherever, is that there's been a concentration of economic activity in cities. And so, you know, if you want to, yeah, if you want to have a seat at the table, like, one of the things I love about New York and the reason I pay like an exorbitant amount of my income in rent is that it's a place stuff is happening. Like, it's a great place to meet people, to build a business. But I'm like, I'm paying through the nose for it. So I think that they're like, people want to be in cities partly for good reasons. It's just, it's not just memeticism, but that's really part of it. I fully agree that walking around

• 52:41Speaker 02

  with phones in our pockets that are like wormholes to other realities where people are like, living much more lavish lifestyles than our own is very, very bad. I've done some work on looking at happiness across countries. And you see this with, I mean, I'm not the only one who's looked at this, but if you look at the correlation between smartphones and happiness, it's a very strong correlation. It's very hard to deny. I think it's very bad for our mental health and we should all spend less time on our phones. I will, let me ask, let me add like one quick thing to that, which is that this is part of the problem, right? Like, if you look, you know, economists talk about the demand curves and the elasticity of demand. And part of the problem with a place like New York or other big cities is that there's so much demand to live here. And so, the

• 53:25Speaker 02

  amount of housing we would have to build to meaningfully move the needle on rents or home prices is really, really high. There's a study that argued that even if every single building in Manhattan was a skyscraper, it would only drop rents by 15%. There's just so much demand to be here.

• 53:41Speaker 00

  So just as a means of walking down memory lane, and you know, when I was a kid, right out of college, I went to Morgan Stanley, I made $35,000. And I got a bonus, I think of 15, so call it 50. And we all put that 15 on our credit cards and paid it off with our bonus. Moved to New York. I had a one bedroom on 73rd. It was $1,900. There were three of us in there. I slept in the entryway. There was a difference, though. A lot of my friends were in different industries, the arts. I had friends who were in Broadway, musicians. And the disparity between my pay as an investment banker and their pay was

• 54:21Speaker 00

  much narrower. I made more money, but not a lot more. It was like, we all kind of were in a certain band. And I feel like those bands, to your earlier point, Aziz, have dramatically changed. The really scary one is after graduate school, I graduated from the Hot School of Business at the age of 27. And I got several offers in consulting that I turned down to start my own business, that compensation was around $100,000. And I bought a house, borrowing money from my girlfriend's parents, for $285,000. So approximately three times my salary. And now, the Hot School of Business, the average salary is $200,000 compensation, which is exceptional compensation. These kids are, you know, going into, you

• 55:06Speaker 00

  know, they're considered elite young human capital. But the average housing price is 2.1 million. And that's as of last year. I wouldn't be surprised if it rockets to 3 million, given all the AI movement that's about taking place. So it's going to be somewhere between 10 and 15 times. There's just no getting around it. This is, this really is, and the word is overused, it's a crisis. And my sense is, all of the things that are many of the solutions that Aziz and Kyla recommended, it feels like we need to do all of them, all at once in different areas, and have just a series of pilot programs to see what works and see what really moves the needle. But I don't think, you know, everybody talks about how great it is to rent, and it's not as good an investment.

• 55:51Speaker 00

  I just think it's an, it's another emotional hit on the psyche of young people, that they're not able to do what their parents did. They're not able to invest in their home and make it wonderful because they don't own it. They're less likely to start thinking about procreating. They're less likely to feel they've engaged in the American dream. And yet again, it's another transfer of not only wealth, but psychological well-being from young to old. All right, that's my TED Talk. Aziz Sunderji is the author of The Home Economics Substack. He previously spent 15 years in research at Barclays Investment Bank and later worked as a data journalist for The Wall Street Journal. Kyla Scanlon is an economic commentator

• 56:35Speaker 00

  and also haunts my Instagram feed. You are everywhere, Kyla.

• 56:40Kyla Scanlon?

  Yeah, it goes to me.

• 56:41Speaker 00

  You are everywhere. The algorithms have determined that I absolutely love your stuff, which is true. And she's a creator of Kyla, or the creator of Kyla's newsletter on Substack. Her debut book, In This Economy?, How Money and Markets Really Work, was a New York Times bestseller. Her new podcast, Best of Luck with Kyla Scanlon, is out now. Aziz and Kyla, thanks so much for joining us on this important topic.

• 57:09Speaker 02

  Thanks, Kyla.

• 57:14Speaker 00

  This episode was produced by Jennifer Sanchez, Laura Janera, and Asher Schwartz. Our video editor is Bianca Rosario Ramirez. Kami Reek is our social producer. Drew Burrows is our technical director and Catherine Dillon is our executive producer. Thanks for listening to the Prof G Pod from Prof G Media.

• 57:38Speaker 00

  Support for the show comes from Yahoo Scout. Whether you're finding your first apartment, preparing for a job interview, or keeping track of the stock market, there's a lot of information on the internet that's harder to parse through than ever. Yahoo Scout is a new answer engine designed to help make the internet an easier, more transparent place by giving you helpful results backed by trusted sources. I've been using Yahoo's personal finance page as my starting or my homepage for the internet for 30 years. I've been using Yahoo Scout. I find the interface really elegant, really easy, and I find the returns of the answers, quite frankly, just a little bit more organized, a little less chaotic and easier to sort through. Turn hours of digging into seconds of informed decision-making with help from Yahoo Scout. Start exploring with Yahoo Scout today at scout.com.