Home is where the debt is

Summary

Business Daily – "Home is Where the Debt Is" (BBC World Service, Sep 24, 2025)

Overview of Episode

In this episode of Business Daily, host Monica Miller dives deep into the challenges facing homebuyers and the housing market in the United States. The episode unpacks why the American dream of homeownership is growing increasingly elusive due to skyrocketing prices, limited housing supply, burdensome regulations, and the ongoing fallout from both the 2008 recession and the COVID-19 pandemic. Through the stories of first-time homebuyers, real estate agents, developers, and policy experts, the episode examines the impact of high interest rates, shifting demographics, and legislative efforts to tackle affordability.

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Key Discussion Points & Insights

1. The American Dream: Still Alive but Exhausting

• Changing Landscape: Homeownership has long symbolized stability and wealth-building, yet many Americans now struggle to buy a home. Even those with decent incomes face an arduous process.
• Firsthand Experience: Robert and Megan McKenna, a newly settled couple in Pennsylvania, recount the draining experience of house hunting—spending weekends touring up to 15 homes, making eight unsuccessful bids, and facing emotional highs and lows.
  • Quote: "It's an exhausting dream. It's a hard dream to obtain." – Megan McKenna [01:24]

2. The Homebuying Rollercoaster

• A Numbers Game and Emotional Attachment: Even buyers with financial literacy, like Robert (in finance) and Megan (in healthcare), struggle with emotional aspects and the mathematics of bids versus personal preferences.
  • Quote: "All of a sudden I get attached to the house...then you get the news, hey, guess what? You didn’t get this one." – Robert McKenna [03:47]
• Compromise Becomes Essential: Over time, “wants” become negotiable as buyers are forced to settle.
  • Quote: "Are we moving these things from the want to the not want because we just want a house? Or are these really things that like...the two car garage would have been nice but...we haven't, we've never had a garage." – Megan McKenna [04:22]

3. Market Constraints: Interest Rates, Inventory, Owners Staying Put

• Historic Rate Shifts: Homeowners who locked in 2% mortgages during the pandemic are now reluctant to sell when new mortgages are at 7%.
• Reluctant Sellers: Record numbers of Americans have paid off mortgages and are hesitant to take on new debt.
  • Quote: "When that person says, but where will I go? My response is, you will know when you're ready...you can't force motivation." – Diane Loomis (realtor, paraphrased by Andrew Kay) [05:28]

4. Volatile Market in Metro Areas

• Case Study - Hoboken, NJ: Dean Clark, a local real estate agent, describes wild swings in market affordability due to rapid interest rate changes and inflation.
  • Quote: "In one month you can afford a million dollar house, the next month you can't afford 500,000 because...how expensive the cost of capital has become." – Dean Clark [06:39]

5. Lending Standards and Mortgage Accessibility

• Easier Access, More Products: Despite high rates and prices, lending standards are currently loose, with many programs offering credits and rolling fees into mortgages.
  • Quote: "There are so many banks that are wanting to give that money away to the right borrowers." – Dean Clark [07:26]
• Psychological vs. Real Impact: Even a minor Fed rate change can lift buyer confidence more than it helps financially.
  • Quote: "Even a small little 25 basis points down...it’s the confidence it will give them to enter the market." – Dean Clark [08:06]

6. Developer Challenges: Costs, Tariffs & Bureaucracy

• Tariffs and Supply Chain Disruption: Andrew Kay, a veteran developer, breaks down how fluctuating tariffs, high material costs (up 45% since COVID), and volatile land prices make it almost impossible for builders to price new homes or offer firm contracts.
  • Quote: "We're lucky if we're in the 90s [dollars per square foot] and sometimes higher than that..." – Andrew Kay [08:59]
• Regulation Overload: Local zoning, permitting, and environmental rules delay projects and hinder the construction of more affordable, higher-density housing.
  • Quote: "When we are mandated, the term affordable housing is gone...especially in the northeast where affordable housing exists." – Andrew Kay [11:56]
• Emotional Reward amidst the Turbulence: Despite obstacles, helping families realize the dream of ownership keeps developers motivated.
  • Quote: "There is nothing like seeing a family walking into for the first time something that they have dreamt their whole life about." – Andrew Kay [12:39]

