City Journal Audio Podcast: "The State of American Homeownership"
Date: February 20, 2025
Host: Jordan McGillis (Economics Editor, City Journal)
Guest: Judge Glock (Director of Research, Manhattan Institute; Author, The Dead Pledge)

Episode Overview

This episode of City Journal Audio’s “10 Blocks” dives into the state of American homeownership amid record-high prices and mortgage rates. Host Jordan McGillis interviews Judge Glock, an expert on U.S. housing and mortgage policy, to explore why home sales have plummeted, the historical and policy context for the 30-year mortgage, the economic implications of restrictive zoning, and what homeownership really means for the American dream in 2025.

Key Discussion Points & Insights

1. Current Housing Market Dynamics

• Sales Volume Crisis:
  • In 2024, U.S. home sales fell to their lowest level (~4 million) since 1995, despite a population increase of about 70 million people. The average mortgage rate hovers around 7%, and the average home price exceeded $400,000. (00:16)
• Homeownership Rate Contextualized:
  • The national homeownership rate (66%) remains close to historical averages, despite perceptions that ownership is out of reach. The spike to 70% pre-2008 was anomalous; current rates are "pretty normal."

    “So Americans are owning their homes about a pretty typical rate that they did historically.” – Judge Glock (01:15)

2. The Lock-In Effect & Impact of Low Pandemic-Era Rates

• Persistent Low Turnover:
  • The pandemic era saw mortgage rates fall below 3%. Many locked in low monthly payments, making trading up or moving highly unattractive now that rates exceed 7%.

    “You have to have a bit of masochism to want to switch out that 3% mortgage for a new 7% mortgage right now... double your interest payments, often more than double because prices have gone up so substantially.” – Judge Glock (03:52)

3. Origins and Peculiarity of the 30-Year Mortgage

• Federal Policy Roots:
  • The 30-year, fixed-rate, prepayment-penalty-free mortgage is a product of U.S. government intervention (starting from the 1910s and 1930s).

    “The government created a whole panoply of these new mortgage institutions... to elicit that kind of weird 30 year mortgage product and make it pretty much the standard across the United States.” – Judge Glock (05:42)

• Taxpayer Risk:
  • The federal backstop means taxpayers absorb risks from interest rate swings and default crises, as witnessed in the S&L crisis (1980s) and 2008 collapse.

4. International Comparisons and Mobility

• Other Mortgage Markets:
  • The U.S. system is unique and arguably less sensible—"classic publicly subsidized and the gains are privately held and the public takes the losses.” (07:27)
  • Denmark’s system (covered mortgage bonds) functions differently but isn't directly comparable.
• Mobility:
  • U.S. residents remain more mobile than Europeans, in part due to prepayable mortgages, though rate spikes now limit moves.

    “The only downside is yes, when those interest rates change and they go up very rapidly, that makes that sort of mobility much harder. And that's exactly what we're seeing right now.” (08:48)

• Britain’s Variable-Rate Experience:
  • In countries where mortgages reset as central rates rise (e.g., UK), families face sudden unaffordable payments when rates spike.

5. The Myth vs. Reality of Homeownership Policy

• Ideals and Interests:
  • U.S. housing policy “about encouraging home ownership per se” is exaggerated; much of the impetus came from banks and construction industry interests.

    “People who claim all of these mortgage subsidies we create were really rooted in a desire for the American dream of homeownership are kind of missing the mark... the impetus... came a lot more from the banks and the construction industry.” – Judge Glock (11:00)

• Homeownership Not Uniquely American, Nor Policy-Driven:
  • High ownership rates exist elsewhere without similar interventions.
• Subsidy Effects:
  • Mortgage subsidies inflate prices in supply-constrained markets, benefiting landowners more than increasing ownership.

6. Regulatory Constraints and Supply Shortages

• Barriers to New Supply:
  • High prices persist in economically productive regions due to zoning, minimum lot sizes, and growth boundaries.
  • The YIMBY (“Yes In My Backyard”) movement champions deregulation—upzoning, removing parking minimums, and allowing accessory dwellings.

    “If we're going to talk about solving the housing crisis, we need to talk about how we can allow that more outward growth to continue to occur in these areas.” (15:23)

• Urban vs. Outward Growth:
  • Most affordable growing cities expanded by building outward (Dallas, Nashville, Atlanta), while places like LA and San Francisco restrict both outward and upward growth.

7. Density Misconceptions and American Urban Form

• Urban Density Often Underappreciated:
  • LA and San Francisco’s neighborhoods—though visually 'spread out'—are among the densest in the U.S.

    “Some of these parts of LA and San Francisco are really some of the densest parts in America. You can have a lot of density in fairly low sung places if the minimum lot size are pretty small and so forth.” (18:45)

• Single Family, High Density:
  • Dense, small-lot single-family neighborhoods contribute significantly to housing supply; focus on only building large apartments is misguided.

8. Looking Forward: The Era of High Rates and Low Mobility

• Lasting High Rates:
  • Sub-3% mortgage rates are likely gone for decades; rates will remain elevated due to persistent inflation fears and government borrowing.

    “We're probably not going to see in our lifetime anything that looked like the sub 3% interest rates in 2020 and 21... that's going to drive up mortgage interest rates.” – Judge Glock (22:20)

• Deficit and Debt Pressures:
  • High government deficits and debt are pushing up treasury yields, increasing costs for borrowers.

Notable Quotes & Memorable Moments

• "[The 30-year fixed mortgage] is a weird product... it's really hard to exist without a government backstop." – Judge Glock (04:45)
• “In general, the US is very, very mobile relative to just about any other country on earth... but when those interest rates change... that sort of mobility [becomes] much harder.” (08:27, 08:48)
• “America, as a country... was a much more ownership society than a lot of the Western European ones... we didn’t really have, you know, what in the West, Western European they would call a peasant class...” (11:41)
• “The concern with the budget deficit is not just about some hypothetical fiscal crisis down the road — that's affecting every family across the United States right now.” (23:55)

Important Segment Timestamps

• 00:16 – Introduction, market statistics for 2024
• 01:04 – Historical context for homeownership rates
• 03:17 – The lock-in effect from pandemic-era mortgages
• 04:38 – Public policy and the 30-year mortgage
• 07:20 – U.S vs. international mortgage models
• 09:22 – U.S. mobility vs. Europe, effect of variable-rate mortgages
• 10:43 – Is homeownership essential to the American Dream?
• 13:09 – Land use restrictions and potential reforms
• 16:38 – Common objections to pro-growth arguments (LA sprawl)
• 18:50 – Underappreciated density in "sprawling" U.S. cities
• 21:55 – The future: high rates and persistent supply constraints
• 22:17 – Why sub-3% mortgages are unlikely to return

Summary Takeaways

• The drop in home sales is a structural problem, worsened by rate lock-in for homeowners with low-interest loans and a regulatory framework that restricts supply in high-demand areas.
• America’s housing policy history is shaped as much by industry interests as by national ideals.
• Solutions will require loosening zoning restrictions to increase supply—not only through dense apartment development, but by enabling higher-density single-family neighborhoods and outward expansion where possible.
• The financial environment has shifted: low mortgage rates were anomalous, and government fiscal pressures mean higher rates are here to stay, with direct costs for consumers.
• Efforts to address America’s housing crisis must combine fiscal realism with locally tailored regulatory reforms—otherwise, high prices and declining mobility will become the new norm.

For more from Judge Glock:

• Manhattan Institute website
• City Journal
• X (Twitter): @JudgeGlock

This summary excludes non-content segments such as introductions, advertisements, and closing remarks.