We Don't Have a Housing Shortage. We Have a Paycheck Shortage.

Summary

Podcast Summary: Optimist Economy

Episode: "We Don't Have a Housing Shortage. We Have a Paycheck Shortage."

Hosts: Kathryn Anne Edwards (Economist) & Robin Rauzi (Editor)
Date: February 10, 2026

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Overview of Main Theme

This episode challenges the dominant narrative that the U.S. housing crisis is purely a problem of supply ("not enough homes") and instead argues that housing unaffordability is best understood as a wage problem. Hosts Kathryn Anne Edwards and Robin Rauzi explore how stagnant incomes, rising income inequality, and misguided policy responses have created a mismatch between available housing and what Americans can afford. The discussion aims to empower listeners by showing that solutions depend more on addressing income and labor market dynamics than on simply building more—or deregulating—housing construction.

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Key Discussion Points & Insights

1. Homeownership & Housing Market Data: Looking Beyond Panic (10:15–12:00)

• Stability in Homeownership: The U.S. homeownership rate is stable, not in freefall, having rebounded from post-2008 lows. Currently, it sits around 65–66%, down from a peak of 69% in 2005, but no longer dropping.
• Mortgage Debt Service: Americans are spending a smaller share of disposable income on mortgages than before the pandemic, suggesting no runaway crisis in aggregate terms.
• Edwards’ Framing: “I don’t say that to be like, ‘up and here’s the economist with the data that says your struggle is fake, because the data says you’re wrong.’ ... It is good that those things are stable and they’re not flashing red. But…if you don’t think about the actual cause of the problem, you’ll never solve it.” – Kathryn Ann Edwards (06:23)

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2. Households vs. Housing Units: What Do We Actually Need? (12:00–13:05)

• A housing unit is built for a household, not simply each person. A household = all people sharing a home (e.g., roommates = 1 household).
• Household formation has slowed since the Great Recession; fewer new households means less net demand, partially driven by young adults staying home longer, lower marriage rates, and the high cost of independent living.

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3. The Real Shortage Is Affordability, Not Supply (14:04–15:21, 22:06–24:11)

• Most “housing shortage” talk is about distribution, not raw totals—housing exists, but in the wrong places, sizes, and especially at unaffordable price points.
• There's a growing misalignment between what is built (often luxury apartments or homes) and what incomes at the bottom and middle can afford.
• “To the extent that we have a housing shortage, it’s not a net shortage, like we have more people than houses. It is a distributional shortage where we don’t have enough housing for people at the place people can afford.” – KAE (13:05)

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4. Why 'Build More' Alone Won’t Work (15:21–17:18; 23:44–24:11)

• Private developers have no incentive to build ‘below market’ housing for low or middle incomes—building is concentrated at the top.
• “There are wages in the US for which there is no housing that is affordable for someone who makes that little money. And we will not build it. No one out there is like, we’ve got to go out and build housing for people who are going to pay me $700, $800 [per month].” – KAE (15:21)
• Only government can supply genuinely affordable housing via policy, historically or today.

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5. Income Inequality: The Heart of the Housing Problem (22:06, 32:56–35:46)

• The hosts emphasize five decades of growing income inequality. The housing stock—many units built decades ago—does not reflect today’s dramatically skewed income distribution.
• Typical mortgage payments now outpace typical wages (Median mortgage: $2,259/month; median full-time worker: $1,200/week), resulting in a persistent, systemic gap that supply alone can’t address.
• “That $500 gap [per week] is not going away with a supply, like a infusion of supply. That is an income and wage problem.” – KAE (23:49)
• “This is a consequence of long-term income inequality that we now are mismatched to our housing stock.” – KAE (35:29)

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6. Policy Myths & Misfires (6:35–7:32; 24:11–27:27)

• 50-Year Mortgage Fiasco: The hosts mock the failed proposal for 50-year mortgages as a distraction from root causes. “That’s…such a bad policy.” – KAE (06:55)
• Deregulation and longer mortgages help banks and developers but don’t create affordability for low- and middle-income families.
• The myth that simply eliminating housing regulations or building more luxury units will improve affordability for everyone is debunked.

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7. The ‘Piggy Bank’ Mentality: Housing as Investment (28:06–30:42)

• The idea that a home must appreciate greatly—and serve as an investment vehicle—drives policy distortions and public resistance to affordable housing.
• “I don’t think people should make money off their houses. I think it warps a lot of decision making to have so much of an investment [in one asset].” – KAE (29:15)

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8. The Call for Policy Solutions: Income, Public Investment, and Empowerment (35:46–37:38)

• Mainstream American policy supports only the very poor (e.g., public housing), but little is done for the middle-class.
• Government can and should build or subsidize middle-income housing, not just rely on tax credits for the very poor.
• “If we make this about what the government can directly intervene in the housing market, we get to design our solution.” – KAE (37:38)
• “Enough income can solve this problem. Enough housing cannot.” – KAE (27:22)

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9. Additional Memorable Moments & Social Commentary

• Notable Quote: “You need to go out there and demand unionization if you want affordable housing. Like, we need better income.” – KAE (34:26)
• The hosts joke about being homeowners and—Robin admits—a landlord, aware that their perspectives might attract criticisms on social media for not representing renters, but stress systemic analysis and empathy.
• Discussion on the dysfunctional cycle of housing policy, property taxation, and efforts to keep housing a “privileged good.”

