So I was looking at the stack of research for
today and I kept getting stuck on, you know,
this one single fundamental contradiction. It's
a question that feels like it breaks the gears
of, well, modern economics every time we try
to answer it. I think I know exactly which contradiction
you're talking about. The identity crisis of
the house itself is a home, a basic human right,
a utility like water or electricity that everyone
must have access to. Or is it an agit class?
Because the data suggests we are trying to treat
it as both. Simultaneously. And you can't. And
that is tearing the system apart. It is the ultimate
conflict of interest. I mean, if housing is a
basic need, the goal of public policy should
be to drive prices down to zero. Or as close
to zero as possible. Right. Or as close to the
cost of construction as you can possibly get.
But if it's the primary retirement vehicle for
the middle class, which, let's be honest, it
has been in the West since the post -war era,
then the goal is the exact opposite. The goal
is for prices to go up. Forever. You cannot solve
for affordable and high return on investment
at the same time. The goals are mutually exclusive.
And today we are going to look at the wreckage
caused by trying to solve for both. We're unpacking
the global affordable housing crisis. And I want
to be clear right off the top, this isn't just
about high rent or, you know, complaining about
landlords. No, this is much deeper. We are looking
at a stack of sources that covers everything
from the hidden mathematical formulas that dictate
where you can live to the philosophical right
to build all the way to, I mean, the slums of
Nezachalcowitza. It's a massive scope. We have
reports from the Council of Economic Advisors,
granular data on zoning from the the Center for
Neighborhood Technology and case studies from
Vienna to Singapore, a really global perspective.
The mission for this deep dive is to get past
the headlines. We all know rent is too high.
Right. That's a boring observation. We want to
know why the math is broken, who broke it, whether
that was intentional or accidental, and what
the actual mechanics of a solution look like.
And we need to start with the scale of this breakage,
because if you are just looking at your own Zillow
feed. You are completely missing the forest for
the trees. The big number from the U .N. report
is 1 .6 billion. 1 .6 billion people. It's almost
impossible to conceptualize a number that big.
And that is not just people who rent. That is
the number of people globally living in inadequate
housing. Yeah. And we should define inadequate
because it's a really important distinction.
Right. Inadequate here isn't I don't like my
countertops or the bathroom is a bit dated. Not
at all. We are talking about lack of basic sanitation,
severe overcrowding, actual structural danger,
or no security of tenure. Meaning you can be
kicked out at any moment. No lease, no rights.
Correct. And if we stay on the current trajectory
by 2030, which is essentially tomorrow in terms
of infrastructure planning. It's just a few years
away. One in four people on this planet may live
in a slum or an informal settlement. Think about
that ratio. One in four. So while we sit here
in our comfortable home. agonizing over whether
a 30 -year fixed mortgage is at 6 % or 7%. A
quarter of the human population is just trying
to construct a physical barrier between themselves
and the elements. It's a completely different
reality. It puts our local complaints into perspective,
but, you know, it doesn't make the local crisis
in developed nations any less painful. Not at
all. And the mechanics are actually surprisingly
similar, whether you are in a favela or a suburb
of Seattle. How so? It's fundamentally about
the gap, the gap between income and the cost
of the roof. That's the universal constant. So
let's start there. Let's try to define this word
affordable, because looking at these documents,
the definition seems to be a moving target. It
feels like gaslighting sometimes. It does. The
government tells you housing is affordable if
it hits a certain metric, but you still feel
broke at the end of the month. That's because
the metric itself is, well, it's pretty arbitrary.
The gold standard that most listeners in North
America will know is the 30 percent rule. Right.
The idea that if you spend more than 30 percent
of your gross income on rent and utilities, you're
officially housing burdened. And if you spend
more than 50 percent, you're severely burdened.
Which sounds so clinical. It is. But here's the
nugget that usually gets left out of the nightly
news. Where did that 30 percent number actually
come from? It wasn't handed down on a stone tablet.
It wasn't derived from a nutritional study of
what a human needs to survive. No, it came from
the Senate floor in 1969. It was politics. Exactly.
