Speaker 1: What's going on. Thank you so much for listening to
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smartphone or tablet, And again, thank you so much for
your support. So I came across a website the other
day called white Coat Investor, and they're doctors, but they
also talk about investments and stuff finances. And the founder
of Whitecoat Investor is a doctor by the name of
Jim Dahl Dahl e Dolly Dolly. Anyway, doctor Dolly or
Doll says in this piece titled the Real Reason for
the housing unaffordability crisis, the real reason and what he's
going to tell us is probably something that people who
want to blame all sorts of other things probably don't
want to hear. So's that's your trigger warning right there. Okay, So,
first off, housing is unaffordable, right for a lot of people,
housing is unaffordable. I think most people would agree that
too much housing is unaffordable. Okay, this is the new
chief complaint in our society, he says. It used to
be that healthcare was unaffordable. Now that problem was not fixed.
It's just that the housing issue became a bigger deal.
Over the past few years. The price of housing soared
due to low supply and a few years of very
low interest rates, and that has now been combined with
high interest rates without any accompanying decrease in prices. That
at least is what most people think and what most
pundits say. That's what everybody tends to believe. Right, low supply,
low interest rates, people started buying more properties and stuff,
and then the interest rates went through the roof. Low
supply continued, and now nobody can afford the homes. And
there is truth to those factors. Sure, the supply issues
caused by builders not building at all, or you know,
for a couple of years at least during the two
thousand and eight financial crisis. Right during that meltdown, building
stopped and that created a backlog because people still, you know,
were being born and getting old enough to want to
move into their own homes and stuff. So you had
this constraint on supply, and then of course COVID and
the supply shortages, and I myself saw that in my
own I was so when we were up in Ashville,
I launched the podcast and we then go and we
start the process of buying a house, and we couldn't
find any affordable existing homes. We found a home that
was being built in a neighborhood and so it was
new construction, but we had to wait. So we you know,
signed the papers and picked out the you know, the
fixtures and the countertops or whatever cheapest you know, level only,
and and then we were like, okay, now we got
to wait for you know, about eight or nine months
while they build the house. And I would go out
and talk with the you know, the the site supervisor
and the you know, talk with the sales repinel of
that about you know, where we were on the on
the project status. And he told me at one point
that we were the last one through the gate. Our
house was the last one through the gate before all
of the disruptions occurred. Because we started doing this during
COVID or right after the lockdowns got eased up a bit,
and so this is when all of the supply chain
disruptions started and there was a house being built right
next to mine, and at one point they had to
board up all of the holes that they had cut
for the windows. They had to board them all up.
They were waiting on windows and they couldn't get windows,
and that house sat boarded up for a couple months
because of the supply chain, so that caused more delays.
That's an example of it. In the house I'm in currently,
my neighbor she closed on her house or sorry, she
signed the papers for her house before Christy and I
signed the papers on our house. But because our house
was bigger, it got slowed down or something a little
or took a little bit longer to do the work
in there. And then by the time they went to
install the bathroom vent fan and they couldn't get any
and so it caused a delay because the inspections wouldn't
pass without that fart fan up there. So which by
the way, spoiler alert, it doesn't actually clear the air,
that's just it's for the moisture anyway. So the point
here is that those disruptions did have impact on supply
keeping up with demand. The demand issues caused by the
ability to borrow money at ridiculously low sub inflation rates
are also very real too, right, the really low interest
rates people were getting mortgages for three percent, two percent whatever,
That had an impact too. Absolutely. However, there's more, there's
more to the story, as Paul Harvey would have said,
size the size of the homes. I know people aren't
going to want to hear this. So right now, fewer
than eleven percent of households can afford the average home,
and that is a real problem. Fewer than eleven percent
of households can afford the average home. Okay that sometimes
people you know have this this nostalgia, this longing for
the fifties. Dad went to work every day at a
job that didn't even require a college degree, and that
would provide enough income to afford to buy a house,
just like everybody else's. Mom stayed home, I kept house,
raised the kids, and participated in the community. And some
people today still see that as an ideal situation. There
are two reasons that that is mostly an impossibility now.
Number one, and he quotes Elizabeth Warren Old Focahontas herself,
which she outlined in her book The Two Income Trap.
