The Prof G Pod with Scott Galloway
00:32:03 · Scott Galloway, Aziz Sunderji, Kyla Scanlon
[00:32:03] S1: of a home you're [00:32:03] S3: sharing with roommates, and heading your own household even as a renter is much tougher than it was historically. Kyla? [00:32:10] S2: Yeah. I think that people are getting into homes later, like Aziz is saying. And even when you look across generations, so, like, Gen X and boomers were in homes at the age of 28, a much higher rate than Gen Z is now, right, who are 28 years old. So I think there was a faster track. It almost feels like I've heard before that 25 is the new 18, that everyone is just, you know, pushing things off a couple years. It makes sense with all the longevity technology. People are living a whole lot longer and a whole lot healthier. And so it makes sense that there is... There's this delayed life cycle, but I don't know if, like, the way that we talk about that has quite caught up yet as people are taking a little longer to age into the economy and to find their stable footing, to find partners. But it does seem, yeah, like as he said, that they eventually find their path, but it definitely is taking a whole lot longer than it used to. [00:33:06] S1: So recently, Zohran Mamdani, the mayor of New York, ran on freezing the rent. Last Thursday, that freeze went into effect on roughly 1,000,000 rent stabilized apartments in New York City and made an ongoing lawsuit made by a group of landlords. Curious to get your thoughts, and I'll start with you, Kyla, on the thoughts of a rent freeze as a solution.
00:33:06 · Scott Galloway, Kyla Scanlon
[00:33:06] S1: So recently, Zohran Mamdani, the mayor of New York, ran on freezing the rent. Last Thursday, that freeze went into effect on roughly 1,000,000 rent stabilized apartments in New York City and made an ongoing lawsuit made by a group of landlords. Curious to get your thoughts, and I'll start with you, Kyla, on the thoughts of a rent freeze as a solution. [00:33:27] S2: Rent control definitely tends to complicate the supply and demand mechanics, you know, to Azeez's point about people wanting some sort of return. Landlords wanna return to... They want to match the market forces that are happening in a city. So I think that the rent freeze is an attempt to address how painful housing is, especially in a place like New York, but the economics of it are are quite complicated, and it can end up exacerbating existing problems. [00:33:59] S1: Is this?
00:34:01 · Aziz Sunderji
[00:34:01] S3: If you if you look at the policies to help renters, there there are there are two big policies that most economists feel very differently about. There's rent control or rent freezes. And I think there's a very strong consensus among economists that that's not a great approach for the reasons that that exactly that Kyla mentioned. I would add also that it's a little bit unfair. Like, you know, the the distribution of rent controlled apartments, it's kind of arbitrary and it's kind of unfair. And it also disincentivizes supply. So you have all these problems with it that leads to that that policy really being viewed pretty negatively by most economists. On the other hand, you have section eight, which I think we we just don't talk about enough. Section eight vouchers, which are are not arbitrary. They're given out according to need. The problem with section eight, and just to be clear about what section eight is, it it says that if your income is too low, if you're struggling with housing, the federal government will give you a voucher that pays such that you you pay 30% of your income towards housing and the government picks up the rest of it. That is a policy that I think is widely and the people who certainly disagree with it, but it is compared to other policies much more highly regarded than rent control. The problem with section eight is that it's just underfunded. Like we have this program here. It could be very helpful for all kinds of people, but only one out of four, roughly one out four, one out of five people who qualify for it get these vouchers because it's simply underfunded.