7. The Lasting Legacy of the 2008 Recession

• Subprime Disaster: Matthew Murphy, NYU Furman Center, explains how risky loans led to the crisis, shattered lives, and prompted new regulations that still shape the market today.
  • Quote: "Some people forget that the recession was the housing market…it was the prevalence of subprime mortgages and the overextension of credit." – Matthew Murphy [15:26]
• Lingering Supply Deficit: New home construction lagged for years after 2008, contributing to today's inventory crunch.
  • Quote: "What we've seen since then is that the supply of new housing has really lagged where demand has been." – Matthew Murphy [16:33]

8. The COVID Catalyst

• Remote Work & Exodus: The pandemic fueled a migration from cities to suburbs and rural areas, sending prices soaring everywhere.
  • Quote: "We saw this kind of shift from urban areas to more suburban rural areas. And in a lot of ways that's sustained." – Matthew Murphy [17:40]
• Record Prices: Both rents and home prices hit all-time highs post-pandemic due to depleted supply and demographic shifts.

9. Policy Response: A New Hope?

• Bipartisan Effort: A bill called the Renewing Opportunity in the American Dream to Housing Act has rare universal support and aims to expand affordable housing, reduce regulations, and oversee federal housing programs.
  • Quote: "Someone should say, praise the Lord. That's a miracle, like Peter walking on the water." – Matthew Murphy [19:18]
  • Quote (paraphrased): "Solving this problem has got to be paramount...for decision makers...and frankly, in the private sector as well." – Matthew Murphy [19:37]

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Notable Quotes & Memorable Moments

• “It’s an exhausting dream. It’s a hard dream to obtain.” – Megan McKenna [01:24]
• “You start going through the process and all of a sudden things that are on this side trickle to the middle.... I can compromise, right?” – Robert McKenna [04:11]
• “In one month you can afford a million dollar house, the next month you can’t afford 500,000...” – Dean Clark [06:39]
• “We can build a phenomenally well insulated, well built house and we can charge the buyer significantly less...and when we are mandated, the term affordable housing is gone.” – Andrew Kay [11:56]
• “Some people forget that the recession was the housing market…it was the prevalence of subprime mortgages and the overextension of credit.” – Matthew Murphy [15:26]
• “Someone should say, praise the Lord. That's a miracle, like Peter walking on the water.” – Matthew Murphy, on rare bipartisan housing legislation [19:18]

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Timestamps for Key Segments

• Opening & Episode Theme – [00:54]
• Robert & Megan’s Home Buying Journey – [02:32]-[04:38]
• Challenges for Buyers & Sellers (Interest Rates, Inventory) – [04:45]-[05:55]
• Hoboken Market Volatility – [06:05]-[07:56]
• Developer Perspective: Costs, Tariffs, Regulation – [08:32]-[12:33]
• Legacy of the 2008 Recession – [15:26]-[16:52]
• COVID’s Impact on Housing – [16:57]-[17:40]
• Policy Discussion – Renewing Opportunity Act – [19:05]-[19:56]

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Conclusion

The episode paints a sobering yet insightful picture of the American housing market. The dream of homeownership persists but has become more challenging, expensive, and emotionally taxing. While the housing deficit has roots in historical crises and was recently exacerbated by the pandemic, hope lies in bipartisan efforts to address affordability and supply. For now, the “exhausting dream” endures, shaped by markets, policies, and the resilience of home seekers and builders alike.

Transcript

[Megan McKenna]

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[Margaret]

Hey, Ryan, that was a fast trip. It was like you teleported.

[Monica Miller]

Yeah, just got in.

[Andrew Kay]

I'll get all my expenses logged, I promise.