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Notable Quotes with Timestamps

• "It is a distributional shortage where we don't have enough housing for the people at the place that people can afford."
  – Katherine Ann Edwards (13:05)
• "There are wages in the US for which there is no housing that is affordable for someone who makes that little money."
  – Katherine Ann Edwards (15:21)
• "Supply will only get you out of this if you have the government aggressively building homes that are below market rates. The market will not build below market rate homes."
  – Katherine Ann Edwards (24:12)
• "That $500 gap is not going away with a supply, like a infusion of supply. That is an income and wage problem. And the more we focus on supply, like, supply is not getting you out of this."
  – Katherine Ann Edwards (23:44)
• "I don’t think people should make money off their houses. I think it warps a lot of decision making to have so much of an investment, you know, putting a lot of money in just one stock."
  – Katherine Ann Edwards (29:15)
• "The solution to the housing affordability problem is truly about what we are willing to ask for, and that is optimism because that puts agency back in our hands."
  – Katherine Ann Edwards (37:34)

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Timestamps for Key Segments

• Homeownership & Housing Market Reality Check – 10:15–12:00
• Households vs. Housing Units – 12:00–13:05
• Affordability, Not Supply, As the Real Shortage – 13:05–15:21
• Policy Misfires (50-year mortgage, deregulation) – 6:35–7:32
• The Role of Income and Inequality – 22:06–24:11, 32:56–35:46
• Housing as Investment & Public Attitudes – 28:06–30:42
• Empowerment & Policy Solutions – 35:46–37:38

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Tone and Language

The conversation is lively, sometimes irreverent but deeply informed, mixing economic data with personal anecdotes and witty asides. Kathryn Ann Edwards is especially sharp in her critique of conventional narratives, bringing both a data-driven and values-oriented approach.

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Conclusion

Main Takeaway:
America’s housing problem is not a mere shortage of units—it's a profound mismatch between what’s available (and at what price) and what American workers earn. The solution lies not in just building more homes, but in demanding better incomes, addressing inequality, and empowering public action for genuinely affordable housing.

Optimism:
By recognizing the root cause (paycheck shortage), listeners are encouraged to advocate for policy change, higher wages, and government intervention that truly serves the majority.

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Executive orders, spiritual sponsors, and lighter moments follow the main interview, emphasizing the podcast’s conversational style and the hosts’ personalities.

Transcript

[Katherine Ann Edwards]

Maybe you already know about naked short selling. Maybe you've personally shorted stocks yourself, but do you know about the time short sellers ruined a Super Bowl?

[Robyn Rousey]

Basically, for me, I was a little late, but red flags went up. Like, what is going on? This is really scary.

[Katherine Ann Edwards]

At Planet Money, we get the story behind the money. To explain how money works, listen on the NPR app or wherever you get your podcasts. I have once put on an economist wedding card, like, congratulations on your upcoming household formation. For your successful household formation, which clearly I would only give to an economist because everybody else would be like, this is not right. Hello, and welcome to Optimist Economy. I'm Katherine Ann Edwards, economist.

[Robyn Rousey]

I'm Robyn Rousey and I'm an editor.

[Katherine Ann Edwards]

On this show, we believe the US Economy can be better, and we talk about how to get there one problem and solution at a time.

[Robyn Rousey]

Today on Optimist Economy, we're going to be talking about the housing market.

[Katherine Ann Edwards]

Housing. And if there's really a shortage of housing and if supply is the answer to all of our housing cost woes. And I'm going to say no, but you should listen anyway.

[Robyn Rousey]

Do we have any announcements?

[Katherine Ann Edwards]

Give us money.

[Robyn Rousey]

Oh, yes, we do have an announcement.

[Katherine Ann Edwards]

Oh, wonderful.

[Robyn Rousey]

Optimist Economy relies on people like you donating to our show. Over the hiatus, we got donations at the spiritual sponsor level from four people, including Sonya Gill, and we want to thank her for her donation.

[Katherine Ann Edwards]

You, too, could become an on air named spiritual sponsor by giving us [e-mail] Yay. All right, our next section is really the one that I own, which is Retcon, where we go back and talk about episodes, reflect on episodes, as well as fix things that I said that were wrong. But Robin has one today.

[Robyn Rousey]

I do. You mentioned Bend It Like Beckham in our last episode, and it is Parmenda Nagra, who is the actress from that movie who shows up at the Angel City Football Club women's soccer games here in Los Angeles, and everybody goes wild.

[Katherine Ann Edwards]

I would lose my mind.

[Robyn Rousey]

Yeah, yeah, people, I imagine if you're seated, I'm not in those expensive seats, but if you are, I'm sure it would be like. It would be crazy. Okay, next chapter is Terms and Conditions. Catherine, I see you looked something up.

[Katherine Ann Edwards]

I did. I like to bloviate it.

[Robyn Rousey]

Bloviate?

[Katherine Ann Edwards]

Yeah, bloviate. It means to talk or write at length.

[Robyn Rousey]

To talk yourself hoarse.

[Katherine Ann Edwards]

Yeah. Okay. The only reason why I wanted to include it is I'm trying to get back into writing Bloomberg columns, and, man, it was Slow going. And I was trying so hard to get words on the page. And I was having my favorite Bloomberg subject, which is to knock Congress for being bad at its job and not doing anything. And I, I brought up a hearing that they had in which they took turns yelling at health insurance CEOs and then yelling at each other for being like the real cause of the problem. And I was trying to come up with a term for talking into dead air. And then I was like, maybe I don't want to look it up, maybe it doesn't exist and I shouldn't look it up and bring it up Anyway. Bloviate. Bloviate.

[Robyn Rousey]

It's a good word. I looked up a term that turns out is not an economic term, but it is one legged stool. So there's a story in the paper today as we're recording this about the one legged stools holding up the fragile economy. And in this case they're talking about in the space of consumer spending, it's just highly wealthy people doing most of the consumer spending. Labor market, it's healthcare and social assistance jobs that are creating all the job growth. And in the stock market, it's basically seven tech companies creating all the returns. So all of these are unstable, like a one legged stool. But when I looked it up, I also discovered that apparently when Alfred Nobel had his first nitroglycerin factories, he actually had one legged stools for the guys who had to supervise the vats of chemicals making nitroglycerin. So that they stayed aware of it was also called a suicide stool. So you didn't fall asleep while sitting down on the job.

[Katherine Ann Edwards]

I was like, is a one legged stool just like a pole?

[Robyn Rousey]

It's no, it's got a, you know, a seat on it. But yeah, just put just one. It looked a little. And they had a picture of it on the Nobel website. I was like, is this a real thing? And indeed it was a real thing.

