Episode Summary: 🏠 “The Housing Pod” — Our 3 Best Stories on the Housing Market

Published on February 28, 2025 by Nick & Jack Studios

In this enlightening episode of “The Best One Yet” hosted by Nick Martell and Jack Crivici-Kramer, the duo delves deep into the complexities of the American housing market. Titled “The Housing Pod”, this episode presents three compelling stories that shed light on current housing trends, challenges, and innovative solutions. Here’s a detailed breakdown of the discussion:

1. Costco’s Foray into the Housing Market: Kirkland Condos

(Timestamp: 04:41 - 09:35)

Overview:
Costco, the retail giant known for its bulk goods, is making a significant move into the housing sector with the launch of its first-ever Costco apartment complex in Los Angeles. Named the Kirkland Condos, this initiative aims to address high rental costs by providing affordable housing options.

Key Points:

• Costco’s Expansion:
  Nick highlights Costco’s impressive stature:

  “Based in Washington State, this 41-year-old company is worth $400 billion. It's the 20th biggest company in America and yet the stock is up 40% this year like a young buck.”
  ([05:01] Nick)

• Amenities and Vision:
  The hosts humorously envision the amenities in Kirkland Condos, imagining free-flowing Costco wares and exclusive access for members. However, the reality falls short of these grand expectations:

  “But the Costco is not getting into apartments right now, are they, Jack?”
  “No, this is a one-off that they're doing just for their location for a very particular reason.”
  ([06:38] - [06:54] Nick & Jack)

• Regulatory Facilitation:
  California’s state law AB 2011 plays a pivotal role by offering fast-track approvals for developments that include affordable housing. This legal framework has enabled Costco to implement a mixed-use project:

  “Instead of a purely commercial construction like for most Costcos, Costco is doing mixed use for this particular LA location. So it's both a commercial space and a residential space.”
  ([07:00] Nick)

• Affordable Housing Metrics:
  Of the 800 apartments, 184 are designated as affordable units. However, critiques arise regarding the size and practicality of these units:

  “The apartments are 600 square feet and smaller. Some people on Twitter are actually calling these Costco apartments Costco prisons.”
  ([07:50] - [08:05] Nick & Jack)

Takeaway:
Nick and Jack emphasize that addressing the housing crisis requires diverse solutions tailored to each state’s unique regulations and needs:

“Fixing housing requires 50 different solutions. Yetis, unaffordable housing is a problem for all 50 states. It's the biggest driver of inflation, of poverty, and of unhappiness.”
([08:36] - [08:48] Jack & Nick)

2. Elevators: A Microcosm of America’s Housing Crisis

(Timestamp: 09:35 - 14:44)

Overview:
The discussion pivots to the often-overlooked role of elevators in the housing market. The high costs and stringent regulations surrounding elevator installations are highlighted as significant barriers to developing multi-family housing units in the United States.

Key Points:

• Historical Context:
  The invention of the elevator by Otis in 1852 is celebrated as a cornerstone of America’s architectural and industrial rise:

  “The elevator's invention was a metaphor for America's industrial rise in the world.”
  ([10:08] Nick)

• Current Challenges:
  Despite their importance, elevator installations in the U.S. have stagnated:

  “The United States has 1 million installed elevators, which. Jack, that sounds like a lot. You know.”
  ([11:22] Nick)

• Cost Disparities:
  The exorbitant costs of installing elevators in the U.S. compared to Europe are dissected:

  “The basic four-story elevator costs $160,000 in New York City. In Switzerland, they cost just $36,000.”
  ([12:01] - [12:25] Nick & Jack)

• Regulatory Hurdles:
  Strict U.S. regulations necessitate elevators that can accommodate ambulance stretchers, making them larger and more expensive. Additionally, labor costs are inflated due to requirements for documented workers:

  “The one reason is regulations... Elevators must be built by documented workers.”
  ([12:34] - [13:03] Jack & Nick)

• Housing Impact:
  The high cost and regulatory barriers lead to a shortage of multi-family apartment buildings, exacerbating the housing shortage:

  “We have too many houses, not enough apartments, and elevators show why.”
  ([13:52] - [14:02] Jack & Nick)

Takeaway:
Elevators serve as a metaphor for broader housing issues:

“We have too many houses, not enough apartments, and elevators.”
([13:52] Jack & Nick)

Nick and Jack argue that streamlining regulations could significantly reduce costs and encourage the development of more apartment buildings, thereby alleviating some of the housing shortages.