[Margaret]

Oh, no, you're okay. SAP Concur uses advanced AI, so your expense report will practically write itself. Quite the breakthrough. It's like we've been teleported into the future. All right, so just curious, would you give us written permission to convert your matter into energy patterns and reassemble you at, say, random travel destinations?

[Andrew Kay]

Margaret, are you building a teleporter?

[Margaret]

No. Yes.

[Andrew Kay]

SAP Concur helps your business move forward faster.

[Monica Miller]

Learn [e-mail] We've had seismic changes in the last decade and we've adapted to them.

[Narrator/Announcer]

But what comes next?

[Monica Miller]

We really talk about autonomous business processes.

[Andrew Kay]

Rather than just automating business processes.

[Monica Miller]

I'm Chip Clinicsel, host of Resilient Edge, a business vitality podcast, paid and presented by Deloitte.

[Dean Clark]

Our latest episode explores how to build.

[Monica Miller]

A digital brain and future proof your business vision to value on Resilient Edge is available now wherever you listen to podcasts. Hello and welcome to Business Daily on the BBC World Service with me, Monica Miller. For generations in the U.S. homeownership has been a symbol of stability and a path to wealth. But now many homeowners are struggling to live the American dream.

[Megan McKenna]

It's an exhausting dream. It's a hard dream to obtain.

[Monica Miller]

Home developers say that they can't build quickly or cheaply enough to make.

[Andrew Kay]

With material shortages that came out of COVID and now tariffs being in place, it's an extremely uncertain industry experts say.

[Monica Miller]

Stiff competition and high interest rates are making it hard for buyers to find the perfect home.

[Matthew Murphy]

The modern American is kind of inheriting a very complex housing market that is in a lot of ways very different than it was even 20 or 30 years ago.

[Monica Miller]

Why home ownership in the US is so out of reach for many and what does it mean for the American dream? That's all coming up on Today's program. Robert McKenna is settling into his new home in Pennsylvania. The hard work of unpacking is almost done. Neatly piled cardboard boxes are ready for trash pickup on the porch of his two story single family home. He now has time to enjoy his new backyard and play fetch with Kia, a five year old goldendoodle.

[Robert McKenna]

This was important when we were getting the house to have a backyard so she could do this. So she's great at the fetch part but not the bring back part.

[Monica Miller]

So you look so happy there on.

[Robert McKenna]

The Grass me like trying to convince her to give me the ball and then she never does.

[Monica Miller]

Hey. Robert and his wife Megan say that they are happy the house hunting process is finally over. They look forward to having their weekends and nights free. After months of going to open houses.

[Megan McKenna]

It has been a process. So we, yeah, we looked at homes. I mean sometimes you look and they're not a fit. So I mean we would look at maybe 15 homes sometimes on a Saturday or Sunday, like just back to back to back. Like literally we'd leave our house at like 9am, get home by like 6pm, eat and want to just sleep. And of those ones we saw there might be like one or two you wanted to put an offer in on. And sometimes even of those one or two you wanted to put an offer in on, you knew it was going for 100,000 over asking.

[Monica Miller]

Megan works in healthcare and Robertson Finance, which are fields where workers can make decent salaries in America. They saved to put a 15% down payment on their home. Despite the hard work, they put in eight bids that were rejected. It became an emotional rollercoaster.

[Robert McKenna]

I was more of like walk through the house, can I see myself living here? All of a sudden I get attached to the house, right? If I'm going to put that much money in as a money guy, I'm playing with all the numbers. I finally get to a number that I'm happy with, I can see myself living in it. And then you get the news, hey, guess what? You didn't get this one.

[Monica Miller]

Megan and Robert made a wish list, but they had to be flexible to compete with the competition from other buyers.

[Robert McKenna]

You make that list, you start going through the process and all of a sudden things that are on this side trickle to the middle. And then all of a sudden they trickled to, I don't really need those. I can compromise, right? So your list.