The two Income Trap She wrote a book many years
ago about this. I was unaware of this. However, you
feel about Warren's venture into politics. Afterwards, this doctor says
she got this point right. When mothers went out into
the workplace end mass, it provided additional income into the household,
and with that income, the family then decided to improve
their standard of living. They decided to move into a
bigger house in a safer neighborhood with a better school district. Right,
that's rational, that's logical. More sacrifice, more work gets you
some economic advantages. But what happens when everybody does that.
We've just shifted the goalposts, and now everybody wants a
bigger house in the safest neighborhoods, in the best school districts,
So they go out and buy them. But after a while,
the natural economic effects are seen. Labor isn't worth as
much as it used to be because the supply of
it is twice as large as it used to be.
By the way, this is one of the reasons why
a lot of countries in the Middle East cannot compete
basically economically despite all of that oil. They they segregate
half of their society out of the workforce. All the women.
They don't educate them, right, they don't. They don't let
them work, and so they're depriving their own society of
the benefits that those individuals can provide to the society
with inventions, with labor, with whatever right you're just you're
walling off half of your population from participating in the
productive side versus the consumption side. So labor isn't worth
as much as it used to be because we have
twice as much of it now. It takes two earners
to get to get what you used to get with
just one income earner. Heaven forbid, you lose your spouse
to disability, death, or divorce, and now the family is
on the verge of poverty, despite the fact that one
parent still has a reasonably well paying, steady job. Maybe
the job pays fifty K sixty K, right, what are
you going to afford with that when you're competing with
people that have two incomes of the same amount. But
the main reason, he says, the main reason is square
footage of the homes. Things have changed. I know this personally.
The first house that I bought here in Charlotte, on
the east side of Charlotte, a neighborhood that was not
so great. My house was nine hundred twenty or so
square foot. That's it. It was a small house, three bedroom,
one bath, little brick ranch, tiny house, old, not a
great neighborhood, not a good school assignment. People today are
not buying the same houses in twenty twenty three that
they were buying in nineteen fifty five. Our houses are bigger,
and we need more room to put all of our stuff.
People have way more stuff than they did fifty years ago. Right,
So this idea that we're trying to compare the current
situation to based on like the fifties or sixties or something,
it doesn't compare any longer. The houses now are bigger.
In nineteen fifty the average home sold for eighty two
thousand dollars in today's dollars. Okay, eighty two k that's
the equivalent, and it had nine hundred and thirty eight
square feet. So that's about the size of my house,
and that's the size of the houses all around that
house I bought. They were all the same kind of
cookie cutter ranch floor plan. They all had the same
floor plan, and they were all the same size basically.
Now some have been improved over the years, and that
was on the east side of Charlotte in one of
the first sort of suburbs that pushed outwards in the fifties.
That's thirty feet long and thirty feet wide. Okay, that's
the size of living space that you're talking about. And
by the way, I bought that home in two thousand
and five for about eighty K. That's what I spent
on that house. Eighty K. Again, it was it was
it needed a lot of work. I spent years doing
work and renovating that house. So I know people don't
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overall average square footage in America for a home is
twenty fourteen square feet. That's the average, or sorry, the
median home size in America twenty fourteen square feet, and
in the fifties it was nine hundred and thirty eight.
So the homes that we are in now, you know,
the median home is more than twice as large as
the homes from seventy years ago, sixty years ago. So
that's one thing, your size inflation. Nobody ever talks about
that aspect of the housing crunch. There is also a
massive difference in the quality of the homes. The quality
homes are better built with nicer amenities.
Speaker 2: Now.
Speaker 1: I know people are like, oh, that's not true. They
built them fantastic, but you know, they built to the
best standards. You may have owned a home that was
built to really good standards back then, but homes now
have better things in them. You know, my first again,
the first home I bought didn't have insight in it,
no insulation in the walls. Okay, because I guess back
then it was like that was a luxury to have
and it wasn't really necessary. You didn't want the house
really insulated or something. The wiring right, and there is
the regulatory costs as well. All of that gets built in.
Heard the story yesterday Fort Mill. They're like they're looking
to slap on additional quote impact fees where they're like,
we're going to charge these developers. You know what is
it now? It's something like twenty eight thousand dollars per
new home for the impact it has on government services.
