The Prof G Pod with Scott Galloway
00:12:24 · Aziz Sunderji
[00:12:24] S3: you know, one way of looking at this, this K shaped economy is, you know, which homes are selling? Is it more expensive homes? Is it cheaper homes within each market? And it's a little tricky to measure because home prices are going up or even if they're going up very slowly, they have been going going up for many years. And so there's a tendency to think that, you know, as homes are shifting into higher priced buckets, it looks like everything's shifting towards luxury. So I did this analysis a little while back, and I I looked at... I sort of pegged prices at 2,019 and kinda set that threshold there for what constitutes luxury and crept up that threshold in line with local home home price appreciation. And that gave me a, I think, a much cleaner look on which how markets are shifting, which ones are going towards luxury and the opposite. And actually, my my findings were like pretty contrary to what has been widely reported in the sense that there's really only a few cities where we see luxury properties taking a larger share of all transactions. So that's Miami. Miami's gotten a ton of wealth recently, partly coming from places like New York City, a lot of finance business moving down to Miami, and and San Francisco, unsurprisingly, and the AI boom. New York to some extent is also shifting towards more higher priced homes changing hands. But most cities are pretty stagnant, and then you have a whole bunch of cities where actually you're seeing more sales at the lower end. So this is like a Pittsburgh, in Atlanta, Cleveland, these kinds of places. So, the majority of cities are actually not shifting in either direction, but you can certainly see the kind of wealth gap, the growing wealth gap in this country when you look at, like, a San Francisco versus, you know, in Atlanta, for example.
00:14:07 · Scott Galloway
[00:14:07] S1: Kyla, anything to add to that?
00:14:09 · Kyla Scanlon
[00:14:09] S2: Yeah. I mean, I think that there was a piece called Negative Yield New York a couple of years ago that talked about... So this is sort of tangential to the question, but it it talks about how there are these, like, epicenters where people want to move to because it's where a lot of jobs are. It's where a lot of opportunities are. Like, for example, I left Kentucky to go to LA because that's where the... My finance job was when I graduated school. And so, like, how seeing in these cities that people, as Aziz pointed out, wanted to move to are more expensive because there's more demand. Like, everybody kinda wants to be in these big cities, see if it works out, and then maybe they go back home. Right? And there's a lot of opportunities in the smaller cities too, but the big cities are where most of the big businesses are. And so this piece in Negative Yield New York was talking about how because housing has gotten so expensive in these big cities, it's harder and harder for people to move there. It's harder and harder for the culture to be established. And so I think that it is pretty painful in big cities, and it sort of creates this reverberation across the economy where people aren't able to take on as much risk. They're not able to take these big swings because the housing is so expensive. And so I think that's definitely one of the the complications. Like, I remember when I moved to LA in 2019 on my on my starter salary, it was very, very, very, very painful. I could barely afford rent. And I was paying, like, $2,000 a month, and this was 2019, for a 300 square foot studio. It was so tiny. And so if we think about that and if we think about the opportunities that people want in these bigger cities just to, like, take a big swing, be around these bigger businesses, bigger corporations, you know, it I think, it creates these downstream effects that we don't totally understand quite yet. So, again, a little bit of a tangent, but I think it's important that there is affordable housing in the places where people want to move to take these bigger risks.
00:16:05 · Scott Galloway
[00:16:05] S1: We'll be right back after a quick break.
00:16:11 · Scott Galloway
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00:17:55 · Scott Galloway
[00:17:55] S1: I wanna try and get to the core of the problem and get your thoughts on where I have it wrong and and whatever nuance you wanna add. But every market has a demand side and a supply side. Let's talk about the supply side. The US completed about 2,100,000 homes, privately owned homes in '73, 1973 when the population was roughly two eleven, so millions, approximately 1% ratio of houses built to population. In 2024, The US completed about 1,600,000 with a population of more than three forty million. If I'm doing my math right, that's about 0.5%. So the ratio of new homes being built to population has been cut in half. Duplexes, triplexes, fourplexes accounted for 7% of new homes in 1979 versus 1.1 in 2025. And then to make things worse, it feels like the programs are all on the demand side, low and trying to keep interest rates artificially low or lower than they should be. First time home buyers tax credit, low income housing tax credit, which puts more money in the home in the pockets of buyers. But without an increase in supply, all that does is take prices up. It feels as if there's just a basic understanding of the economics. And then we cosplay concern with programs that ultimately just take prices up. Your thoughts. I'll start with you, Kala.