The Brooke Amendment, named after Senator Edward
Brooke. Initially, the cap for public housing
rent was set at 25 percent of income. And the
logic for that 25 percent was pretty sound. It
was. The logic was that a family needed the other
75 percent of their income for, you know, everything
else, food. clothes, transportation, the basics
of life. Which makes sense in 1969. But then
the 80s happened. Then the 80s happened. Budget
cuts in 1981. To reduce the federal subsidy for
public housing, Congress just pushed the tenants'
contribution up from 25 % to 30%. So it wasn't
an economic decision based on affordability research?
Not at all. It was a budget hawk decision to
save federal dollars. And that number 30 %...
Just calcified. It somehow became the standard
definition of affordability for the entire market,
public and private. So we are measuring our financial
health with a ruler that was literally forged
from 1980s budget cuts. That's a great way to
put it. And the problem with a flat percentage,
any flat percentage, is that it completely ignores
the absolute value of money. Yeah. I mean, if
I make a million dollars a year and spend 50
percent on housing, I still have $500 ,000 to
live on. You're doing just fine. I'm not. severely
burdened. But if you make $20 ,000 a year and
you spend that affordable 30 % on housing, you
have $14 ,000 left. For the whole year, that
remaining 70 percent might not even cover food
and medicine, let alone a car payment or saving
for an emergency. The percentage is regressive.
It hurts the poor more than the rich. Which is
why the data from 2022 is flashing red all over
the place. About half of U .S. renters are in
the so -called safe zone under that 30 percent
threshold. But that means half aren't. And inside
that half. A massive chunk one in four renters
in the entire country is paying over 50%. That
is the danger zone. When half your income vanishes
to the landlord on the first of the month, the
math for the rest of your life just breaks. It
doesn't work. You aren't saving for retirement.
You aren't fixing your car when the check engine
light comes on. You're definitely not. You are
one minor emergency, a sick kid, a flat tire
away from addiction. I noticed in the research
that... Australia takes a different approach
to this, which seems, I don't know, much more
humane. They use what they call a residual income
model. Yes. It's a much smarter way of looking
at it. Instead of a cold percentage, the Australian
model asks a very simple question. After you
pay for housing, do you have enough money left
to meet your other basic needs? So it focuses
on what remains in your wallet. Which is what
actually matters to a family. It's not about
the percentage. It's about what you have left
to live on. It treats housing as the first eater.
The first eater. I like that. It eats first,
and you have to survive on the crumbs. If the
crumbs aren't enough to buy a loaf of bread,
then the housing wasn't affordable, regardless
of what percentage it was. Precisely. Now, for
the people trying to buy the aspiring homeowners
out there, there's another metric in our stack
that explains why everyone feels so hopeless.
It's called the median multiple. This is the
World Bank and U .N. standard, right? It is.
And it's brutally simple division. You take the
median house price in a city and you divide it
by the median household income. And historically,
a healthy market, a sane market, had a multiple
of about 3 .0. Right. Meaning the average house
cost three times the average annual salary. And
there's reason for that number, isn't there?
It connects back to how banks used to underwrite
mortgages. It does. There was the old rule of
28 in banking. It generally said your mortgage
payment shouldn't exceed 28 % of your income.
Which is pretty close to that 30 % rule we were
just talking about. Exactly. And at reasonable
interest rates, a 3 .0 price to income ratio
fits perfectly into that box. It creates sustainable
debt. You can pay it off without bankrupting
yourself. But looking at the data for major global
cities today, 3 .0 is a fantasy. It's a fairy
tale. It's ancient history. We are seeing multiples
of 10, 15, even 20 in places like Hong Kong,
Vancouver, Sydney, and large parts of California.
So just to do the math for the listener, if you
make $100 ,000 a year, which is a great salary
in most places. A very good salary. A healthy
house for you should cost around $300 ,000. But
in these markets, that starter home is $1 .5
million. Right. Or $2 million. Which means the
local wages have completely disconnected from
the local housing stock. The people who work
in the city, the teachers, the firefighters,
the nurses, can literally never earn enough in
wages to buy a piece of the city they maintain.
This leads to the classic debate, the one you
hear all the time. Is this an income problem
or a price problem? Are houses too expensive
or are we just too poor? Well, the obvious answer
is it's both. But the income inequality argument
is really strong. For the bottom 60 percent of
earners, real wages have been relatively stagnant
for decades when you adjust for inflation. Right.