[Katherine Ann Edwards]

We're going to take a quick break and we'll be back with the biggest pilgrim of them all.

[David Remnick]

Right now, we are living through some of the most tumultuous political times our country has ever known. I'm David Remnick and each week on the New Yorker Radio Hour, I'll try to make sense of what's happening alongside politicians and thinkers like Cory Booker, Nancy Pelosi, Liz Cheney, Tim Waltz, Ketanji Brown Jackson, Newt Gingrich, Robert F. Kennedy Jr. Charlamagne, tha God, and so many more. That's all in the New Yorker Radio Hour. Wherever you Listen to podcasts.

[Katherine Ann Edwards]

The biggest pilcrow.

[Robyn Rousey]

The biggest pilcrow. Bigger than any pilgrim we've ever recommended.

[Katherine Ann Edwards]

Pilgrim?

[Robyn Rousey]

I don't know if you. Did you see this poll yesterday that. The New York Times Sienna poll about affordability?

[Katherine Ann Edwards]

No.

[Robyn Rousey]

It said that basically Americans are deeply pessimistic about their economic future. But also specifically, they said, more than half of people surveyed said that housing and education are now so expensive that they are actually unaffordable. Housing was 54%. I think 58% said education is unaffordable.

[Katherine Ann Edwards]

Yeah, I mean, Americans have said quite clearly housing is unaffordable. And the narrative you hear around this is supply. We need to build, we need to deregulate, we need to juice the market in order to ease prices. And I think what we try to do on this show and what we want to do specifically today is to get at what's. What's wrong with that story. It's not. Is that wrong, wrong, wrong.

[Robyn Rousey]

It's just not the whole.

[Katherine Ann Edwards]

It's not the whole story.

[Robyn Rousey]

It's not the whole story.

[Katherine Ann Edwards]

And if you don't think about the whole story, if you don't think about the actual cause of the problem, you'll never solve it. And we want to solve housing affordability, but it's not as simple as, let's just build some stuff.

[Robyn Rousey]

I think the other things that we, you know, just to keep in mind about what's been going on is, of course, the president has proposed and then backed away from the idea of 50 year mortgages as a way to make housing more affordable. Sorry. Wait, is that a spit take? Okay, sorry.

[Katherine Ann Edwards]

That's. It's such a bad policy. And they.

[Robyn Rousey]

I don't.

[Katherine Ann Edwards]

I. It was so bad, I just deleted it. But then I did remember. I don't know if you saw the reporting of the 50 year mortgage where the guy who. Bill Pulte.

[Robyn Rousey]

Yeah, Bill Pulte.

[Katherine Ann Edwards]

He put like a poster board with FDR's face and then Trump's face, and under one, he put 30 year mortgage. And on the other he put like 50 year mortgage. He's like, you're going to be like FDR. And then as soon as it came out, people were like, this is the stupidest thing I've ever heard. That just made me crack up. Like, nailed it.

[Robyn Rousey]

Yeah, fascinatingly. Bill Pulte. So Bill Pulte's the. He directs the Federal Housing and Finance Agency, like, oversees Freddie Mac and Fannie Mae. And they've been just like firing all the people whose jobs were about housing Affordability programs, fair lending program, teams that focus on counseling people on mortgages. His idea is just like, let banks do whatever they want to get rid of all the regulations that came after in the wake of the 2008 recession and housing crisis.

[Katherine Ann Edwards]

Just.

[Robyn Rousey]

That's the solution.

[Katherine Ann Edwards]

Boom. 50, you're welcome.

[Robyn Rousey]

And here we are.

[Katherine Ann Edwards]

So failing that.

[Robyn Rousey]

Yeah, failing that, failing that.

[Katherine Ann Edwards]

You know, how do we talk about housing? What do you, what do you need to know to have a, you know, proactive, productive conversation of what is going on with housing in the U.S. i think that there's a, like, kind of a North Star here, is that when we're talking about home affordability, we should look at the homeownership rate. It peaked in 2005 with the peak of the housing bubble. And after the housing bubble crashed, the homeownership rate in the US fell for 11 years and it went down to 62% from a peak of 69. And it didn't stop falling until 2016, and then it started to rise again. Now, a lot of weird things happened with the homeownership rate in the pandemic, but right now it is around 65 to 66%. It's kind of bouncing between there. So it's, it's stable. Maybe you would argue it should be rising, but it's not crashing. It has been stable for the past few years. So the homeownership rate is not like falling off a cliff the way that it did after the housing bubble burst. The second is, if you look at mortgage debt service, this is the amount of money that all Americans piled together are spending on their mortgage payment and express that as a share of income. And all the disposable income they have mortgage payments now are a smaller share of disposable income than they were before the pandemic. Again, it peaked with the housing bubble, peaked a couple years later in 2007. But we now spend less on mortgages as a country than we did even six years ago ago as a percentage of income. Were there some kind of catastrophic crisis in the housing sector, those two things would not be stable. And so that's, I don't say that to, to be like, up. And here's the economist with the data that says your struggle is fake, because the data says you're wrong. It's to, in some ways allay the concerns of how big of a problem we're dealing with because we have some basic level of stability in the market and in home ownership. So that's, that's good. It's good. It might make you, it might make you feel like I'm erasing. But it is good that those things are stable and they're not flashing red. But I think the second thing to understand, and this is also pretty important, is that when we think about housing and how many houses we need, like what are the total number of units we need? The denominator isn't people, it's households. And we build housing for households, not people.

[Robyn Rousey]

You mean how many housing units you need is based on how many households there are, not how many individual humans there are in the country?