[Megan McKenna]

And then we have the conversation of are we settling? Like are we moving these things from the want to the not want because we just want a house? Or are these really things that like, you know, the two car garage would have been nice but like at the end of the day we don't have to, we haven't, we've never had a garage.

[Monica Miller]

The couple say another hurdle is finding the right real estate agent. They had to go through a few before finding Diane Loomis.

[Andrew Kay]

You don't have the time to process here. Stay up all night because, you know, I'd like to think about it, start thinking because it may not be there tomorrow.

[Monica Miller]

If speed is a buyer's biggest challenge. Diane says sellers are hesitant to put their properties on the market. One of the main reasons is interest rates. Homeowners who purchased mortgages or refinanced mortgages during the pandemic got historically low rates at around 2%. These days, the number has hovered around 7%. And with the current economic climate and many homeowners aren't moving. According to the national association of home builders, roughly 40% of Americans have paid off their mortgages and are reluctant to take on debt.

[Andrew Kay]

A huge number of my sellers are boomers and folks who are going to that 55 plus and sometimes beyond. And my experience is when that person says, but where will I go? My response is, you will know when you're ready. You've asked the question, so you're not ready, so you can't force motivation.

[Monica Miller]

Life events are also a significant factor, like relocating for a new job, a divorce or marriage and a growing family.

[Andrew Kay]

This stop is Hoboken.

[Monica Miller]

Connections are available to New Jersey Transit. Hoboken, New Jersey is about a 15 minute train ride from Manhattan. Its claims to fame are being the birthplace of singer Frank Sinatra and where the first official baseball game took place. It's a small town that is home to many university graduates and young families who rent or are purchasing their first homes.

[Dean Clark]

Business in general has been really interesting.

[Monica Miller]

Dean Clark owns a real estate agency in Hoboken.

[Dean Clark]

And I say that because ever since COVID a lot of things have ebbed and flowed quicker than it ever has in the last 50 years. Whereas like you would see real estate appreciate a certain level every year at a certain rate, you kind of expect real estate was always predictable. But now because of where the rates are and how the Fed has been acting and just in general with affordability and inflation, everything things have gotten like in one month you can afford a million dollar house, the next month you can't afford 500,000 because of just how expensive the cost of capital has become.

[Monica Miller]

Unlike some countries where homes are often bought with cash or short term loans, most Americans rely on credit, usually a mortgage from a bank or lender with a 30 year fixed rate mortgage backed by the government, which makes borrowing more stable.

[Dean Clark]

What's not talked about a lot People talk about the lack of inventory, the high interest rates. They don't talk about how loose lending standards are today. And people don't realize that the amount of programs that are out there, they're giving different credits and concessions back now where everything can be rolled into all the closing costs can be rolled into your mortgage. As an example that it's, they have made the mortgage lending standards a lot easier. And there's so many banks that are wanting to give that money away to the right borrowers.

[Monica Miller]

But after nine months of holding steady, last week the Fed lowered interest rates by a quarter point cut, which is welcome news to the real estate industry.

[Dean Clark]

I'm on the boots in the trenches. Every conversation is around the rates. So even, even a small little 25 basis points down, it's not even that it will impact their economic pocketbook, it's the confidence it will give them to enter the market.

[Monica Miller]

Home buyers and real estate agents aren't the only people impacted by shifts in the market. Andrew Kay is a real estate developer in New Jersey.

[Andrew Kay]

So this will be four bedrooms, I think there's actually a fifth, an optional that we put in down here today.

[Monica Miller]

His team was supposed to be installing installation into a single family home, but the work has been put on hold until inspectors from the local government give their assessment of the current phase of construction. He's been in the industry for almost 40 years, but changes since the pandemic have been dynamic due to interest rates and inflation.

[Andrew Kay]

The biggest problem that we have is land prices are still based on a full blown market. And it's hard to convince a land seller that the land may not be worth what it was before COVID and when interest rates were 2 and 3/4%. Material costs alone are up about an average of 45% since COVID I can remember a time when I was building for 35, $38 a square foot for sticks and bricks. We're lucky if we're in the 90s and sometimes higher than that depending on the product.