The paycheck just doesn't stretch as far. Meanwhile,
the asset class housing has appreciated wildly
far outpacing inflation or wage growth. But there
is a hidden variable here, one that I think is
the biggest aha. moment in this entire deep dive
you're talking about the h plus t index the housing
plus transportation index developed by the center
for neighborhood technology this This changes
the map completely. Let's walk through this because
this just destroys the standard advice given
to every young family for generations. It really
does. And that advice is drive till you qualify.
Drive till you qualify. Exactly. Can't afford
the city center. Okay, move to the suburbs. Can't
afford the inner ring suburbs. Move to the exurbs.
Move an hour away. The rent drops. You get a
yard for the kids. And if you're just looking
on Zillow or Redfin, that looks like a huge win.
You trade a $3 ,000 a month two -bedroom apartment
for a $1 ,500 a month mortgage on a house. You
think you just saved $1 ,500 a month. You think
you're a financial genius. But you didn't. You
didn't save a dime. Because transportation is
the second largest expense for American households
right after housing. When you move that far out,
you are now legally married to your car. Or,
more likely, two cars for a household with two
working adults. And we aren't just talking about
the cost of gas. That's what people focus on.
No, it's so much more. We're talking insurance,
which is not cheap. We're talking maintenance,
repairs, tires, depreciation. And the time cost.
We tend to value our commute time at $0 in our
personal accounting. But it's not zero. It is
absolutely not zero. It's time away from your
kids. It's time you aren't working a side gig
or learning a new skill. It's stress on your
body and your mental health. So the Center for
Neighborhood Technology ran the numbers. They
said, OK, let's stop looking at just the 30 %
housing rule. That's a broken metric. Let's look
at housing plus transportation combined. And
they set a new benchmark for affordability. 45
% of income. So roughly 30 % for the roof, 15
% for the wheels. That seems reasonable. It seems
very reasonable. But when you apply that filter
to the map of the United States. The map of affordable
America shrinks. It's a shock. If you just look
at housing costs alone, about 55 % of neighborhoods
in the U .S. look affordable. So more than half
the country seems okay. Seems okay. But when
you add the transportation costs of those cheap
exurbs, the affordable inventory drops to just
26%. Wait, run that by me again so we lose nearly
30 percentage points. We lose more than that.
The number of neighborhoods drops from 55 % to
26%. They are illusionary affordable. We lose
nearly 60 ,000 neighborhoods. That is the trap.
The drive -to -you -qualify advice is actually
a mechanism for capping social mobility. That's
it, exactly. while the odometer destroys the
resale value of your primary asset besides the
house, your car. Exactly. It explains why so
many people feel so squeezed even when they move
to so -called low cost of living areas. The cost
of living isn't low. It's just shifted from the
landlord to the auto mechanic and the oil company.
So we've established that the demand side is
messy wages are low, our metrics are broken,
and the hidden cost of transport is high. But
let's pivot to the thing that really, I mean,
it makes my blood boil when you read this research,
the supply side. Yes. The why can't we just build
more question. Exactly. If 1 .6 billion people
need homes, that sounds like a massive business
opportunity. Why aren't developers flooding the
zone with cheap apartments? Is it just pure greed?
It's not just greed. I mean, greed is a factor
in any market. But the real issue is that we
have made it incredibly. prohibitively expensive
to even ask for permission to build, we have
to talk about the right to build tax. Yeah, to
be clear, this isn't a tax you see on a receipt.
This isn't a line item. No, it's an invisible
tax. Yeah. This comes from a 2007 study by Glazer
and Tobio. Right. And what they wanted to do
was isolate the cost of bureaucracy, not the
cost of lumber, not the cost of labor, not even
the cost of the land itself, just the cost of
the regulatory apparatus. The red tape. How did
they even calculate that? Because that seems
so intangible. It's a very clever methodology.
They compared the cost of homes on quarter acre
lots versus half acre lots in the same area.
OK. By stripping away the difference in the quantity
of land and the construction costs, which are
basically the same. Right. They could isolate
the regulatory premium, the cost of the permit,
the zoning delays, the environmental reviews,
the legal battles with neighbors. And the numbers
they found for a city like San Francisco were
startling. That's an understatement. In San Francisco,
the right to build, meaning just the cost of
navigating the bureaucracy to get the green light
added, approximately $600 ,000 to the cost of
a single new house. $600 ,000. Yes. That's a
luxury home in most of the country. In San Francisco,
that is just the cost of paper and time. It's
mostly time. If a project takes five, six, seven
years to get approved, you are paying interest
on the land loan that whole time. You're paying
lawyers. You're paying consultants and architects
to tweak the plans over and over. All of that
gets baked into the final price of the home.