[Katherine Ann Edwards]

Right, right. So bit of a terminology here. A household, in kind of the economics definition is whoever has a key. So if you live in an apartment with three roommates, you and your roommates are one household. If you live in an apartment by yourself, you are one household. If you live in a house, but there's two families in the house and you guys are split up, you are one household, two families. The household is basically whoever is under the roof, whether they're related or not. Over the past 15 years, we have seen a big slowing of household formation, which means you go out and you get a new key. So when I moved in with my boyfriend, I left my group house with three roommates and he left his group house with two roommates and we moved into a place together. We have formed a new household. So there has been a lot of reasons why we have not had new household formations. And one of them was after the Great Recession. A lot of people were staying with their parents, like living with their parents longer. Marriage rates are down, independent living amongst young adults is down. And some of this is because housing is expensive, but at the same time it also reduces the total need for housing. So it's definitely a two way street. Like the total household formation in the US is down by several million over the last 15 years and is projected to stay down.

[Robyn Rousey]

One question I've always had about this is whether there's also a mismatch between the types of housing that are available and the housing that people need at various stages of their life. So you just moved into a house in Texas, you've got kids, you wanted to be in a house with multiple bedrooms. In Southern California, where I live, a huge amount of the construction that's happening is apartments. They are mostly one bedroom and two bedroom apartments. They are probably not ideal for people who have children or more than one child. And granted, you know, Southern California thinks it's the Midwest and we should all have backyards. But I've Often wondered if there's also that. Right. And likewise a shortage of not just the size of the units, but whether you are at a stage where you want to be buying a house versus renting. Like, I think a lot of these things get really mashed up together into, like, housing shortage, when the shortage could be, we've got housing. It's just what you said, it's not affordable.

[Katherine Ann Edwards]

Yeah. I think that's the exact instinct that you can understand at a really fundamental level what it means to be mismatched to the housing supply. Because you want to live in a house, but there's only condos, or you want to live in an apartment, but there's only, like, houses far from the city center. Right. That mismatch of preferences, translate that to income. And that is the housing affordability problem we have is that the distribution of housing is mismatched to the distribution of income. And we have a. To the extent that we have a housing shortage, it's not a net shortage, like, we have more people than houses. It is a distributional shortage where we don't have enough housing for the people at the place that people can afford. Right. Supply is not like it's a. It's a problem, but it's a really subtle version of the supply problem. And maybe some would say not really a problem. All it's about mismatch between what people can afford in the bottom.

[Robyn Rousey]

Yeah.

[Katherine Ann Edwards]

And what is being built.

[Robyn Rousey]

Yeah.

[Katherine Ann Edwards]

Right. So it's not a matter of, like, as long as we got rid of certain regulatory and tax policy, people are suddenly going to build housing that someone who makes $50,000 a year can afford. That's why the supply answer is not fitting with the actual supply problem, which is income. Yeah. We don't have housing for people who don't make that much money. That is the problem. It's not that we don't have housing, is that we don't have the right price of housing. And what people are building is not at that price point. At least what private developers want to build is not at that price point.

[Robyn Rousey]

Yeah. That's interesting. And this affordability problem, I mean, again, I live in Southern California. The affordability problem came to us a long, long time ago. So it's been kind of interesting to see it catch up to other places. Like, for instance, we lived for two years in Spokane, and I watched it happen in Spokane in, like, in this period of time between 2019 to. What is it, 2022 or 2023, when housing prices shot up, like, what is it, 48% or something. There was in fact this gigantic leap in home prices as people moved, and then also a gap in purchasing power because of, largely because of interest rates and housing prices outpacing wage growth.

[Katherine Ann Edwards]

So I wrote about this in 2024. I wrote about it at the start of summer, like really getting into home buying season, and interest rates were high. And there was all this talk about how like, we had to push housing supply and construction forward. And I, I said, you know, affordability is a function of price and income. Like, if I can't afford something, it could be that it's expensive or I just don't have that much money. And I said, I think the US Will have a housing crisis so long as it pursues a low wage policy in the labor market. So if you assume that 30% of your income is affordable, right? If you give no more than 30% of your income towards housing, that's, that's the typical standard for affordability. And that standard has policy precedent behind it because that subsidized housing is paid back based on 30% of your income. So if you were in federal subsidized housing, they're tagging it around 30%. So it's not just like a number that came out of the air. Like, there is a lot of federal policy behind it. So it's, you know, we can talk about housing supply, but like, there are wages in the US for which there is no housing that is affordable for someone who makes that little money. And we will not build it. No one out there is like, we've got to go out and build housing for people who are going to pay me 7, $800. Yeah, they're not. It's not, that's not what they're building.

[Robyn Rousey]

One of the things I read was that the change between 2019 and now is that in 2019, 54% of houses were affordable to a median household income, and now that number is like 28%. So I was just also curious if half the houses are affordable, is that like kind of where you would want it to be? Like, to me, 2019 already felt unaffordable. But I live in Southern California like it was. It's. I know that I'm in this hyper, totally crazy real estate bubble.

[Katherine Ann Edwards]

We, we merely adopted the dark. You were born in it.

[Robyn Rousey]

No, I moved here. But anyway, back to my question, which is if like 54% of the housing stock that was for sale is affordable to the median household income, Is that imbalance?

[Katherine Ann Edwards]

54% of the housing stock that was for Sale is affordable to median household is an imbalance. Not necessarily, because it all depends on the distribution of home prices relative to the distribution of income. And it could be that, like, at the exact middle point, half, you know, which you could have, the middle person could afford middle housing, but that says nothing about the people underneath. The US Income distribution has a big clump of people below average. And we have more people below the average income than we do above it because the tail is really, really long, right. So if you, if you take an average, right. Just one of my favorite measures of central tendency. But if you take an average, right, you're just like, here's the total income, here's the number of people. We divide that average be above what even 60 or 70% of Americans make because we have a big clump of people that are below average and then a long tail of people that are above average. So I say all this because, you know what, what that big clump can afford really depends on if it has an equally big clump of housing right there. And the middle point is instructive, but it's not necessarily going to be indicative of what happens to everybody else below them.

[Robyn Rousey]

Does that mean the crisis or the real crunch point is people trying to get into the housing market? It's people trying to buy their first home?

[Katherine Ann Edwards]

Yes, I think that that's, or I.

[Robyn Rousey]

Guess maybe trying to move.