3. Georgetown, Texas: The Rise of Boomer Boom Towns

(Timestamp: 17:21 - 22:16)

Overview:
The final story explores Georgetown, Texas, highlighted as the fastest-growing city in America, primarily due to its appeal as a retirement destination for baby boomers. The episode examines how these "boomer boom towns" inadvertently contribute to solving broader housing challenges for younger generations.

Key Points:

• Sun City, Texas:
  A planned and gated community designed for retirees has attracted 17,000 older adults, drawn by amenities like pools, golf courses, and the absence of state income tax:

  “Sun City which is in Georgetown, Texas, has attracted 17,000 retirement people to move in to benefit from the pool, the golf course, and the lack of income tax.”
  ([18:33] - [18:54] Jack & Nick)

• Demographic Shifts:
  With a median age of 73, Georgetown exemplifies the aging population trend:

  “The median age over in the population of Sun City, Texas? 73 years old.”
  ([18:58] - [18:59] Jack & Nick)

• Wealth Redistribution:
  Older generations hold a significant portion of the nation's wealth, and their migration to specialized communities affects housing availability:

  “Americans 55 and older own 70% of the country's wealth, which is up from 50% of the country's wealth 35 years ago, according to the Fed.”
  ([20:19] Nick)

• Counterintuitive Solution:
  By relocating boomers to areas like Georgetown, existing affordable housing elsewhere becomes available for younger generations, such as millennials and Gen Z:

  “Building unaffordable housing is the best way to create affordable housing.”
  ([21:04] - [21:08] Jack & Nick)

• Market Dynamics:
  Developers prefer constructing higher-end housing due to profitability, leading to a trickle-down effect where more affordable units become available as a result:

  “Developers don't want to build affordable housing. No, no, no, no, no. Developers, they prefer building unaffordable housing that's more profitable, but that is actually just as good, because each boomer moving into Sun City leaves behind an empty home somewhere that's probably more affordable.”
  ([21:19] - [21:53] Jack & Nick)

Takeaway:
The migration of affluent retirees to specialized communities can indirectly alleviate housing shortages for younger populations by freeing up existing affordable housing stock:

“Poltigroup is building 11,000 unaffordable homes in Texas, which opens up 11,000 affordable homes somewhere else.”
([21:25] - [21:31] Nick & Jack)

This approach underscores the interconnectedness of housing dynamics across different demographic groups and regions.

Concluding Insights

Throughout the episode, Nick and Jack intertwine humor with critical analysis, offering listeners both entertainment and valuable perspectives on the housing market. They emphasize the multifaceted nature of housing challenges and the necessity for diverse, localized solutions.

Notable Quotes:

• “Fixing housing requires 50 different solutions.”
  – Jack, ([08:36] Jack)

• “We have too many houses, not enough apartments, and elevators show why.”
  – Nick, ([13:52] Nick)

• “Building unaffordable housing is the best way to create affordable housing.”
  – Jack, ([21:04] Jack)

Future Episodes:
Nick and Jack hint at continuing their exploration of housing solutions tailored to specific states, with the next episode focusing on New York’s unique challenges and opportunities.

Final Thoughts:
"The Housing Pod" offers a comprehensive look into current housing trends, from corporate ventures like Costco’s apartments to the intricate role of elevators in urban development and the demographic shifts influencing housing availability. By dissecting these stories, Nick and Jack provide listeners with a nuanced understanding of the housing market's present state and potential pathways forward.