Valuetainment - April 16, 2026


“HORRIBLE Time To Be A Realtor” - 10M Home Shortage FUELS U.S. Housing Crisis


Episode Stats


Length

14 minutes

Words per minute

199.35638

Word count

2,829

Sentence count

171

Harmful content

Hate speech

3

sentences flagged


Summary

Summaries generated with gmurro/bart-large-finetuned-filtered-spotify-podcast-summ .

America is short 10 million homes. The White House estimates that the U.S. needs to build 10 million more homes to meet the growing demand for housing. What does this mean for the economy, the housing shortage, and the economy as a whole?

Transcript

Transcript generated with Whisper (turbo).
Hate speech classifications generated with facebook/roberta-hate-speech-dynabench-r4-target .
00:00:00.040 Okay, when I sell my business, I want the best tax and investment advice.
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00:00:30.000 White House, America's short 10 million homes.
00:00:32.980 And we remember, we read this article a couple of years ago that was saying 4 million homes.
00:00:37.120 And a few years prior to that, 2.6 million homes, right?
00:00:40.700 But the White House comes out saying 10 million, the White House estimates of how many single family homes the U.S. is missing.
00:00:47.420 Part of the Council of Economic Advisors, annual economic report of the president.
00:00:52.440 This dwarfs prior estimates.
00:00:55.220 Freddie Mac, November of 2024, said 3.7 million.
00:00:58.500 National Association of Realtors in June of 2021 said $5.5 million.
00:01:02.640 Now they're saying $10 million.
00:01:04.020 If home building had continued at its historical pace of 6,000 new homes per million people per year,
00:01:09.720 the pace had held steady for decades before 2008.
00:01:12.540 The U.S. would have had 10 million more homes today.
00:01:14.480 The 2008 financial crisis essentially cut the home building grade in half, and it never fully recovered.
00:01:19.700 The medium home price right now is $534,000, up 52% from Q1 of 2020, according to Federal Reserve Bank of St. Louis.
00:01:29.740 40% of Americans don't own a home, believe buying one in the future will be impossible, according to CNBC.
00:01:36.400 Only eight of the 50 largest U.S. metro areas are currently buyer markets.
00:01:41.880 Half of those eight are in Florida.
00:01:44.580 The rest are Atlanta, Austin, Nashville, Riverside,
00:01:49.120 and a U.S. Senate passed a bill last month, an 89 to 10 vote,
00:01:53.220 but its fate in the House is uncertain.
00:01:55.880 So when you look at a number like this,
00:01:58.000 they're saying if we don't use the number 534,
00:02:00.600 we just assume it's $450,000 per unit at 10 million unit shortages,
00:02:06.180 represents $4.5 trillion in housing wealth that could enter the market,
00:02:10.040 could create jobs, could be good for some people.
00:02:11.840 So when you see a story like this, Tom, how do you react to it?
00:02:15.060 So there's a supply and demand issue on housing, and I'll give you two case studies.
00:02:19.280 The first case study is Austin.
00:02:21.160 During the big run-up in prices in 2022, we were about to come out of COVID.
00:02:25.900 We had inflation hit the asset.
00:02:28.380 The underlying assets were hit by the inflation of printing money.
00:02:32.580 So assets, prices went up everywhere, such as stock market and homes, real estate.
00:02:37.760 So number one, all those went up.
00:02:39.640 But in Austin, Austin was in a gold rush of construction that started in 2018.
00:02:46.200 They were going nuts.
00:02:47.420 Who was going to put their headquarters in Austin?
00:02:49.920 Remember this, Pat?
00:02:51.000 Everybody.
00:02:51.840 Oracle, I'm going to Austin.
00:02:54.080 SpaceX, I'm going to Austin.
00:02:55.500 All these Silicon Valley companies on the strength of South by Southwest on a favorable high-tech and startup environment in Austin, Texas.
00:03:05.240 Hey, we're all going to Austin, and we're going to have low state income tax, by the way.
00:03:08.580 and it's going to be pretty cool to live there guess what happened they built built built built
00:03:12.720 built supply supply right now rents are moderating in austin and there is an excess supply of rental
00:03:20.940 housing available which is making brandon it actually affordable for people to find very
00:03:27.060 affordably priced rentals in the near town areas not downtown but in the near town like you don't
00:03:32.480 have to live in you know in round rock and commute all the way down to austin for your job so there's