[Katherine Ann Edwards]

And in a lot of ways that's a function of interest rates, that interest rates have pushed up mortgage payments, which they're intended to do, and that as a result of that, you know, you either can't afford the mortgage payment because it's higher than rent or it crowds out other spending. Now, I, you know, not to be like, I don't know that like, jerk economist that's like, excellent. It's not supposed to be, but like, this is one of the reasons why we push up interest rates when inflation gets out of control is because when you push up interest rates and it makes things like mortgage payments more expensive, that crowds out other spending and that reduces demand, lowering the pressure on prices in the economy. I mean, this is, we're essentially all feeling the pain of having to try and conquer inflation. This is one channel of doing it. I mean, it is a blunt tool to raise interest rates. And you get all kinds of pain points like this. So that's one reason why the, the supply concern and the need to build, build, build is, I think, out of step with the reality that the escalation of homeownership, affordability and the crisis around it does coincide really well with interest rates climbing. And then I. And then the second part would be that I don't. I'm not convinced that we are actually millions and millions of short of units so much as I am convinced that we do not have a housing stock that reflects the cumulated toll of five decades of income inequality. And a lot of developers will build for the top of the market, and the bottom market becomes affordable. You know, basically when it grows so old or dispossessed that, like, other people can afford it. Well, that's not an affordable housing strategy.

[Robyn Rousey]

Just a wait and just wait for houses to get old and rehab.

[Katherine Ann Edwards]

Yeah, that's actually called Noah Naturally occurring affordable housing.

[Robyn Rousey]

Noah's okay, huh?

[Katherine Ann Edwards]

Yeah. And there are. There are people who are, like, work in urban areas to try to preserve Noah's. Because you have people who come in with a lot of income and they decide a neighborhood is desirable, and they push up the home price in a neighborhood, and you have all these Noahs that are lost because people are willing. You know, kind of going back to what we said about hedonic pricing, the neighborhood itself has become more desirable, and then that has altered the home price and the affordable housing is gone.

[Robyn Rousey]

Yeah. And you certainly see that in big cities where even the houses that probably should be torn down because they weren't ever really like, I live in a neighborhood where tons of houses. Los Angeles boomed in the 1920s. They built so many houses that they just. They weren't built to last. But they do, because it would now be so expensive to rebuild them on those lots, in part because of engineering things that they didn't do a lot of 100 years ago. And so you just. If you want to live in the center of the city, you live with the old housing stock, and you pour money into that instead of trying to build something new or move farther out where there's land.

[Katherine Ann Edwards]

Yeah, it would be really nice to just like, be able to sprinkle some housing on a city and say, like, there, like, the problem's solved. But I think what I want to stress about housing is that the problems go much deeper than just, is there a pile of bricks for you to move into? And I think it's a function of how we remunerate workers in our economy. You know, you go decades and decades without meaningfully reforming the labor market regulations, without raising the minimum wage, and then you have a housing affordability crisis, and you're like, and the answer is to build more. I'm like. Or think about it. We might have enough houses and not enough income. And one of those problems is a lot. There are a lot of people who want to jump in the game and say, like, well, let's develop and let's build stuff here as opposed to, you know, let's start getting incomes higher. I mean, I was looking up this morning, the median mortgage payment in the US right now is $2,259. The median weekly earning of a full time worker in the United states is around 1200 bucks. 1200 bucks. A lot lower for women, but 1200 bucks is the median. Median weekly.

[Robyn Rousey]

It's a lot lower for women.

[Katherine Ann Edwards]

I'm sorry, it's 1,200 bucks, but it's around 1,000 for women and 1300 for men. So median weekly earnings $1200. Median mortgage payment $2200. That comes out to needing $7,500 a month of income in order for that payment to be affordable.

[Robyn Rousey]

Sure.

[Katherine Ann Edwards]

So you can think of that $7,500 a month of being around $1,700 a week.

[Robyn Rousey]

Okay.

[Katherine Ann Edwards]

So there is a $500 weekly gap between what your median mortgage payment is and what the median worker earns. That $500 gap is not going away with a supply, like a infusion of supply. That is an income and wage problem. And the more we focused on supply, like, supply is not getting you out of this.

[Robyn Rousey]

Yeah.

[Katherine Ann Edwards]

Supply will only get you out of this if you have the government aggressively building homes that are below market rates.

[Robyn Rousey]

Right.

[Katherine Ann Edwards]

The market will not build below market rate homes. The government can go out and build below market rate home. That is what they would have to do to actually change supply in a way that matters for, you know, affordability.

[Robyn Rousey]

Right.

[Katherine Ann Edwards]

I mean, it's worth going back to history and thinking that, like, we have had housing supply shortages in the United States. They were very acute during World War II. And people who worked at factories related to wartime production, they were living in shanty towns, in tent villages, even though they were making good money, because there.

[Robyn Rousey]

Was truly not a house, no house to bed. That happened here and there, in fact, are still literally Quonset huts that were divided into like, duplexes that were housing into the 60s, I think, because they just couldn't build housing fast enough to absorb all the people who moved here after the war, in addition to all the returning soldiers and, you know, all the people who had worked in the ports and such and in the aerospace industry here.

[Katherine Ann Edwards]

Well, I mean, the U.S. coming out of World War II, you had a lot of constrained household formation as it were like you had people like they were married but they were in their parents house because like there was just not a house to be found in the city. And it was not about preferences and it was not about what they could afford. I mean it was just there was a not enough housing where people lived. And you saw a just absolute flourishing of home development, a lot of it with the government's help, if not the government building directly. Some of the histories you'll read will say like, yeah, because otherwise people would have like outright revolted. Like they need like people were so desperate for housing they wanted to get out of their parents house, they didn't want to and they wanted to all live alone. And you saw this like era of single family housing as a reaction to how much doubling up occurred out of necessity during World War II when there wasn't enough houses, especially in areas near production. Well, you know, I think about that not just because of what we should build, but like I do this all the time, but like this is not your grandfather's housing shortage. This is like people can't afford housing because we've been building, building too much expensive housing, not enough affordable housing and incomes have started to, you know, have just not taken off the way that they should have. And if we don't have incomes rising at the bottom, like we will never have affordable housing for half of Americans if the market is building for the top. And I think there's this kind of idea of like, oh, but more supply would reduce payments. I, I just. You haven't seen it.