Basically twenty eight thousand dollars. The builder doesn't pay that, folks,
The buyers do. Right, So you're you're creating an economic
wall around your town so nobody else moves in. And
that is also one of the major problems here too,
with the regulatory regimes. Is that nimbiism. Not in my
back yard. People arrived and this was really pronounced in
the Asheville area when I was up there, and these
people would go down to the city council for a
rezoning petition or a development petition or something, and they're like, yeah,
we want to build an apartment building, and you'd have
all the neighbors come down and say no to the
apartment building. No, no, no, And they would always start
the people who came down. I don't know why, but
the people who came down to speak at these meetings
almost every single time, they would start off with saying
something like I moved here eight years ago, and I'm
opposed to anybody else moving here. So there is this
mentality of pulling up the ladder behind you after you
got your slice, you know, you found your piece of
heaven in the Blue Ridge Mountains, but nobody else can
move in. And then they put pressure on the elected
officials to vote down more housing, and when you do that,
you get less housing. And when you have less housing,
the existing housing goes up. Also on the regulatory front,
builders are not building starter homes. They're not building nine
hundred thousand square foot or night or a thousand square
foot homes. They're not building them because the profit margins
are so low, if existent at all. They make money
when they build bigger because they can sell the house
for more, and so they're just not building the starter homes.
On the quality front, we have hardwood floors and tile
where there used to be linoleum. We have higher quality carpet.
We have higher quality paint. We have baseboards and light fixtures,
and granite countertops and stainless steel kitchen appliances, air conditioning,
central heating, a dishwasher, a washer and dryer that you
actually keep inside. And if you don't know what that's about,
once again, first house that I bought, the washer and
dryer were outside. You had to go outside. There was
a little room off the back porch. So there was
like a little like concrete step of about you know,
ten feet long, and then like six or seven steps
down to the grass. And on that back patio there
was a little shed, a little closet, and in there
was the circuit panel and the the washroom dryer, and
it was not finished. It was like exposed beams and
everything else, and so you would walk outside to do
your laundry. Now we have laundry rooms, right, we have
bathrooms attached to the master bedroom. Whereas, again the old homes,
there was one bathroom, one bathroom, one shower, one sink,
everybody shared it. That was it. Houses are bigger, they
are nicer than they used to be. And then well,
why don't we just buy a smaller house? Right, here's
the thing, those smaller homes. A lot of that housing
stock dils does still exist, but it's in neighborhoods where
people don't want to go and live. See. I went
to a neighborhood like that, and then I was accused
of gentrifying it. So you know, what do you do?
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message from Kevin US Consumers always want bigger, faster, more,
bigger houses, bigger, nicer vehicles, vacation three times a year,
more and more and more. I did not go to college.
My wife only worked for three months after we got pregnant.
Eighteen years later. In my two thousand square foot house
and my newer vehicles are all paid off. I have
zero debt. Many of my friends back then did go
to college, and both husband and wife have worked full
time since and they are living paycheck to paycheck still now.
Some of that had to file bankruptcy. I tried to
warn them, they didn't listen. I mean, this is all
just living within your means. That's no matter what price
point or income level you're at. It's about being debt free,
not spending more than you make. You know, right before COVID,
I was helping my father and mother in law find
a lot to build a house less than a thousand
square foot house. It did not exist in my area.
Minimum square foot in all subdivisions was eighteen hundred square feet.
I ended up just building them a small house on
our one and a half acre lot. Yeah, which, by
the way, the doctor Jim Dowell at White Cote Investor,
he does have a recommendation. He does offer a piece
of advice on this, and I'll get to that. A
couple of tweets here, Russ says, you haven't at the
outdoor washer and dryer you haven't truly lived until you've
had to take your freshly cleaned laundry outside through the
rain to get it back inside. Bonus points if something
falls out of the basket and onto the wet grass
or mud. Yeah. Look, I have no doubt that just
the idea of having a washer and dryer attached to
the house. I mean, there was no garage on this
house that I had bought, but that was a luxury
at the time. This is from Melissa, who says the
first house I bought was an old Victorian eighteen eighties,
still owned by the original family that built it. No
electricity or heat upstairs, one central register in the downstairs
central hall. I paid sixty three thousand dollars and I
sold it four years later. It is now on Zillo
for over a million dollars. The house that I bought
for under eighty thousd I think I bought it for
seventy eight thousand. I fixed it up over the course
of about three years or so, this was like five
to eight, and then sold it, and I think I
got I'm trying to remember. I think it was like
one oh three. I mean, because I improved it, so
I think I got over a little over one hundred
k if I remember correctly, that house is now they
so it has changed hands a couple of times, and
somebody along the way took it from a three bedroom
to a two bedroom, one bath, and it's now. The
last time it sold it was over a quarter million dollars,
still at like nine hundred something square feet every hat like.