00:03:38.040 there's the supply coming together and that's exactly what they're talking about when you've
00:03:42.820 flashed back on a national basis and say not everybody was building like that so everyone
00:03:47.960 else has a shortage of rental homes which is why they're coming to this 10 million number
00:03:53.440 number one and so how do you get all that built now because now you're dealing with
00:03:58.880 inflated materials austin was built since 2018 with the old material costs that started going
00:04:05.060 up in 22. So now you start building homes on inflated copper, inflated concrete, inflated
00:04:10.160 plywood, inflated labor costs, shortage of labor. So you have to pay construction guys more. Boom.
00:04:16.340 Now to build out the supply, it's going to cost you more to do it. And the pressure, and Rob just
00:04:22.340 put the chart up, look at the gap between sellers and buyers right now. Interest rates are back up
00:04:27.920 to 6.4, 6.5. There's an estimated 1.359 buyers in America and 1.9 sellers, a gap of 600,000.
00:04:37.920 So people on the existing homes can't afford to buy them. So there's the two problems. You got
00:04:43.400 to build more homes, but it's be inflated costs to do it. And the homes that are out there right
00:04:48.000 now haven't come down enough. And if we all had done what Austin did back in 2018 and got too
00:04:53.900 excited and built a bunch of supply, our citizens would have more affordable housing.
00:04:57.960 Lynn?
00:04:58.660 Yeah, I think there's two main factors here.
00:05:00.340 One is NIMBYism.
00:05:01.620 So many, many areas don't want a lot of new supply because their existing homeowners are
00:05:05.120 worried about their price disruption.
00:05:07.220 Places like Austin are kind of the model to do it correctly, which is to allow new supply
00:05:11.500 to come on the market when it's incentivized to do so.
00:05:14.800 And so that's one factor that's very region specific.
00:05:18.220 And the other one is this more structural issue that for about 40 years from 1980 to
00:05:22.980 2020, you had structurally rising home prices, both in nominal terms and as a percentage of
00:05:29.180 average incomes. So the multiple of home value to income kept increasing. But for 40 years,
00:05:35.140 that was roughly offset by structurally declining interest rates. So, you know, you have higher
00:05:40.000 housing costs, but you have kind of decreased financing costs. So the monthly amount that
00:05:46.440 they have to pay was kind of held in check, at least relative to their incomes. The issue is
00:05:50.360 that once we hit zero rates and we start to get this more of inflation wave, we don't really have
00:05:56.660 that tailwind behind us anymore. And I don't think it's coming back. I mean, the best we can hope for
00:06:00.360 is just interest rates kind of chop around in a sideways pattern here, up and down during boom
00:06:06.100 years and bust years. But we don't really have that structural decline anymore. And we still
00:06:11.040 have those very high multiples of housing value to income value. And a lot of that is because as
00:06:17.600 you have decades of money supply growth it it finds its way toward the scarcest things right
00:06:22.280 so things that can that things that we can get much better increasing the supply of their price
00:06:26.740 standard control you know grain prices uh manufactured goods out of china um more is
00:06:32.660 anything any electronic with more's law and software and all that all that can be kept very
00:06:36.620 low because there's not really much scarcity to it but whether it's the best financial assets you
00:06:41.080 know the best stocks uh gold bitcoin uh top tier housing but then even kind of just normal median
00:06:48.020 housing there's obviously a scarcity factor to that and that so that's where we get more and more
00:06:52.660 just people using their you know buying second homes as their piggy bank for lack of wanting to
00:06:57.320 hold the money uh and and we're kind of at the phase where this really impacts the consumer
00:07:02.500 because there's no structural decline in interest rates anymore even if the fed does cut rates uh
00:07:07.400 going forward, it's not necessarily going to impact the long end, uh, and therefore mortgage
00:07:12.300 rates. Um, they have extreme tools. They can do a yield curve control, but they're not very popular
00:07:16.780 when you have high inflation. Um, and so I think a lot of it's going to come down to, you know,
00:07:22.140 getting out of the way of, of builders, letting them build when the incentives are right to do