So when people scream at developers for building
luxury condos, they're kind of missing the point.
They're pointing the finger at the wrong villain.
If the entry fee just to break ground is $600
,000, you can't build affordable housing. It's
not possible. You literally cannot build a $200
,000 unit if the permit cost is triple that.
Precisely. Regulation sets a floor price. If
you make it illegal or prohibitively expensive
to build, you won't get cheap housing. You'll
only get housing for the people who can afford
the $600 ,000 premium on top of everything else.
And this leads us directly to zoning, the invisible
lines on the map that dictate everything. Zoning
is often presented as this benign safety measure.
We don't want a coal plant next to a kindergarten.
Which, sure, I agree with that. No one wants
that. Industrial and residential should be separate.
Of course. But it has morphed over decades into
a tool to effectively outlaw the bottom end of
the housing market. And we see this most clearly
with things like minimum unit sizes. The 400
square foot rule. Right. Many cities mandate
that a new apartment must be at least 400 square
feet. Now on the surface, that sounds nice. Everyone
deserves space. That sounds humane. It does.
But what if I only have $600 a month for rent?
I can't afford 400 square feet. I might be perfectly
happy in a 200 square foot micro studio with
a shared kitchen. But the city says, no, that's
too small. You're not allowed to live there.
So where do I go? You don't go to the micro studio
because it was never built. It was illegal to
build. So you go to the street. Or you cram three
people into a one -bedroom illegal sublet. By
outlawing small, cheap legal options, we haven't
raised standards. We've just removed the bottom
rung of the ladder. And then you add the car
back into the mix. This is where it gets really
crazy. Parking minimums. The silent killer of
affordability. I was reading about Los Angeles
in the research. In some new developments, a
single parking space can cost $75 ,000 to build.
Is that real? It's very real. If you are building
an underground parking structure, yes, concrete
is expensive. Digging giant holes in the ground
is expensive. So if the city code requires. one
or even two parking spots per apartment unit.
You're forcing the developer to build a bedroom
for the tenant and a bedroom for their Toyota.
And the tenant pays for both, of course, even
if they don't own a car. That $75 ,000 cost is
amortized into the rent of every single unit
in the building. So it's a subsidy. It's a massive
hidden subsidy from renters who don't own cars
to renters who do. And it's mandated by the government.
It's just wild when you look at it that way.
We are prioritizing the housing of automobiles
over that. And then you have the pure politics
of it all. NIMB -ism. Not in my backyard. This
story blew my mind. It sounds like something
from the Middle Ages, not modern America. It
was almost futile. Until 2018, if you wanted
to build an affordable housing project in the
city of Los Angeles, you needed a letter of acknowledgement
from the specific city council member of that
district. And they could just not sign it. For
any reason. They could just pocket veto it. No
reason given. Just silence. And the project dies
on the vine. It gave a single politician unilateral
power to block housing for thousands of people.
And they would use that power to appease local
homeowners who didn't want those people moving
into their neighborhood. Those people being teachers,
nurses, baristas, restaurant workers, the people
who make the city actually run. Exactly. We want
our labor during the day. We just don't want
their presence after 5 .00 p .m. We want them
to have a two -hour commute. That's the implicit
message. So we have a system where the math is
hidden, the commute is bankrupting us, and the
regulations make it illegal to build what we
actually need. But if you think the situation
in San Francisco or L .A. is bad... We need to
widen the aperture. We need to talk about the
megacities. This is where the sheer numbers become
overwhelming. For the first time in human history,
the majority of humans now live in cities. And
we aren't just talking about cities like Paris
or Chicago. We are talking about urban agglomerations.
The Yangtze Delta region in China is approaching
80 million people. 80 million. The Tokyo -Yokohama
region is at 100 million. A single contiguous
urban area. And when that many people flood into
a system that isn't building enough formal housing,
or where the formal housing is completely unaffordable
for new arrivals, you get the informal settlement,
the slum. The source material highlights Neza
Chalcoitza in Mexico. It sits on the sprawling
outskirts of Mexico City. It is the largest slum
in the world. It's home to nearly 4 million people.