You cannot find small houses unless they're like the tiny
house variety, you know. So the point here is that
houses are bigger and they are nicer than they used
to be, and that has created some of the shortage
in the housing supply. You can find tiny houses, smaller houses,
I should say, but they will be in you know, disrepair.
They're going to be in dumpy, crime ridden neighborhoods with
terrible schools, right, And that means that you're you're not
just economizing, but you're sacrificing the safety and education of
your kids. And parents don't want to do that. He says.
The real cause of housing on affordability is that in
many cities in America, perhaps even most, it is impossible
to buy a small house in a reasonable neighborhood because
those houses simply don't exist. Home Builders aren't making them,
realtors aren't selling them, and people aren't willing to live
in them because they think they're entitled to nice stuff
even if they can't afford it. There, I said it,
but it's the truth. Think about it. A lot of
people are raised in these larger, nicer homes, and so
they then expect to go into a larger, nicer home
and I should be able to afford the same thing
that I grew up in. Well, No, the only solution
in most cities build more housing, usually smaller housing, including
higher density stuff like condos or duplexes and town homes.
The nimby crowd fights it, Nimby not in my backyard.
Nimby cities get behind their biggest tax payers. Even if
developers wanted to help with the issue, they are stimied
at every turn by bureaucrats, regulations, and homeowners associations. If
cities want affordable housing, they have to make it easier
and more profitable to build or convert units. And then
he says, because again these are doctors talking about, you know,
investment stuff. So a lot of read this website. So
he says to these people, this audience, he says, okay,
but Now, what about your kids If you want them
to live anywhere near or like you do, presumably on
less income than you make as a doctor, right, you're
going to have to help out. You're going to have
to help pay for their first home. And that means
you have a new financial goal. And maybe your old
list included college savings, retirement to down payment for your
own house, but now it also has to include some
money for your kids' houses. How much, he said, I'll
leave that up to you, he said, though I would
suggest that this goal of putting money aside for your
kids to help offset the cost of buying a decent
house in a decent neighborhood. I would suggest that this
goal may be just as important, or even more important
than saving for college costs what you're willing to pay.
But that's not the case with housing. All right, if
you're listening to this show, you know I try to
keep up with all sorts of current events, and I
know you do too, And you've probably heard me say
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Speaker 3: Hi.
Speaker 1: I'm Brett Weerble and we are pregaming with him, as
we have started doing pretty recently. I think this is
like episode three or it is something like that. Yeah,
we're still where where it's a we're baby stepping right now.
I like it.
Speaker 3: This is one of my favorite parts of my whole.
Speaker 1: Day, not to be outdone by the hangover, which is
the first segment of your show after three o'clock. Yes, okay,
where I join you?
Speaker 3: We double up? Right, that's I like it so well.
Speaker 1: You know, many hands lighten the load. That's a good point.
All right, So I got, I got, I got a
story for you to react to. You've probably already seen this,
but I'm curious because I read this, I was like,
I gotta ask Brett from The Daily Caller. Former Vice
president and failed twenty twenty four presidential candidate Kamala Harris
is thinking about an institute for policy and ideas for
her next act. One of her top advisors is reaching
out to universities to discuss the possibility of setting up
a think tank. Mmmm for Harris.
Speaker 2: So okay, I think we know what's going to happen here.
They are hoping that the Elan not not Elon musk.
Speaker 3: Right, the Elon.
Speaker 2: They're hoping that the Elon will connect with the Harris pole,
so they'll they'll they're they're working to kind of take that,
you know, take that forward, being like, yes, we're from
the Harris Institute, you're not going to really think about it.
And they're going to pick up an automatic amount of
of of crad because of the Harris Pole.
Speaker 3: That happens every every election.