00:07:26.320 so. Um, but then stepping aside from that, it is just a structurally hard problem with no longer
00:07:30.500 falling interest rates and, and sellers are kind of locked in. They don't want to sell because they
00:07:34.440 They had locked in a 3.5% mortgage.
00:07:36.700 But over time, more of them just become forced sellers anyway,
00:07:39.740 and they have to bite the bullet and sell.
00:07:41.480 So eventually the market can clear, but it can take quite a while.
00:07:44.620 Rob, go back to that chart that you had, sellers and buyers.
00:07:46.920 I mean, look at that.
00:07:48.860 We've never had this big of a gap on sellers above buyers.
00:07:54.500 Like if you go look at 2021, that was the worst time.
00:07:58.320 Like if you look at the buyer's market at that time, look what it was like.
00:08:01.880 Go to the difference.
00:08:03.480 If you go a little bit prior to that, all the way to the top right there, look at that.
00:08:06.540 2% interest rates, and those buyers were buying.
00:08:08.820 That's right.
00:08:09.240 Go a little bit to the right, Rob.
00:08:10.960 Go a little bit to the other peak.
00:08:12.680 Keep going, keep going right there.
00:08:14.040 Look at that.
00:08:14.920 Look at the peak between the buyers and the sellers.
00:08:18.180 But if you go prior to that with the sellers and buyers, you have to go to 2015, 2016.
00:08:23.720 That gap is not keep going back, keep going back a little bit, Rob.
00:08:26.800 Keep going back, back, back, back, back, back, right there.
00:08:29.160 No, a little bit to the front, right there.
00:08:30.940 One back.
00:08:32.020 Okay, right there.
00:08:32.720 Look at the difference between that, and that's still not as bad as it is today.
00:08:36.400 So this has to be a horrible time to be a realtor and a loan officer.
00:08:41.980 I mean, if you're still a realtor making money, you know, you have outlasted a lot of guys that have probably quit and left.
00:08:50.920 I think, you know, we used to run our events.
00:08:53.040 This last event that we had, Tom, the Sales Leadership Summit, every year I would ask and say, raise your hand if you're in the mortgage industry.
00:08:59.440 Four years ago, it was 40% were all in mortgage and real estate.
00:09:04.800 We have 403 people in the room, attendees.
00:09:09.300 I asked them, raise your hand if you're in a mortgage business.
00:09:12.400 How many people raised their hand?
00:09:13.580 A guy named Phil.
00:09:14.980 No, he's not kidding.
00:09:16.700 One guy raised his hand.
00:09:19.400 And five years ago when he would talk to these guys,
00:09:21.060 they had three Rolls Royces, two Ferraris, three homes, vacation homes, 17 Rolexes.
00:09:25.520 it's a very different ball game for some of these guys that they're going through it brandon your
00:09:29.400 thoughts on the story yeah this makes me think of some of that absolutely blew my mind and made
00:09:33.860 everything made make sense a couple weeks ago when you had richard werner on so i remembered when the
00:09:38.440 um the fed changed the role for the banks that they they didn't have to have a reserve requirement
00:09:42.160 in 2020 you know it used to be 10 they dropped it i thought it was that they dropped it quick and
00:09:46.800 they brought it back but i didn't realize that they never brought back a reserve requirement
00:09:50.260 for loans because you know when you know money creations uh commercial banks lending money so
00:09:54.400 So I was always wondering, I know we printed a couple trillion or did a couple trillion in debt from the Treasury during COVID,
00:10:00.880 but I'm like, man, that's really lasting five, six, seven years out into the future.
00:10:05.780 But no, it seems it's probably more the lack of a reserve requirement because that's infinite money that could be created.
00:10:11.360 So that's what's pushing up the real estate market.
00:10:14.300 That's what's pushing up everything else in a big way, I bet, is the fact that there's no reserve requirement for the banks
00:10:19.680 for how much money they can issue out to borrowers.
00:10:24.400 but that's um that's one side of it the other side of is we need to get these commodity prices
00:10:29.300 down and i mean we do have the levers to do that like so commodity prices zoning um i mean any of
00:10:36.120 these places that are trying to restrict home building for just the sake of keeping the prices
00:10:39.880 up and you know that's something that needs to be fought against viciously because your your home
00:10:44.640 as your number one asset i don't think that's like a healthy place for society i think it's