4 million people. That's larger than the population
of roughly half the states in the U .S., just
in one informal sprawl. And these places form
because of rural to urban migration. People leave
the countryside looking for economic opportunity,
but the city's economic stagnation or lack of
planning leaves them with nowhere to go. So they
build where they can, often without title to
the land or access to basic utilities like water
and electricity. And this brings us to the most
visible, visceral edge of the crisis, at least
in developed countries, homelessness. We have
a report here from the Council of Economic Advisers
from 2019, and it breaks down the drivers of
homelessness in a way that is Honestly, it's
a bit cold, but it's very revealing. It's an
economic analysis of a human tragedy. And they
identified four main drivers. The first one we
just beat to death, overregulation. The report
makes a pretty stunning claim. It claims that
if we deregulated housing markets in just 11
constrained metros. homelessness would drop by
54 % in San Francisco. That's what their model
suggests. It puts forward the idea that homelessness
isn't just a social pathology. It is primarily
a supply problem, a housing price problem. The
idea being that if housing is cheap enough, most
people, even though struggling, find a way to
pay for it. But when the absolute bottom rung
of the ladder is a $2 ,000 a month apartment,
people just fall off. There's no safety net.
But then there are the other drivers. The second
one is climate. It's grim physics, really. It
is physically easier to survive sleeping on the
street in Los Angeles or San Diego than it is
in Chicago or Boston in February. You're less
likely to freeze to death. Exactly. So the unsheltered
population naturally skews toward warmer climates.
It's a rational choice under irrational circumstances.
But driver number three. This is the one that's
going to make some listeners uncomfortable. It's
the right to shelter paradox. This one is very
counterintuitive. There are places like New York
City or the state of Massachusetts that have
a legal right to shelter. If you are homeless,
the government must provide you a bed. Which
sounds like the most humane and decent thing
to do. It is. It comes from a place of compassion.
But the economic argument in the report is that
because the quality of that shelter is relatively
high, it has heat, security, food services, it
becomes a viable substitute for the bottom end
of the private market housing. So if my only
private market option... is a dangerous illegal
basement apartment for $800 a month that eats
half my income. Right. Or I can go to a free
shelter bed that is safe and warm. I might choose
the shelter. That's the theory. It increases
the demand for shelter beds because the shelter
starts to compete with the private market. And
it can create this feedback loop where having
a right to shelter can statistically increase
the sheltered homeless population. Not necessarily
the total homeless population, but the number
of people in the system. It's a difficult tradeoff.
You want to help, but the help itself changes
the incentives. But we absolutely can't ignore
the fourth driver. the individual factors. Mental
illness and substance abuse. The numbers are
high. The report says about 20 % of the homeless
population suffers from a severe mental illness.
Another 16 % have a chronic substance abuse problem.
And this is where the policy of housing first
comes into the conversation. For a long time,
the model was treatment first. You know, solve
your addiction, get your mental health in order,
then you get a house. Which sounds logical on
paper. But housing first, flip that on its head.
It said... Give them the house first, give them
a stable foundation, then solve the addiction.
Because it's really, really hard to get sober
when you're living under a bridge. It's nearly
impossible. You need stability first. But now
we are seeing a bit of a shift, a refinement
of that model back toward housing plus services.
Because a roof alone doesn't cure schizophrenia.
You need the support structure to go along with
the physical structure. And there is a ticking
clock in the U .S. right now regarding this.
the emergency housing vouchers from the pandemic.
The EHV funding, a lot of that is expected to
expire by the end of 2026. If that funding dries
up without a replacement, we could see a massive
spike in homelessness numbers right when we think
we're starting to get a handle on them. Now,
we've talked a lot about the people directly
experiencing this crisis, the burdened renters,
the homeless. But the housing crisis doesn't
just stay inside the house. It ripples out. It
infects the rest of society. It affects everything.
Let's start with public health. Housing is health.
They are inextricable. This is huge. If your
house is damp or cold because you can't afford
proper heating or repairs, you get respiratory
diseases. Asthma rates in children skyrocket.