00:35:36 · Scott Galloway
[00:35:36] S1: I appreciate how measured you are. You know, my sense of rent control makes absolutely no fucking sense and does the exact opposite of its intent, what its intended outcome. My rent control story is when I was your age or Kyla's age, even younger, my friend said there's a place, a rent control place, I was living in LA that's just come up for rent in Santa Monica. Let's go fill out an application. We went down and there was a line of about 25 people outside waiting to fill out applications for this rent control house. The person had died. The same people had been in there for like thirty years. You know, they weren't gonna leave. And the broker, whoever was taking applications were like, this is ridiculous. And said, well, you have a good shot. The two of us were going to move in together, me and my friend Lidos, because you're an investment banker and you work in finance. And okay, rent control is meant to help anyone but us. Yeah, right. We were making, I was working at Morgan Stanley. He was working at Great Western. We were there just to arbitrage this weirdness called rent control. And the reason why we might've gotten, we didn't. But the reason why we might've, we had a shot at getting it was because we were quite frankly, these white yuppies that didn't need rent control. It was it was exactly, it was doing exactly what it was not supposed to be doing. And the section eight thing, I hadn't heard that. I think that is actually really interesting. And I'm trying to think everything, nothing's perfect. Right? I was immediately starting to discourage people to not report the full income or are they not as ambitious, but you're gonna, you're right. Anything is gonna have a certain, you know, a certain externality. If there was one program each of you had a magic wand around that you think could help young people or accelerate the, you know, the launch, if you will, as it relates to housing, what would that one program be? Kyla, I'll begin with you.
00:37:38 · Kyla Scanlon, Aziz Sunderji, Scott Galloway
[00:37:38] S2: So I think that if there was one policy, and I'm sort of curious for Aziza's thoughts on this because I think you might disagree, zoning, I think, is a really big issue. Like, there's all sorts of headaches with, sidewalk and just how... Where the house can be, yard size. So I think that really complicates the housing picture, just like where you can build, what you can build. And I just... Whenever I talk to housing experts, like, that's one thing that they always advocate for is we just have to change some zoning laws. We have to change the regulations, and that'll free up a lot of space for builders to build. But Aziz, do you disagree with that? [00:38:15] S3: No. No. No. Not not at all. I don't know why why you think I disagree. [00:38:18] S2: Oh, sorry. Okay. Yeah. [00:38:21] S3: No. I I I am, like, all for changing zoning regulation. I just don't I just don't think it's the only thing. It's the it's the very start of the process. Right? Like, we have to we have to make building legal. Otherwise, you can't build. Right? Like, it seems fairly straightforward, but I just don't think it's enough. It's just not nearly enough. One thing I would I would point out... Can can I can I read you guys something from the New York Times? [00:38:45] S1: Of course.
00:38:46 · Aziz Sunderji
[00:38:46] S3: Okay. Here we go. This is the season... Okay. The the the article is called high rents. This is the season of the year when the people of New York break out in loud complaints about the rise of rents, the scarcity of houses, and the impossibility of making both ends meet while landlords demand such exorbitant rates for their tenements. So that last word might give you a clue about when this is from. This is from 1856. So aside from the word tenements, you could kind of just copy and paste that onto The New York Times today, and it would read pretty accurately. So my point is that this is like... This is a big this is a big crisis. It's happening around the world, especially in these big productive cities where the economic opportunities are, and it's been happening for a long time. So I think we should stay very humble about our ability to influence this. I think if I could choose one thing that is driving it that we don't talk about enough, it's income inequality. You know, the fact is that you have some people, like Scott, as you were working at a bank, and when I moved to New York, was also working at an investment bank. They come to the city and they earn these high salaries, and they're competing with everybody else, teachers and, you know, all kinds of people who don't earn high incomes for the same parcels of land. Housing is a positional good. We're all competing for it. And I think inequality is a huge engine explaining the fact that we've been in a housing crisis around the world and clearly for like hundreds of years. So I... You know, it's... I I don't know if there's any, like, silver bullet for it. I I honestly don't have a good answer to your question, Scott. I think it's it's a whole bunch of different things in tandem. It's it's zoning reform. We have to build out infrastructure so that so that, you know, people can commute from further out in reasonable times. Kids are coming out of school with more debt. A lot of people are, like, completely debt laden. And I I... My worry is that this is all gonna get worse because, Scott, you were talking about how, you know, eventually the people who own these homes will die and pass them on. And maybe it'll be late. Maybe it's when we're all, like, 60. Or when I'm 80 and Kyla's 60. But, you know, when that happens, it's not going to be an even distribution.