[Monica Miller]

Talk to me a little bit about Terrace. When we were touring the house, you kind of gave some examples of how prices have changed.

[Andrew Kay]

I was reading a study that was done recently by the national association of Home Builders and they're predicting that as of now, the average cost of a typical middle American home of 2,800 square feet, we've probably added about $10,500 to that in tariff costs since this began. But more importantly, the issue of uncertainty is bigger than that because the tariffs are in such a whipsaw position right now, where we went from a low single digit percentage tariff on copper to 50% and then back down. So the suppliers are just unsure how to price things for us and we're unsure how to sell them.

[Monica Miller]

Andrew says price uncertainty is a huge obstacle for a small business owner like himself.

[Andrew Kay]

We're in the process of completing the improvements on a 12 unit subdivision. If I put those houses up for sale when I started the improvements seven months ago, I couldn't even begin to peg what the cost is going to be when I ultimately go to build them. So if I'm going to sign a contract with an end buyer, I've got to put some kind of escalator in there to cover myself in the event it's tariffs or it's any material supply chain disruptions. However, as the consumer, they don't want to sign an open ended contract and I clearly don't blame them.

[Monica Miller]

Real estate developers also face a patchwork of zoning laws, permitting delays and local opposition that slow or block new construction.

[Andrew Kay]

I am all about both smart growth and smart planning and smart construction. There were mistakes made in the 70s and 80s with regard to land planning and stormwater and things that were not accounted for. And now as I said, I think we've just gone too far in the other direction. Mostly out of fear of oh no, what if that happens again?

[Monica Miller]

Strict height limits, environmental reviews and single family zoning can make it difficult to build more affordable higher density housing. Even when projects do get approved, navigating the regulatory process can drive up costs which are ultimately passed on to buyers and renters.

[Andrew Kay]

We can build a phenomenally well insulated, well built house and we can charge the buyer significantly less and ask them what options from there they want in the house and give them the ability to upgrade, become more efficient, add to certain things as opposed to being mandated to do those things. And when we are mandated, the term affordable housing is gone. It is just gone. And there are very few instances, especially in the northeast where affordable housing exists.

[Monica Miller]

Andrew says the past few years have been a perfect storm, especially for first time homeowners.

[Andrew Kay]

The American dream used to start and hopefully still will start on owning your own home. And I know from my experience there is nothing like seeing a family walking into for the first time something that they have dreamt their whole life about. It's truly amazing and it's probably the thing in this industry that I love the most and that keeps me going and staying in this industry through all of these other things that try to get get us out.

[Monica Miller]

Real estate developer Andrew Kay, you're listening to Business Daily on the BBC World Service.

[Narrator/Announcer]

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[Andrew Kay]

Hey, it's Ryan Reynolds here for Mint Mobile now. I was looking for fun ways to tell you that Mint's offer of unlimited Premium Wireless for $15 a month is back. So I thought it would be fun if we made $15 bills, but it turns out that's very illegal. So there goes my big idea for the commercial Give it a [e-mail] switch.

[Monica Miller]

Upfront payment of $45 for a three month plan equivalent to $15 per month required new customer offer for first three months only spend speed slow after 35 gigabytes of networks busy taxes and fees extra see mint mobile.com I'm Monica Kniller, and today I'm looking at the housing sector in the U.S. how Americans have reached a point where rising prices, scarce supply, and layers of regulation have made it harder than ever for families to find a place to call home. Interest rates, tariffs, and an inventory crunch are some of the reasons for the current crisis. But the 2008 recession fundamentally changed the housing market. Matthew Murphy is the executive director of the New York University Furman center for Real Estate and Urban Policy.

[Matthew Murphy]

Some people forget that the recession was the housing market. It was the prevalence of subprime mortgages and the overextension of credit essentially to households that shouldn't have qualified to buy homes.

