The Prof G Pod with Scott Galloway
00:07:57 · Kyla Scanlon
[00:07:57] S2: Yeah. I mean, I think America does have a really complicated relationship with housing because, you know, Derek Thompson has talked about this before, housing has to be both a speculative asset and a place to live. And I think for a lot of people, a lot of their wealth is wrapped up in the house, so they're gonna push back against anything that they think can threaten that. And increasingly, that's turning towards the stock market. Stock market wealth is becoming more and more of people's total net worth. But I think that for younger folks, like, they look at the refusal to build, and when they look at older folks, you know, just saying, like, no. You can't build near us. Like, we don't want this housing near us. I think it can feel like everything is sort of working against you because what you've been told from since you were little is that in order to be a successful person, in order to reach this American dream, you have to buy a house. And, you know, I'm 29, and I don't I don't know when I'm gonna be able to buy a house. And I I know a lot of people in this situation, and more and more people are starting to lean on their parents for financing a home or leaning on some sort of outside help. And I think that's the really hard part is that housing is the foundation of the economic ladder. And if people feel like they can't climb up of it, they're just gonna be like, well, you know, maybe it doesn't make sense for me to work really hard at my job, and it doesn't make sense for me to get married. It doesn't make sense for me to build this economic future because I don't feel stable. And I think for older folks, they were able to benefit from the post World War two boom, you know, every... Like, there was just so much policy that worked in their favor, and that's why people over the age of 55 have so much wealth in The United States. I think the thing that is going to be challenging, and I'd be curious for Aziza's thoughts on this eventually too, is that, you know, one in five Americans are gonna be over the age of 65 by 2030. And so we have... In in 1920, it was one in twenty.
00:09:48 · Kyla Scanlon
And so if you think about the demographic profile of The United States, it's an aging population, but eventually, this population is going to have to pass these homes on to somebody, and then we might have a structural oversupply, and then home prices might have to go way down. And then younger folks who did get into the housing market are going to be screwed that way too. And so it just feels like sort of an impossible push and pull, and policy, I think, could really help with improving zoning regulation, allowing people to build multifamily properties, this missing middle that we often talk about. But, yeah, I think that it makes total sense that young people are frustrated. I'm frustrated, and we could do a whole lot more to help people get their foot on this first rung of the ladder so they feel like they have a place within the economy.
00:10:33 · Scott Galloway
[00:10:33] S1: Yeah. There's a, you know, a lot of times when I speak to a wealthier older generation about how much wealth they've aggregated relative to young people and they say, but the young people are going to get it. You're going to see, I don't know, I've heard everything from 60 to $120,000,000,000,000 is gonna be inherited. I'm convinced these people are never gonna die. If you have two people living in a house, the reality is that generational wealth isn't going to pass down to the generation until likely the kids are 60. And then, okay, great. Does feel, I mean, I think it's one of the bigger issues of our time right now. And if you look at my generation, three and four of us felt good about America when we were your age. Now it's one in four. And let's talk a little bit about, Aziz, you wrote last month that the crisis is most acute and desirable cities that attract highly skilled, high earning people. Your data shows a Detroit household earning $50,000 can keep housing under 30 percent of income, while in San Francisco it takes more than a 100 k. I'm shocked it's that low. How split is the housing market right now? Is this just another example of the K shaped economy and sort of a bifurcation where there's a small number of super cities that are astronomically. I've always said in New York, we all have that moment, Kyle, I'm sure you have it in LA where you look around on eleven on a Wednesday and it seems like everyone has enough money to buy a $12 latte and the places are packed and they're like, what on earth do these people do? That's the app. What does this person do? Where you can hold up and find out how they're actually affording to live here. Is this the K shaped economy? Nobody has a birthright to live in LA or New York, but what's going on geographically and regionally here, Aziz? A lot of people when they, when they look at,
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.