How do we fix the housing crisis?

In this episode, Gary delves into the complex issue of why housing is so expensive, arguing that it is a widespread global crisis rather than a localized symptom of specific cities’ governance or policies. He highlights that residents in cities worldwide feel the pinch of rising housing costs, which indicates a common global issue. Gary critiques the focus on individual city governance, explaining that if the problem were localized, it would not be evident in so many global contexts.

The discussion transitions into recognizing that the issue cannot be exclusively framed as a housing crisis; it is part of a broader pattern affecting all asset prices, including stocks and commodities. He notes a troubling trend where the accumulation of wealth by the rich leads to inflated asset prices across the board. When wealthy individuals gain monetary assets, they tend to invest in high-value assets, which impacts housing markets.

Additionally, Gary mentions the fundamental mechanisms at play, like inequalities in wealth distribution. Rich individuals dominate asset ownership, making it difficult for average individuals to compete in the housing market. As wealth inequality grows, ordinary people find it harder to afford homes, leading to escalating prices. This systemic issue is compounded by current economic policies, which emphasize construction over addressing underlying inequalities.

The episode also critiques the naivety of a simple response, such as building more houses, as a means to resolve the affordability issue. He stresses that without addressing the root causes of inequality, merely increasing housing stock will not suffice. Instead, he advocates for comprehensive reform that targets wealth inequality and suggests that the solution lies in taxing the wealthy while easing the burden on working people. This holistic approach aims to provide a sustainable fix to the pervasive and escalating crisis of housing affordability.