← How Is This Better?
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- [00:00]
A
I'm Brian Reed. When I created S Town, I looked at how secrets lies and the stories we tell shape a small rural town. Now on my podcast Question Everything, I'm going bigger. Hi, this message is for Senator Lindsey Graham. I head to Washington to take on a law that gives tech companies sweeping immunity is how these companies have gotten rich. Join me as I go after big tech on Question Everything from placement theory and KCRW out Thursdays. Wherever you get your podcasts, on any.
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B
Given evening, you can find me in my home watching home tours on YouTube.
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A
What are you doing here? Just kidding.
- [00:37]
B
Come on in. People older than me have hired designers, architects and artisans of all kinds to make their homes plural look beautiful. And while I find many of those videos inspiring, I often come away annoyed. How is it possible for them to have the kind of money needed for these homes? I mean, the median home price across the US is $350,000, according to Zillow. Most young people, saddled with sky high college debt and rising basic living costs, really can't imagine a way to save the kind of money needed for the market. So they rent. Do you want the apartment? Yes. The idea of owning anything really is out of reach. Everything is a subscription house, tv, Internet, car phone. The list never ends. I'm Mikaela Hughes. This is how is this better? And today I'm trying to get to the bottom of an American dream where homeownership is no longer in the picture. How exactly did home ownership become a fairy tale? Is it just generational wealth, luck, and never buying rotisserie chicken and fancy juice that can bring it into the realm of possibility? What's going on here? It's time to look to the laptop I use to bring up. Before the 1930s, most Americans didn't buy homes with predictable long term loans. Mortgages were short, risky, and often ended with a massive lump payment due, leading to defaults and foreclosures during economic downturns. The Great Depression changed that system entirely. During the Depression, the Federal Housing Administration and later Congress standardized the long term, fully amortizing mortgage. By the mid 20th century, this 30 year fixed rate mortgage became the main way Americans bought homes, making monthly payments stable and manageable. Home ownership also depended on borrowing costs. Through the 20th century, mortgage rates fluctuated widely, peaking above 16% in the early 1980s, then dropping to historic lows near 3% in 2021. These rates deeply shaped who could afford a home. And when government support came through, entities like Fannie Mae created during the New Deal buy mortgages from lenders and keep credit flowing. This federal backing helped scale up home loans nationwide, turning them into a staple of the US middle class. But these policies were not equally available. Early appraisal systems and mortgage access often excluded black households and non white communities, shaping unequal paths to generational wealth. But even after World War II, when suburban expansion massively increased, homeownership was most attainable when earnings grew faster than prices. Credit was abundant and mortgages were stable, conditions experienced by many boomers and much of Gen X. By the time Millennials and Gen Z tried buying homes, prices had outpaced wages, inventory was tight, debt loads were high, and investors increasingly competed for the same properties. Home ownership rates for the first time buyers have hit record lows, and the median age of first time buyers climbed into the 40s. Home ownership in America was once shaped by accessible credit, expanding supply and policy incentiv. Over time, rising prices constrained supply, shifting credit conditions and structural barriers have made that same path far steeper for younger generations. And that's the laptop I use to bring up old shit. When we come back, we dive into the policy reality that has made home ownership so unattainable for so many Americans. Speaking of the housing market, just about all of us can relate to the feeling of paying more and more and getting less and less. It's like paying for all of the streaming services and never finding anything good to watch. Unrelatable, right? My producer Devin was tired of the endless price hikes he was getting from his old cell service provider and switched to Mint. He insists that he's getting the same coverage and the same speed for a fraction of the cost. And he's pretty convincing. So I'm personally looking into it. You can be like Devin and stop paying way too much for wireless just because that's the way it's always been. And even better now for a limited time you can get 50%, 3, 6 or 12 month plans of unlimited premium wireless. It comes with a seven day guarantee and customer satisfaction is in the mid-90s. Mint makes it easy to try and easy to see why people don't go back to their old providers. So are you ready to stop paying more than you have to? New customers can make the switch today and for a limited time get unlimited premium wireless for just $15 per month. Switch@mintmobile.com courier that's mint mobile.com courier upfront payment of $45 for three months, $90 for six months or $180 for 12 month plan required $15 a month equivalent taxes and fees, extra Initial plan term only. Over 50 gigabytes may slow when network is busy. Capable device required. Availability, speed and coverage varies. Additional terms apply. CementMobile.com.