[Robyn Rousey]

I haven't seen it. I actually, I found this story by the way, about what it would take just to get back to the 2019 affordability. The analysis was from actually realtor.com, which I believe put out a report about it, but they said to get things back to what you were talking about where the mortgage payment would be about 21% of median household income compared to more than 30% today. They say mortgage rates would have to fall to 2.65% or home prices would have to fall 35% or incomes would have to rise 56%.

[Katherine Ann Edwards]

Yeah, so it's not going to be just one.

[Robyn Rousey]

Yeah, it's not going to be just one thing.

[Katherine Ann Edwards]

And I guess the income side is overlooked here. And there's a degree to which enough income can solve this problem. Enough housing cannot solve this problem. More housing can help, but it cannot solve this problem if people don't have enough income or if incomes are being so, have left so far behind housing Price. Now, there's a whole other piece to this that there are a lot of people out there who do not want more housing. Now they say that they do and they want housing to be affordable. But I get this sense that really they want to keep housing as kind of the privileged good that it is because they treat it like a piggy bank. I mean, most Americans view their home as an investment, like they're trying to get equity out of it.

[Robyn Rousey]

Yeah, I guess. I mean, I can't speak to everybody, but to have savings out of their house, if not an investment, you know, does that distinction make any sense to you? So when I bought my house, I was very young compared to my peers. I was 27 when I bought my house. And I did it because housing prices were low, but I was paying so much in rent that I really couldn't afford to save at the rate I wanted to save. So I wound up buying a duplex and it allowed me to at least use the money that I was. Was putting towards rent to a certain extent, that it was also going to build up the principal and the equity in the house. I did not expect that the morgue. That the housing market would do what it did.

[Katherine Ann Edwards]

What year did you buy your house?

[Robyn Rousey]

1997.

[Katherine Ann Edwards]

1997.

[Robyn Rousey]

Now, you know, I mean, I was a newspaper reporter. I wasn't making a lot of money, but I did also read the newspaper and it told me that housing. Housing costs in Southern California were at. At 10 year lows because of riots, the earthquakes, the recession. Like that combo pack meant that housing prices were at 10 year lows. And I was like, this is my chance, I gotta go, I gotta do it. Now.

[Katherine Ann Edwards]

I think a lot of people view housing as an investment that, you know, the boomers bought houses for 50 grand in 1980 and now they're worth millions. And like, they want to do the same and that they want. They think of a house as this, like equity, you know, skyscraper of like once you get in, like you go straight to the top and like, all you need to be a millionaire is buy a house and have it, like just hold onto it and it just goes up, up, up and up. I don't think people should make money off their houses. I think it warps a lot of decision making to have so much of an investment, you know, putting a lot of money in just one stock. Like, it warps decision making.

[Robyn Rousey]

Yeah, it does. I mean, we keep passing laws and constitutional amendments and all sorts of things in California trying to incentivize people to do different Things with their housing.

[Katherine Ann Edwards]

Right.

[Robyn Rousey]

So we have rules that say you can take your property tax basis with you when you move if you're over 55. Because I just feel like people are locked into kind of the same way that people talk about being locked into low mortgage rates, that it would cost so much more. You'd have to essentially downsize your house. The feeling is it was for, you know, it was boomers, but now it's going to be Gen Xers. You know, that housing prices shot up so much that you can't afford the property taxes on the place that you would go. And I mean, we live in Los Angeles in part because we are locked into those. To all those things.

[Katherine Ann Edwards]

Yeah. I mean, yeah. Portable mortgages, which we talked about once on a Q and A episode, like if you're credit worthy and you're paying down a 25 year mortgage and that's worth $500,000, like, why does it have to be fixed to that one address? Like you could pay a fee and just move basically your house. The thing about portable mortgages is like, sure, sure. It's basically someone is giving you a, an asset backed loan and kind of.

[Robyn Rousey]

Letting you like swapping assets.

[Katherine Ann Edwards]

Yeah, you're swapping like the little A asset for the big A asset of like, I own a house. But like that kind of changes the perspective that people have on mortgages as well as how they, like how long they stay in a house, how they invest in a house, what they think of equity out of the house. It's almost like you're prepaying rent for 30 years and then you're shifting location of I'd rather prepay rent with an interest on a loan rather than pay it in like real time. And then that I think would change a lot of people's calculus of like, do I need to buy? When do I need to buy? I mean, there's so much wrong with the housing market that's not supply. I think every time I hear a supply thing, I just. It's just this like eye roll for days of like, oh, yeah, let me guess. We need to be able to kill more birds and build houses and FL planes. Like, I get it. We shouldn't have regulations and that's the answer to all of our problems. Or hear me out. Fixing all the problems that we have.

[Robyn Rousey]

Yeah.

[Katherine Ann Edwards]

All right. Optimism. Optimism.

[Robyn Rousey]

Yeah.

[Katherine Ann Edwards]

I'm gonna do two things. One is I bet someone's going to be listening and be like, nice for two homeowners to talk about it. And we're gonna get Like, a lot of slack. Especially if this is TikTok. Flack.

[Robyn Rousey]

We're not gonna get any slack.

[Katherine Ann Edwards]

Flack.

[Robyn Rousey]

Why.

[Katherine Ann Edwards]

Why do I.

[Robyn Rousey]

That's why you have me here.

[Katherine Ann Edwards]

I don't know where.

[Robyn Rousey]

I know that people think that I correct you because, like, I'm a. But I really am trying to help.

[Katherine Ann Edwards]

You help so much. I. I think we will get Flack because we're two homeowners talking about, I'm a landlord.

[Robyn Rousey]

I'm the worst kind of homeowner.

[Katherine Ann Edwards]

You're a landlord?