Exactly. We already mentioned homelessness is
officially recognized as a public health issue.
But even beyond that, think about education.
There was a study in Boston that looked at this.
It showed that foreclosures and frequent moves
have a direct negative impact on student test
scores and attendance. It makes total sense.
If a kid doesn't know where they are going to
be sleeping next month, how can they possibly
be expected to focus on algebra? They can't.
But here is the kicker from that study. It affects
the other kids too, the ones who are stably housed.
How? Teachers in classrooms with high student
turnover have to slow down the instructional
pacing for everyone to accommodate the new kids
coming in and the old kids leaving. So if your
neighbor's housing is unstable, your child's
education literally slows down. That is a powerful
point. High rent in your community makes the
whole class learn slower. It's a collective problem.
Then there's the labor market, what economists
call the spatial mismatch. This is when businesses
complain they can't find workers. You hear it
all the time. Nobody wants to work. The workers
are there. They exist. They just live two hours
away because that's the only place they could
afford. And they can't afford the gas and the
time for a four -hour round -trip commute for
a $15 an hour job. So when housing pushes labor
away from capital, businesses lose competitiveness.
They can't staff their shops. And the whole regional
economy suffers. Okay, we have depressed everyone
sufficiently. Let's pivot. Let's open the toolkit.
Because people are trying to solve this. And
there's some really cool innovation happening,
both in design and in policy. Let's start with
the physical stuff, the actual buildings. If
you live in a U .S. city, you have seen the 5
over 1. Oh, yeah. The boxy, colorful apartment
buildings that seem to pop up overnight on every
vacant lot. Sometimes called the Texas donut,
it refers to a specific construction style. Five
stories of wood framing sitting on top of a one
-story concrete podium. Five over one. Why is
this specific shape taking over the entire country?
What's so special about it? It exploits a sweet
spot in the international building code. Wood
is cheap. Concrete is expensive. By putting the
parking and the ground floor retail in the concrete
base and then using fire -treated wood for the
residential units above, you maximize density
while keeping construction costs as low as possible.
So it's the most efficient way we currently have
to build mid -rise density. By far. And then
we have a classic making a comeback, the triple
-decker. The New England classic. It's all over
Boston and Providence. Three floors, three distinct
family units. It fits on a standard single -family
lot, but it triples the housing supply. It's
what urban planners call gentle density. You
don't have to build a giant tower. No, it fits
right into the neighborhood fabric. And what
about container housing? I feel like shipping
container homes were a huge trend on Instagram
and Pinterest for a while. But are they actually
practical? Standard shipping containers are actually
terrible for housing. They're just steel boxes.
You freeze in the winter and you bake in the
summer and they're full of toxic paint. Right.
Not ideal. But there is a specific type of container
that works really well. They're called reefer
containers. As in refrigerated? Yes. They are
the ones used to transport food, produce, things
that need to be kept cold. So they already have
high -grade insulation built directly into the
walls, the ceiling, and the floor. Ah, so they
solve the biggest problem from the start. Exactly.
Using reefer containers is a very viable path
for quick, modular, well -insulated housing.
And then there's adaptive reuse. We have all
these empty office buildings downtown post -pandemic.
This is going to be huge. Some estimates suggest
that 90 % of U .S. real estate growth by 2033
will come from adaptive reuse. Why build a whole
new shell when you have a perfectly good concrete
frame sitting empty downtown? It's greener, it's
faster, and it's often cheaper. Now let's talk
policy, because you can build a cool container
home, but if the ownership model is predatory,
it doesn't really help. What is NOA? NOA stands
for Naturally Occurring Affordable Housing. This
isn't a government program. This refers to the
existing older housing stock. The dingy 1970s
apartment buildings with the avocado green appliances.