00:10:48.540 more important for the younger generation to be in a position of strength rather than the older
00:10:52.220 generation to maintain their number one asset.
00:10:56.480 There's a quick caveat on that.
00:10:57.740 This sometimes gets lost in discussion.
00:10:59.160 So even though it is true that reserve requirements have been eliminated, when you actually look
00:11:02.980 at banks in aggregate, they have pretty high reserves relative to their total assets and
00:11:07.640 relative to deposits right now.
00:11:09.060 So even though the requirement's gone, it doesn't mean that the reserve ratios actually
00:11:12.620 went down in any material way.
00:11:13.840 In fact, in the whole post-global financial crisis era, they're actually pretty high.
00:11:19.600 The lowest they ever got was actually right before the whole subprime mortgage.
00:11:23.280 That's when they really were extended, had tiny reserves.
00:11:26.520 Regulations were very low at that time.
00:11:28.660 Instead, what they have is kind of risk-adjusted capital ratios.
00:11:32.020 So they actually still have a lot of regulations for how much kind of like low risk or no risk capital they have to hold,
00:11:37.060 whether it's reserves, whether it's, you know, T-bills and things like that.
00:11:40.500 And actually their ratio of those kind of like low risk or nominally no risk assets is actually a pretty high percentage of their assets.
00:11:47.340 So I don't really view banks as making aggressive loans.
00:11:50.580 It's kind of the issue here in a similar way that it was leading up to 2008.
00:11:54.860 I think it's those other factors we discussed, the fact that interest rates are not going down,
00:11:59.300 that the house that was affordable at 3% rates is not affordable at 6% rates,
00:12:04.600 unless we start to see more exhaustion from some of these sellers that say,
00:12:08.940 you know, my house has been on the market for two years.
00:12:12.380 I keep trimming prices, but I'm not getting any bites.
00:12:15.020 I'm going to have to bite the bullet and materially reduce the price in order to get buyers back in and say, you know, this house that I bought for $700,000, I'm trying to resell for $700,000, I might have to sell it for $600,000 just because the buyer's market's different now with higher rates.
00:12:30.100 If it gets to the point, that's good if we get to that point.
00:12:34.260 But if you listen to CNBC today, yesterday, if you listen to everything they're talking about, well, hopefully the new guy, you know, they're trying to sue Jerome Powell.
00:12:42.940 Are you seeing this?
00:12:43.600 Are you seeing the possible conversation of Jerome Powell?
00:12:45.960 Are you following that story?
00:12:47.020 Yeah, over the build-out of the Fed,
00:12:51.180 and did he oversee a construction project to beautify the Fed
00:12:55.720 that just was a rip-off to the American taxpayers?
00:12:58.940 That's kind of the White House angle.
00:13:00.320 Yeah, but they're kind of trying to force him out earlier,
00:13:03.860 and he's not flinching.
00:13:05.360 They're saying the new guy is going to come and change the rates
00:13:07.680 and all this other stuff.
00:13:08.680 So who knows what their reaction to the market is going to be with that.
00:13:11.120 But can we go ahead, Tom?
00:13:13.860 I'll just put one thing is what we have to keep in mind.
00:13:16.880 It's fashionable to pick on interest rates.
00:13:18.460 It's fashionable to pick on the Fed. 0.86
00:13:19.560 It's fashionable to pick on boomers. 0.93
00:13:21.280 I'm looking at you. 1.00
00:13:22.340 Yeah, I know.
00:13:23.220 But you have to remember, what percent increase has homeowners insurance gone up since 2021, since the middle of COVID to today?
00:13:31.000 Five years.
00:13:31.780 A lot.
00:13:33.020 46%.
00:13:33.460 What is homeowners HOA has gone up?
00:13:36.200 A lot.
00:13:37.200 28%.
00:13:37.600 So you have to remember, those are also chasing the consumer down the street when they're trying to do this.
00:13:42.180 And by the way, that's not the greedy insurance companies.
00:13:44.960 Insurance companies are pointing to the price of copper, lumber, and concrete.
00:13:51.020 Why?
00:13:51.660 Because they have to pay for that when they rebuild your home.
00:13:54.300 If it burns down or you have a hurricane or a tornado.
00:13:59.480 So the insurance rates goes up because of replacement costs, not necessarily because of greedy insurance companies, which is also fashionable.
00:14:07.300 So all of it comes together to be this perfect storm in housing.
00:14:10.240 I just wanted to add those, Pat.