Speaker 1: There was a movie like that, what was it called
the Guy who was running or the incumbent died and
then Chris Rock had the same name as him and
ran for off Hill.
Speaker 2: That's that's like a way right movie, Holy cat right,
And he had the same name and then he won
based on the written the name being the same, same idea.
I think I think that's what they're trying to do
that because they'll probably call it the Harris Institute, the Harrow,
the Harrison Pole. That well, you can't say the Harris
Pole because that's probably wow, that's that's that's a little jarring.
Speaker 1: Find somebody here, you go find somebody else named Poll,
last name Poll.
Speaker 3: The Harris Pole Institute, Yeah, that would probably work.
Speaker 1: From Harris Pole.
Speaker 3: How about the Harris Walls Institute.
Speaker 2: No, no, the Walls Harris instid.
Speaker 1: That guy's no. So I think this is actually a
very positive development for her to have an institute for
her to have an idea and for just the idea.
You're you're giving credit for just the idea, and the
idea is to have an institute for ideas. So she's
it like that's forward looking like that's aspirational. That is
like I'm going to come up with, like with a
bunch of ideas like this, right.
Speaker 2: I like this, because what are we going to do.
We're going to figure we're going to bring people together
to get more understanding, yes, of the challenges of this time. Correct,
I mean right that you're gonna get forty million just
off of that sentence.
Speaker 1: Easily forty million, right, and you house this thing at
a university, at a university, scrape up that sweet sweet
cutter cash cutter cash.
Speaker 3: Oh my gosh, that's that's a good move.
Speaker 1: And we all know just like Roy Cooper and our
former Senator John Edwards, like this is and Bev Purdue,
our former governor you land in these yeah, these college
centers or institutes and such, and they're just it's it's
just a you're on scholarship, you know, you're just there, uh,
waiting for the next run for something else.
Speaker 3: Yeah. That look that it makes total sense.
Speaker 1: And she could really develop some ideas for her next.
Speaker 2: Run, ideas about bringing people together to solve the problems
that everyone is facing.
Speaker 1: And have and have faced, and have will face and
will face and may face or not or not right,
those for the face and the face less.
Speaker 3: See, this will be represented.
Speaker 1: This is the kind of this is the kind of
think Tanker that I think we are really needing.
Speaker 2: Uh And Harris, did you say did I just hear
you say?
Speaker 3: Did you say tanker or did you say tankarey?
Speaker 1: Both?
Speaker 3: Wow? Because you're gonna need both of those things?
Speaker 1: I think. Yeah, I have another story for you too. Okay,
did you hear that the crime is down? Where in Charlotte?
Speaker 3: Which part?
Speaker 1: Crime is down? Arrests all are.
Speaker 3: Down?
Speaker 1: Crime is down, arrests are up? Yes?
Speaker 2: What?
Speaker 3: And how how can that be?
Speaker 1: It is? I was as perplexed as you. Crime. According
to the Charlotte Observer, crime is down and arrests are
up in the first three months of the year.
Speaker 3: So they're arresting more people who knew.
Speaker 2: But wait a minute, See this is one of those
sticky wickets, because pete, are they prosecuting? It's one thing
to have the bracelets slapped on you. Yeah, yeah, and
then they let you go two hours later, and now
you're doing car takeovers?
Speaker 3: Right, I mean, what up with this?
Speaker 1: Well? I mean I like to think it's a positive
development because you can't have the prosecutions unless you first
have the arrests. So baby steps, right, we start off
with some arrests.
Speaker 3: Some arrests. We get some arrests, right right, then you
get some prosecutions.
Speaker 1: Maybe I'd like to.
Speaker 3: Go one step further.
Speaker 1: Okay, persecutions.
Speaker 2: I think it's time to bring back persecure like there
should be. Prosecution is so passe. Persecution is something that
is forever.
Speaker 1: See this is Brett. I feel like you take it
too far? Son, How is that too far?
Speaker 3: It's persecution the persecution Institute.
Speaker 1: All right, that'll do it for this episode. Thank you
so much for listening. I could not do the show
without your support and the support of the businesses that
advertise on the podcast, so if you'd like, please support
them too and tell them you heard it here. You
can also become a patron at my Patreon page or
go to dpetecleanershow dot com. Again, thank you so much
for listening, and don't break anything while I'm gone.