The Prof G Pod with Scott Galloway
00:19:18 · Kyla Scanlon, Scott Galloway
[00:19:18] S2: Yeah. I mean, I think that's... I I interviewed Wally Ediemo a few years ago now, who is the deputy secretary of the treasury in the Biden administration under Janet Yellen. And that was one thing that he really talked about is that it's very hard to do much about supply, so all you really can do is the demand side. So the financing side, that's what a lot of... It's a little simpler to pass policy on mortgage rates and support for first time homebuyers than it is to fix zoning laws, for example. And so I think for a lot of big governments in these cities, you know, they're just looking towards the demand side subsidies. But it... Of course, if there's not enough supply and then everybody has a little bit more money to spend, home prices are gonna go up. [00:20:00] S1: Susan, any thoughts?
00:20:01 · Aziz Sunderji
[00:20:01] S3: Yeah. So it's it's hard to it's hard to boost supply, as Kylie said. If this is not just a US thing, it's hard to boost supply in any big dense city. The conversation in... Especially for the past maybe five years or so has really centered on zoning. The sort of conventional story is that, you know, NIMBYs took over, and they captured local governments, and they're standing in the way of more home building because they don't want, you know, the the value of their homes to fall, and they don't want their neighborhoods to change. And there's definitely a ton of truth in that. I think that that is true, and you're seeing moves to move... To to to shift governance from the local level up to higher levels of government that oversee the broad population and can make decisions that help everybody, not just those in certain neighborhoods that don't wanna change. But what I think is kind of lost in in that conversation is that there are all kinds of reasons it's hard to build, and it's it's not just zoning regulation. You know, like in New York City, this is a very, very dense place. We have a lot of regulation. Some of that is because they don't want places to change. I live on the Upper West Side in a in a in a big building. The rent's too high. People don't want that that neighborhood to change. A lot of it is landmarked. So that's that's part of the issue. But the other one is that this is just a very, very dense place. And, yeah, for example, if you look at permitting times, how long does it take to get a permit through to to build an apartment building? It correlates very closely with density because it's very tough to build in a dense spot. You have to... You know, here in in in Manhattan, there's almost no vacant land. If you're building a new building, you're knocking down the existing building, which is very expensive. And then you're gonna build high, presumably higher than the the building you're knocking down. It's very expensive to build high. Like, a a 12 story building costs, like, 40% more on a price per square foot basis than a three story building. And then there's the thick enough regulations, some of which are NIMBYism and some of which are just the regulations that you need in a big dense place. So, yeah, I mean, to your question, Scott, I think supply is where we should be focusing.
00:22:11 · Aziz Sunderji, Kyla Scanlon
It's a really tough thing to address, but I I think we need to take it on not just through zoning, but also other measures that can help builders build homes more cheaply. [00:22:21] S2: So, Aziz, I was at a housing conference in New Hampshire, and I was talking about housing. Right? And somebody came up to me, and he was a local builder, and he was like, it's the sewage systems. Like, we just don't... If we build more houses, the sewage is gonna explode out of the pipes. And so I'm curious how you think about the underlying infrastructure of the cities too. Like, are we even able to support more build out with the public services?
00:22:46 · Aziz Sunderji
[00:22:46] S3: Yeah. That... That's a really good point, and I think that's that's, like, kind of what I'm getting at here with this. You know, when people say, well, like, why is it so hard to build in dense places? Like, you know, you should you should be able to do it. I think this is part of the reason. There's all this, like, shared infrastructure, and it's very, very complex to build in these places. That builder may be totally correct. Like, maybe where they are trying to add density requires more of a a public infrastructure upgrade. So, like, the... One of the problems is that behind all of these challenges and, like, know, environmental review is another example of this. There are, like, real reasons to do these things. There are, like, real reasons we've put in place regulations. We need regulations. There are real challenges to building. There are, like, strains on the infrastructure. People talk about traffic, for example. The problem is is that a lot of a lot of people who don't want their neighborhoods to change have weaponized these these reasons. They're like, oh, we can't possibly change because there'll be too much traffic. Actually, you just don't want your neighborhood to change. That's the real reason. So it's like it... That's really muddied the waters where there are there are real concerns around this, but often it's just it's just weaponized by by people who don't want change in their neighborhoods.
00:23:52 · Scott Galloway
[00:23:52] S1: Sewage, that's a new one. Some of the other ones you hear a lot is these unexploded IEDs called low mortgages that have been taken out where it's literally impossible for someone to move. Weirdness like tax policy. I own a home in Florida. I'm really reticent to sell it because if I were to try and buy back in anywhere in Florida, my tax basis for, or my basis for the assessment of taxes would probably double or triple. So there are all these weird exogenous events keeping people in their home. In The UK, something like 40% of homes have two or more spare bedrooms, but people don't want to leave because they're locked in because of interest rates. So let's get to solutions and I'm curious if there are any sort of non traditional solutions we can think of. A couple I've heard, manufactured houses that basically on-site on premise building is twice as expensive as homes that are manufactured and then assembled. And they're actually quite nice. You hear that and you think, oh, it's gonna look like a, you know, a Lego box or something. It's not, they're actually quite nice. And also unincorporated areas where you just try and get a mess of young people with tattoos and skateboards. And all of a sudden you have this cool little area and young people, a density of young people has a tendency to create an interesting area. And all of these, you've seen one in Florida, a bunch of VCs are talking about one. I don't know if it's actually happened in the Central Valley where the reason they create a city is so they don't have to put up with any regulations. They can just build like crazy. Any other nontraditional ideas that you've heard of that you you think are interesting we should we should consider? I'll start with you, Kyla.
00:25:38 · Kyla Scanlon
[00:25:38] S2: Yeah. I mean, I... So to the point about, you know, in The UK that there's two spare bedrooms empty, you know, boomers do own most of the three to four bedroom homes in The US. They own about 30% versus millennials with kids own about 15%. I think that's a stat from Redfin. And I think that there could be policies where we help boomers downsize. Like, you know, my... I think a lot of people have a big house that they've held onto. Their kids are out of the nest, and they don't wanna move because it's a family house. They can't afford to move because of the high rates. And so I think there's a way where we could help boomers refinance into a a smaller house and then help people with children move into the... Or whoever it may be into these bigger homes. That's not necessarily a nontraditional policy, but I I think that these people being stuck, these sort of golden handcuffs with housing, is definitely one of the biggest problems. And when you talk to a lot of older folks, like, I wrote this New York Times piece, and a lot of the comments were, like, I can't afford to move. I'd love to move. I hate my house, and I'd love to have a younger person live in it in it. And so I think policies around that, like, how do we help people get out of the house could be really helpful.