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Over the same old news cycle Tune in to Hysteria, your weekly group chat with me, AAR and my co host, Alyssa Mastromonico.
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Where no topic is off limits.
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From politics to pop culture. We're bringing you brutally honest takes on the stories shaping our lives.
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From powerhouse women like Elisa Slotkin to.
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Wellness trends in education.
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No sugarcoating, no doom scrolling, just real talk, strong women and hope to keep moving forward. Catch Hysteria wherever you get your podcasts and tune into our YouTube channel for full episodes and our special series to.
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A
Enjoy a standard of living beyond the wildest dreams of anyone who lived a half century ago. The more we earn, the more our families have to spend for the things they need and want.
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B
For most of the 20th century, the US treated housing like a starter pack for adulthood. Then somewhere along the way, we turned it into a luxury investment and told everyone else to figure it out. Is that right?
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A
Well, I think it's definitely the case that homeownership is deeply ingrained as this thing that Americans are supposed to strive for. That's really this marker not only of, you know, that you are on your way to building wealth, but that you have sort of hit these traditional milestones when it comes to starting a family and having a job and owning a home.
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B
This is James Rodriguez, a real estate correspondent for Business Insider. And I wanted to chat with him because he writes about all the shifts in housing in the US but also because he's young enough to be affected by these policies or the lack thereof.
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A
There is definitely that aspect where it has been pretty explicitly encouraged throughout our country's history to purchase a home. And, and there's been sort of this idea that you are a, you know, a better neighbor and member of your community, even if you're, if you're a homeowner, that you have this stake in your neighborhood. And I do think that we've seen, especially in the past couple of decades, the split where older generations have, you know, in many cases made a lot of money off of their homes.
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B
Yeah.
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A
And not saying that it's been without challenges, but older generations making, getting these huge returns on their investment and the younger generations sort of struggling to catch up for various reasons. I think we saw, we saw this really come into focus around the Great Recession.
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B
Yeah.
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A
And the housing bubble collapse after that.
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B
Absolutely. And if you had to put sort of a rough date range on when that change really took hold, Would you say that it was the Great Recession was this moment where they were like, cool, homeownership is going to be out of reach for a lot of people? Or, or had. Did it start earlier than that?
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A
Well, I think too, even when you're looking at the pandemic disruptions, which I do really, you know, in my time covering real estate has really been a focus of just sort of that before and after, where I think there were a lot of factors that actually made it such a unique time and really brought into focus some of these challenges that younger generations are facing. Where you have this underbuilding in the wake of the Great Recession, where home builders pulled back.
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B
Yeah.
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Many of those local home builders went out of business entirely. So the, the country as a whole wasn't producing enough housing to accommodate what this, you know, what demographics told us was going to be this huge wave of demand from millennials. And so you had so many millennials, you know, the largest living generation by 2019, reaching their prime home buying years right around the same time as, as this underbuilding had been playing out. And then you have the, you know, increased demand for housing, you have the lower mortgage rates that really encourage people to dive into the market and created this frenzy. And so then you've generations, you know, especially millennials, they've been playing catch up.
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B
Yeah.
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A
And we've seen some progress there, but it's still difficult for many members of the younger generation.
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B
Earlier in the timeline of just housing in America, the government was way more involved in helping people buy homes. There were subsidies, there were tax structures. There was, like you were saying, sort of like more of an investment in building. What are one or two specific sort of policies or norms from that era that would sound completely fake to people our age? Like, how were they really getting that leg up?