Exactly. The stuff that is affordable just because
it isn't brand new and shiny. The strategy here
is preservation. Instead of letting that building
get torn down for luxury condos, a nonprofit
or a public -private partnership buys these units
specifically to keep them as they are. You preserve
the existing affordability. I love the concept
of community land trusts or CLTs. This feels
like a really... deep structural fix. This is
a game changer. In a CLT, a nonprofit owns the
land underneath the house. The homeowner owns
the house itself that's sitting on it. So you
take the cost of the land, which is often the
most expensive part, completely out of the mortgage
equation. Exactly. And because the trust owns
the land in perpetuity, they can put restrictions
on the resale price of the house. So if you sell,
you get some modest profit, but the house has
to remain affordable for the next low -income
family. You kill speculation. You can't flip
a CLT home for a massive profit. You can't. It
treats housing as a community asset to be stewarded,
not as a winning lottery ticket. And co -ops,
specifically mutual aid co -ops. The outline
mentions FUCVM in Uruguay. This is an incredible
story. FUCVM is amazing. It's a federation of
housing cooperatives, and their model is based
on sweat equity. So you pay with your own labor
instead of just cash. A big chunk of it, yes.
Families contribute a set number of hours of
labor per week to actually build the homes. This
lowers the financial cost significantly, but
maybe more importantly, it builds a powerful
community. You know your neighbors because you
poured their foundation with them. Wow. They
have housed over 25 ,000 families this way in
Uruguay. It's a massive success. That is inspiring.
Let's look at who else is doing it differently
on a national or citywide scale. We always hear
about Vienna, Austria. It's always cited as the
gold standard of housing. It really is. In Vienna,
social housing isn't stigmatized. It isn't the
projects. It's just housing, high quality housing.
And that's because it's for the middle class,
too, right? It's not just for the very poor.
Yes. The income limits to qualify are quite high.
As a result, about 46 percent of the entire city's
housing stock is either government owned or subsidized
public private partnerships. Almost half the
city. And because so many people from all walks
of life live there, doctors, teachers, mechanics,
artists, it is maintained to a very high standard.
And because it's nearly half the market, private
landlords can't price gouge. They have to compete
with the high quality public option. Exactly.
It acts as a massive anchor on prices for the
entire city. What about Germany? I know Berlin
has had some major issues with rent control,
but the city of Hamburg has an interesting model.
They have something called the Alliance for Housing
Construction. It's basically a grand bargain.
The city says to private developers, we will
give you city -owned land and fast -track your
permits, no seven -year delays. And in exchange?
In exchange, you agree to build X number of units
per year, and 30 % of them must be permanently
reserved for low - and middle -income households.
It's a trade. Efficiency for affordability. And
in China, they have a fascinating system called
tradable land quotas. This allows development
on the city outspurts, which increases supply.
But it's done in exchange for protecting agricultural
land somewhere else. It's a way to balance the
massive urbanization we talked about with the
need to still grow food for 1 .4 billion people.
So we have solutions. We have the technology,
the reefers, the five over ones. We have the
policy models, the CLTs, the Vienna style social
housing. But it all comes down to political will.
It always does. And that brings us to the outro.
I want to return to that philosophical question
we started with. The litmus test. One of our
sources had this beautiful haunting line. It
said that society's housing policy reveals the
warmth or coldness of heart toward those of lower
socioeconomic status. That hits home, doesn't
it? Are we warm or are we cold to the people
who serve our coffee, teach our children, and
clean our offices? Our zoning map suggests we
are. Pretty cold. And here is a final provocative
thought for you to chew on. We talked about supply.
Most of the sources suggest that increasing supply,
even building market rate luxury housing, eventually
helps affordability across the board. Right,
through a process called filtering. If a rich
person buys a new luxury condo, they move out
of a slightly older, slightly less luxurious
premium unit. An upper middle class person moves
into that. They vacate a middle class unit. It
creates this chain reaction that eventually opens
up a unit at the bottom. It frees up inventory
at every price point. So if that's true, why
is there such intense resistance? to building
anything, even luxury housing in so many communities.
We often hear people say they want to preserve
the character of their neighborhood. And the
question that leaves me with is, what is the
tradeoff we are making between character, which
often means the aesthetic look of a street, and
the ability for actual human beings to live there?
If a neighborhood has perfect character, but
no one can afford to live in it except for the
ultra wealthy, is it really a neighborhood or
is it just a museum? That is the question we
have to answer as a society. We want you to do
one thing for us this week. Look up your local
zoning map. Just Google it for your town or city.
See what your neighborhood is actually zoned
for. Is it illegal to build a duplex next to
you? Is there a minimum lot size? Is there a
parking minimum? You might be really surprised
by what those invisible lines on the map are
doing to your community and to your own rent
check. Thanks for diving deep with us. Take care.