Why Pakman says housing costs need more supply

Transcript

Transcribed by machine (Whisper) from the episode’s audio, so a word may be off here and there.

1. 24:45

   crisis how much of this is to do with people i have a lot of empathy for you know millennials and gen z they a lot of them did everything they were told to do they went to school they worked hard yeah they went to college they come out of college saddled with a load of debt they then go and do a job and they go hang on a second not only can i not buy a house i can't buy a flat not only can i not buy a flat i can't even rent a flat for myself i have to live like a glorified college kid into my 30s and 40s yeah that housing is the biggest single expenditure for most households so of course even small changes to the cost of housing much more so than like what's your cell phone bill or does netflix raise the price by a couple bucks is going to have a disproportionate impact on people's day-to-day housing's complicated because on the one hand you have the phenomena in

2. 25:36

   the united states where private equity is buying up more and more single family homes which is giving them pseudo monopoly power in some in some markets not not in large cities generally but in some markets so that you we could look at that and say well that's a problem there's also extraordinary can i just before you move on to that yeah that's really because people talk about this a lot yeah and there's a lot of people particularly me who don't know what's going on can you just flesh it out a little bit yeah you have companies like BlackRock and others that will just sweep up large portions of homes in certain parts of the country. Sometimes they're buying homes on the secondary market. Sometimes they're going to some of the largest home builders, not like your local developer that builds five homes

3. 26:20

   a year or 10 homes a year, but the ones that are building hundreds of units. And they'll say, we'll take the entire neighborhood. So that's what we're talking about. I had a conversation actually with the governor of Colorado about this, where this is happening a lot in Denver. And so that's what I mean by that. OK. Is that fair? Yeah, that's absolutely fair. So moving on, what was going to be your other point following on from that?

4. 26:39

   It's really difficult to build in a lot of parts of the country. You have zoning. This is like what we would call boring stuff in some sense, but it's extremely important. It's really difficult to build. In some parts of the country, you have large tracts of land that are controlled by municipalities or states. And it's not that they're unwilling to let those go to allow the building of new units, but it's that it can be a decade process to get all of the right permitting and agree on a price, et cetera. So you've got that as an issue. You have zoning with everything related to the amount of frontage that's required for each house that limits how many units can be built, how high you can build, all of this sort of stuff. You're right, this is boring.

5. 27:18

   But we have the same shit in the UK. Yeah, yeah. And it makes it, at the end of the day, you need more housing units. That's fundamentally the issue. You need more housing units, which by increasing the supply is going to have a little downward pressure on pricing. And I guess the real question and the one that I think is on everyone's lips and probably at this point,