- [10:00]
A
That's a great question. I think, you know, what I, what I tend to focus on are some of the things that are even continuing into today that really have actually are things that are designed to encourage homeownership, but have actually sort of contributed to the situation we find ourselves in today. I think one is just the 30 year mortgage in general, that ability to lock in, I mean, that is a, you know, lock in your housing costs for three decades. That is very much something that's unique to us and North America to an extent. But really that is kind of an American creation that is both, you know, a financial gift, but can also turn into this trap. When we've seen rates rise as sharply as they did in 2022, and you have all these people that are, you know, holding on to homes or delaying these moves, or maybe they moved and they had such a good mortgage rate, they held on to their original property as a, you know, second home or investment. And I think this so called lock in effect from, you know, people just deciding to stay in place, I think that is something that it, you know, is a result of, you know, that policy and having, having, you know, loans really with the, the backing of the government to an extent.
- [11:09]
B
Yeah.
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A
I think those are things that, you know, are explicitly designed to encourage homeownership. But they also create this idea that if you're not, you know, reaching that milestone, then you have somehow fallen behind and it can be difficult to catch up.
- [11:22]
B
So housing gets more expensive, but government doesn't change in any way. That doesn't feel coincidental. So what stopped it from scaling? You know, there are way more people in the US now. So like, how come they're not, you know, giving out, like the GI Bill, for example, post war construction? All of those things, you know, were a boom when they happened and now it's just sort of like there's nothing. So do you think that there's some sort of, like, policy gap? Is it like lobbying from homeowners associations? Like, what is it?
- [11:51]
A
I think the interesting thing that we're seeing now is this issue of affordability is really front and center. Where we see the President talking about it, we see a sort of a bipartisan thing where politicians on both sides of the aisle are really directing a lot of attention to what they see as a housing supply gap, this affordability challenges that people are facing. I think, you know, when you look at, I think the underbuilding in the wake of the Great Recession cannot be ignored. And I also think, you know, these demographic signals have been there for a while. It's not a surprise that there are all of these millennials that are clamoring for homes. But when we, you know, just sort of. The collapse of the home building industry has made it tough to recover. And, you know, between 2010 and 2019, builders were building at about half the rate that they were in the three decades prior. As you have this huge generation coming into their prime home buying years, I think that just sort of naturally creates a recipe for disaster there.
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B
We're all familiar with the wisdom that if millennials just didn't eat so much dang avocado toast, they could own a million dollar home. Do you feel that housing is the final boss and we just have to level up? Or is this actually fubar and over like chat. Are we cooked?
- [13:03]
A
Yeah, I mean, I think that's a great question. And it varies so much from person to person. I think there are some myths around homeownership where I found in talking to people that they realize, you know, potential buyers who thought that they had somehow missed the boat or that their finances would never allow them to purchase a home, and then they attend some first time home buyer classes or they, you know, start talking to an agent, they realize there are all these other ways, whether it's through an FHA loan or a VA loan or some of these other pathways that aren't, you know, as robustly advertised. Or maybe they, you know, they have this idea they need to save up 20%, you know, for a down payment on a house when, yeah, really we see people getting in for much lower than that. And so I think some of those myths certainly, you know, hold people back from, from taking the plunge. But I also do think, you know, when you look at the way that costs have increased over even since the start of the pandemic, where home prices are up 50% in some areas, a lot more than that. I think those, those barriers are certainly real in terms of affordability.
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B
So if home ownership stopped being a way people start their lives and became something you enter later, if ever, that doesn't like just change when you buy a house. It changes how you live, how you socialize and how the economy functions. Which brings us to this. If people are renting longer, forming households later, what ripple effects do you expect to see that maybe haven't come to light yet or that we haven't planned for yet? Like if young people can't get mortgages today, what happens to that industry?