[Robyn Rousey]

Yeah.

[Katherine Ann Edwards]

My God, you're one step away from being a pawn broker.

[Robyn Rousey]

Like, I. I should just, like, draw a mustache on my face and, like, twirl.

[Katherine Ann Edwards]

We just lost production.

[Robyn Rousey]

Yeah, that's Just quit.

[Katherine Ann Edwards]

But I.

[Robyn Rousey]

But I think in fairness, I have a. I have a rent control. I have a rent controlled unit.

[Katherine Ann Edwards]

Oh, snaps. Okay, they're back. We got production back.

[Robyn Rousey]

Derek also listens to the show. He's gonna be like, wait, what?

[Katherine Ann Edwards]

I mean, yeah, it's a lot for, like, two people who own houses and refinanced houses to be like, supply isn't the end all be all. And it's not to downplay how hard it is to buy a house that I bring up all these other things. I think it's to make the narrative much more empowering. Right? Like, hey, y', all, good news. Our salvation doesn't come from housing developers deciding to take a chance on a market that's good. Don't listen to our housing developer presidents or whatever legion of bros who are following him. It's not there. Our fate is not in their hands. Our fate is in the hands of, like, better banking policy, better lending policy, and better labor market policy where people actually earn an income. And that is where our salvation comes from. And not from whenever some decides to build a big building and say, like, it's mixed use and one of the units are affordable. You come on, like, y', all, let's put this power. This is back in our hands here. You need to go out there and demand unionization if you want affordable housing. Like, we need better income. Sorry, I didn't mean to. I didn't mean to rant. So I know. I focus on income, but think for a minute about our. Like, if you listen to the first episode, we talked about the just enormity of income inequality, right? We have, over the past 50 years, seen this incredible increase in incomes at the top versus this paucity of growth for the bottom 90% missing out on so much of the economic growth. So if I Were to tell you think of like two housing markets, one in 1975 and one in 2025 or 2026. How much has our housing supply kept up with the gross income ine? Right. Like these are fixed buildings, many of them built before the time we're talking about. If you were to just like kind of close your eyes at the end of the first episode and say, what are the consequences of having five decades of growing income inequality in which the top incomes are taking off and the bottom are not growing enough at all? Well, yeah, we're going to be mismatched with our housing stock eventually. This is a consequence of long term income inequality that we have now are mismatched to our housing stock. And that is a big part of the problem. And that is not just a matter of like stripping down environmental regulations and making sure that we can build like in a watershed or in a national park. It's a bigger problem than that. But it's also. That makes that solution seem so like.

[Robyn Rousey]

And that solution has so many other benefits. Right. I mean, there's so many things that are happening because of housing affordability, including like far reduced mobility of Americans. People just aren't moving anywhere and in part because they don't have the money to move and buy a house in a new city. There's a lot of things that, that, that people get locked into because they can't afford to move.

[Katherine Ann Edwards]

The answer to that is not building more housing.

[Robyn Rousey]

Yeah.

[Katherine Ann Edwards]

Or maybe the answer to that is not like more market built housing. I think that government building below market housing is the answer. Americans are terrified of that now. Yeah, we're terrified of it now. We didn't, we weren't always. But I mean, the government building below market housing that is actually affordable, you know, most of our intervention into the housing market is for the very poorest. Yeah, right. We don't have median public housing. We have low, low, low income public housing. We kind of ask private developers to like, in some places set aside some units for people who are at like 30 to 50% of area income. That is not the same thing as building housing for the middle or, or having government subsidized housing for the middle, which we don't really have. We do more at the bottom, not enough in the middle, and the private action takes place kind of at the top half.

[Robyn Rousey]

We do also act as if, I don't know that it's anathema to American capitalism for the government to be interfering in the housing market. Right. That it's a market. But of course they interfere in it in all sorts of ways. So why not in a way that actually increases affordability instead of, I don't know, subsidizing banks with mortgage interest deductions?

[Katherine Ann Edwards]

It strikes me how often there's like the right kind of intervention and it never applies to most of us.

[Robyn Rousey]

It seems to apply to JP Morgan Chase more than me. Yeah, I know, yeah.

[Katherine Ann Edwards]

Like we have, we have low income housing tax credits to help build very low income housing, but there's not enough. And, and there's no reason why the government can't build housing alongside of housing building that it's subsidizing. If it wanted to try, if it wanted to take a chance on housing affordability in a way that it had control over, I think it's all a matter of, like, the solution to the housing affordability problem is truly about what we are willing to ask for, and that is optimism because that puts agency back in our hands. It's not waiting for a developer to decide that our neighborhood or our city or our price point is suddenly worth it to them or they can squeeze the government for more in order to make it worth it. Right. If we make this about what the government can directly intervene in the housing market, we get to design our solution. And we are more empowered in that process than just build, build, build. So let's become empowered. Let's tell them exactly what we want them to do and make sure that the housing that is and the supply that is addressed is something that will benefit the bottom 70% of Americans and not the top 30 who can afford a housing anyway.

[Robyn Rousey]

All right, we're going to take a little break and we will be right back with executive orders.

[Katherine Ann Edwards]

And we're back to continue to tell people how to live their lives, how society should be organized. Smaller ways. Smaller ways.

[Robyn Rousey]

So I have an executive order. As listeners of the show know, I was in Houston last week visiting Catherine and her family and I flew back on Delta Airlines. And I'm just going to say bathrooms on airplanes have become criminally small. I am an average sized woman. I don't know how anybody larger than me is fitting into this bathroom. I'm waiting for an Americans with disabilities lawsuit on these. They're criminally small.

[Katherine Ann Edwards]

Some listener is going to know how airplanes get around. Ada, I don't understand. And how.

[Robyn Rousey]

Yeah.

[Katherine Ann Edwards]

How bathrooms on planes work for people with a disability. I mean, try going in there with a kid. Oh, yeah. Yes, I endorse this executive order. Make bathrooms on airplanes bigger. Allah Amtrak. Where like you and your eight best Friends can go to the bathroom together. Like everybody on this. Let's all go. Why don't we all go? There's a big group down to the bathroom on the Amtrak.