[Monica Miller]

Before the 2008 financial crisis, it was common for lenders to offer extremely high risk mortgages known as NINJA loans, which is an acronym for no income, no job and no assets.

[Matthew Murphy]

What happened there is that we had a lot of households who owed a lot of debt on homes. And not only that, we saw home prices plunge, so households were really underwater.

[Monica Miller]

The 2008 housing crisis in the US sparked a global financial crisis. It wiped out trillions of dollars in wealth and cost millions of people their jobs worldwide. The US Government stepped in with massive bailouts for banks, a stimulus package to jumpstart the economy and implemented more stringent lending regulations meant to prevent another financial meltdown. It left a lasting impact on investment to build new homes.

[Matthew Murphy]

We didn't see a lot of building of new housing during that time. So you saw this crash. And while that kind of moment of crash led to lower home prices, what we've seen since then is that the supply of new housing has really lagged where demand has been.

[Monica Miller]

Then there was Covid. Matthew says it almost dramatically upended the market overnight.

[Matthew Murphy]

We saw a lot of portions of the country experience almost immediately increased demand that would have been unimaginable, right? The kind of exodus of somebody from New York City to a farm, you know, in upstate New York or something like that. That they either didn't have the confidence that New York City would come back, or they felt like, I can remote work. It's that combination of all these changes that really pulled home prices up to what we can now call historically high levels.

[Monica Miller]

Much of the low cost housing inventory was snapped up during the pandemic. Record low interest rates, government stimulus checks and boosted jobless benefits gave households extra cash and buying power.

[Matthew Murphy]

In the pandemic, we saw this kind of shift from urban areas to more suburban rural areas. And in a lot of ways that's sustained. And then in addition, we've seen urban areas come back. We're now seeing historically high both rent prices and home prices in New York City as an example. So we have this kind of inventory supply crunch that's sustained during the pandemic. And we've also kind of similarly seen demographic changes.

[Monica Miller]

Housing affordability was a key issue for voters in the 2024 presidential election. A Pew research survey at the time showed almost 70% of Americans were very concerned about the cost of housing. First time home buyers Megan and Robert McKenna finally got their foot on the property ladder. They got most of the things they wanted on their wish list. A safe, quiet neighborhood in the suburbs of Philadelphia with four bedrooms. A place where kids have swing sets and ride their bikes around the cul de sacs. They say achieving the American dream is a lot of work these days.

[Megan McKenna]

We were in a spot where we had savings and had money to put down, you know, the money down on the house and to buy it. But I think it's still the dream. You know, you still want this, you want your own house to call your own. And it's like a, you know, you're prideful and it's like, come into my house, I want to show you. But it's an exhausting dream.

[Monica Miller]

A bipartisan bill called the Renewing Opportunity in the American Dream to Housing act is making its way through Congress. It passed the first hurdle with unanimous support from both Republicans and Democrats.

[Matthew Murphy]

Someone should say, praise the Lord. That's a miracle, like Peter walking on the water.

[Monica Miller]

Speaking at an event in Washington, the bill's co sponsor, Tim Scott from South Carolina, says it aims to expand affordable housing, reduce regulatory barriers, and improve oversight of federal housing initiatives.

[Matthew Murphy]

Solving this problem has got to be paramount for decision makers all across the spectrum of government and frankly, in the private sector as well. So I look at this through the eyes of a kid who wanted a front yard to play in and not just a concrete driveway.

[Monica Miller]

For many Americans, the outcome can mean the difference of renting forever or finally finding a place to call home. You have been listening to Business Daily, produced and presented by me, Monica Miller. You can hear more episodes by searching for Business Daily. Wherever you get your BBC podcasts.

[Andrew Kay]

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[Margaret]

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[Andrew Kay]

Well, you can predict the future.

[Margaret]

I can predict you'll like that message.

[Andrew Kay]

What message? Hey, we all got bonuses you can.

[Margaret]

Save for college now.

[Andrew Kay]

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[Monica Miller]

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[Andrew Kay]

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