- [14:38]
A
Yeah, I think one thing that I've been closely tracking is the growth of the single family rental industry that's been in the spotlight recently. You know, it's not just the big companies that own, you know, tens of thousands of homes, which we really did see after the Great Recession. That is sort of when this industry of sophisticated real estate investors popping up to buy single family homes, we saw that really come into being, but it's also just a lot of, you know, smaller landlords. And so people are going to be looking for some of the other things that come with living in a single family home, whether that's to get into a school district or because they want a little bit more space.
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B
Right.
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A
Or they want, you know, some nicer amenities and things like that. And so they're going to be looking to Single family homes. And I think we're going to see the continued growth of what we're seeing now is there are companies that are building homes, single family homes, explicitly to be rented out and to potentially never be owned by an occupant. That's what I'm going to be tracking is just how much does that industry continue to grow and how does that sort of fill in the gaps that people aren't buying? Are they going to still be turning to rent a single family home?
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B
That's kind of a good segue because I want you to imagine with me the day that zoomers are boomers, they're old, and we're going to assume that global warming hasn't burned down or drowned out most of the housing inventory. Do you see a world where they will, you know, return to the sort of home ownership percentages from before, or is it sort of like we were going to have a lot of 80 year old renters who are still working because Social Security ran out?
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A
Yeah, I mean, I think it's important to keep in mind too, that there are a lot of, you know, the boomers own the majority of or they have the biggest share of real estate ownership today and eventually they are going to age out of the market. I think the big question is, you know, what happens to all those homes? Are those places that younger people want to live in, are they going to require the kinds of updates that younger generations just aren't willing to shoulder? So I think that's a big question mark in all of this. I do think we see with millennials, you know, sort of playing that catch up game, but eventually hitting those milestones, whether, you know, they're getting married later or they're moving out of their parents home later. But there is sort of that element of, okay, well, I may not have bought my first home at 32, but I'm buying it at 40. And we're seeing that with the older ages of first time home buyers as well. Right now. I think there are real conversations around are the younger generations going to be seeing the same sort of wealth gains that older generations, baby boomers have seen? And I think again, that's where you return to demographics, where we do have an aging population in this country, we are seeing population growth really slow down. Part of that is because of immigration, part of that is just simply because of birth rates. And so much of the, you know, housing wealth gains has been predicated on a growing population and increasing demand for housing. And so I think that's another thing that, that I'm really interested in right now is just seeing the demographic tide sort of turning where you don't have that population growth. And I think it does raise a real question of are millennials and younger generations going to see that same increase in home values?
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B
Right.
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A
There are so many things that come with homeownership that are not, you know, financial based.
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B
You know, right.
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A
We want a lifestyle or you want to live in a place with, again, schools or a community that you want to be a part of. But I do think it could raise questions of, you know, what was the sort of financial return from homeownership.
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B
What this really comes down to is whether we think a system should change when real life changes. Because people didn't suddenly lose ambition or discipline, the goalposts shifted dramatically. We built an economy where housing costs exploded, wages didn't keep up, helped stay frozen in time, and then we acted surprised when fewer people could clear the same milestones. Home ownership became harder to achieve. It's just a foregone conclusion in a system that never adjusted to new realities and still insists on treating the outcomes as personal shortcomings. For anyone without a silver spoon, the path that used to lead to stability now leads to precarity. Rent forever, move often, delay everything, stay flexible. Blame the generation, not the circumstances. So if this is what progress looks like, it's worth reframing the question from how is this better? To Better for who? Because a system that only works for people who already have power, money and leverage isn't the American Dream. How is this Better? Is a production of Courier. It's written and hosted by me, Akilah Hughes. It is produced by Devin Maroney. Video editing is by Shane Verkus. The rest of the team at Courier includes Kevin Dreyfuss, Sam Hollows, Marianne Kuga, and Charlotte Robertson. Please subscribe to follow. How is this Better? On all the platforms, YouTube, Apple, podcasts, Spotify, etc. And tell someone about your favorite episodes. If you're interested in sponsoring episodes or giving us products to try and try to sell, reach out to advertiseuriernewsroom.com thanks for listening and until next time, see ya.