[Robyn Rousey]

All right, what's your executive order?

[Katherine Ann Edwards]

My executive order is very self serving, but I need to be involved on the remaining casting decisions for the movie that they're making about the 1999 Women's World cup, about the 99ers, the girls of Summer. I need to be involved in the rest of casting. They did great with the. I mean, Mia, she looks just like her. I'm very excited, but, like, you can't exclude me anymore. I need to be a part of this. I had so many ideas of who should play everyone, and I swear to God, I swear to God, if they cast the wrong person as Michelle Akers, like, I don't know what I'm going to do.

[Robyn Rousey]

Who do you think should play Michelle Akers?

[Katherine Ann Edwards]

God, I don't. I don't have everyone yet. I just need to be in the room when the decisions are made to make sure that there's. Like.

[Robyn Rousey]

You want approval?

[Katherine Ann Edwards]

I need producer approval. A lot of actresses are like 5 foot nothing, 75 pounds. And I'm like, michelle Akers is. Stall is like a force of nature. And you can't just do casting. You can't just do, like, angles. I need a person of substance in the most amazing wig. Yeah, let's not skimp out on the wig budget for this one. Like, let's. Let's make sure that this girl. I've got so many. Anyway, so me being a producer with like a lot of opinions on the 1999 ERS movie is my executive order benefits no one but me. But I just. I feel like I'm gonna install myself there.

[Robyn Rousey]

Okay, that sounds good. All right. Optimist Economy doesn't have any financial sponsors except you guys, but we do have spiritual sponsors, and those are the things that are keeping us going. Katherine, what's your spiritual sponsor this week?

[Katherine Ann Edwards]

Lily Allen's new album, West End Girl.

[Robyn Rousey]

I listened to this on your recommendation while I made dinner the other night.

[Katherine Ann Edwards]

Oh, what did you think?

[Robyn Rousey]

It's great. It's great. I mean, it's a reminder. Don't break up or screw over a songwriter, man. Like, that's.

[Katherine Ann Edwards]

That's all I keep thinking is like, wow, this sounds so painful. And she's been through so much. But at the same time, I have benefited from this personally by having such a banger album.

[Robyn Rousey]

I felt like I'd been on a. I'd read a novel. By the time I finished cooking dinner.

[Katherine Ann Edwards]

I've been through such a journey. Yeah. And also the SNL skit that features her where they reference the album is like equally as good. It's when Josh o' Connor hosted. But I would recommend watching the Lily Allen and SNL skits. But I can't help but thinking that like, that one song of like Love and Light, Madeline, it is. I'm like, that is the new Bless your Heart. Like if I walk up to someone and I'm like, love and Light. Love and Light. I'm like, wow, that's what a devastating thing to say. Love and Light, the new Bless yous Heart. If we. If there's hope in the world, the new Bless yous Heart will be Love and Light, Madeline. Oh, man, it was so good. What is. Who is your spiritual sponsor? What is your spiritual sponsor?

[Robyn Rousey]

My spiritual sponsor this week is actually Japanese Grand Sumo Tournaments. I won't go on and on about it, but here's what I can tell you. The champion sumo wrestler in Japan right now is a guy who's actually a 21 year old Ukrainian. So everybody's a wrestling name. And his wrestling name is Onishiki. And you know it references because he's Ukrainian blue as the Ukrainian flag. And then Shiki is the name of the. Was his mentor. But anyway, but his real name is Danilo Yavushishian and he's a 21 year old Ukrainian. He moved to Japan after the Russian invasion of Ukraine. But he had been a wrestler and a sumo wrestler. And sumo is done like this. There's like 20 odd guys and they each wrestle one person one day every day for 15 days. Each wrestling match, I mean sometimes they last seconds. For a sumo wrestling match lasts like two minutes. It's like epic and it's full of ritual and it's full of these amazing outfits and this huge stadium full of people looking down on this one little doyo, which is the ring where they wrestle. And anyway, it's pretty great. There was a Wall Street Journal article actually, it turned out just I think today or yesterday about this guy, the wrestling champion. But we watched the whole tournament and you can also watch a day's bouts in about 30 minutes because they're so short. And they're on YouTube on NHK, which is the national broadcast of Japan's YouTube Sumo. Yeah. And you know, for our video listeners, I do have sumo wrestlers in the painting on the back wall here.

[Katherine Ann Edwards]

Oh my God, you do?

[Robyn Rousey]

Yeah.

[Katherine Ann Edwards]

I've never pieced together what your painting is of because of the window. My mind is blown on so many levels.

[Robyn Rousey]

That's it for another episode of Optimist Economy.

[Katherine Ann Edwards]

Optimist Economy podcast is edited by Sophie Lalonde. Our video production for Social media Social Media is by Andy Robinson, Video Consulting. Thank you, Andy and Sophie, for making us sound like a podcast, sort of. If you agree with the things we say, we post video clips from the show for you to share with your friends or your foes. We're on tick tock, Instagram, YouTube, and LinkedIn. You can find us on those platforms to share some highlights from the show.

[Robyn Rousey]

If you're on substacks, you can follow us there too. And we have an optimist chat going. And while Optimist Economy is a labor of love for me and Catherine, we do have bills to pay. So if you have the means to contribute, you can do [e-mail] where we will also happily sell you a T shirt. Or a hat.

[Katherine Ann Edwards]

Or a really good tote bag.

[Robyn Rousey]

Or a really good tote bag.

[Katherine Ann Edwards]

Okay, Thanks, y'.

[Robyn Rousey]

All.

[Katherine Ann Edwards]

Love and light, Madeline. No house I will ever own will ever come close to how cool my Chicago apartment was that we rented. It was just. It will never. Nothing will ever come close. It was one block south of, like, the northern border of the Chicago Fire. So it was in that, like, Beaux Arts style. It was just. Sophie. I had the opposite experience in Chicago. Sorry, Sophie. My Chicago apartment was so cool.