1381: The Housing Crisis | Skeptical Sunday

1381: The Housing Crisis | Skeptical Sunday

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Jordan Harbinger: [00:00:00] Welcome to Skeptical Sunday. I'm your host, Jordan Harbinger. Today, I'm here with Skeptical Sunday co-host, writer and researcher Nick Pell. On The Jordan Harbinger Show, we decode the stories, secrets, and skills of the world's most fascinating people and turn their wisdom into practical advice that you can use to impact your own life and those around you.

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Just visit [00:01:00] jordanharbinger.com/start or search for us in your Spotify app to get started. Today on the show, it's almost impossible to know nothing about the housing crisis here in America. In fact, the statistics are pretty grim for anybody under the age of 60 who actually wants to own their own home.

The median age of a first-time home buyer is now 40 years old, and the average age of all buyers is 59 years old. 14% of current homeowners own a multi-generational home where their adult children live with them. I know that's a lot of numbers up front here, but there's a lot going on here, folks. Current homeowners seem to be satisfied with their homes, at least in theory, since time spent in a home before sale, in other words, the amount of time that you live there before you sell the thing, is at an all-time high of 11 years.

And that's great for them, but it also means there are fewer and fewer homes on the market. We talked about increasing rental prices on an earlier episode related to squatting. You can find all that on episode 1070. This episode is going to focus specifically on the housing market itself. So just how bad is the housing crisis?

Who's winning? [00:02:00] Who's losing? Is it true that private equity is buying up all the available housing and driving up the costs? And most importantly, what is the source of the crisis, and what can be done about it? Here today to help me separate the studs from the straw men is writer and researcher Nick Pell.

Nick, you've been a homeowner in the past, but you currently rent. Isn't that kind of going backwards? What's going on there?

Nick Pell: Oh, thanks. I just love hearing that- ... right out of the gate.

Jordan Harbinger: You're welcome.

Nick Pell: There's a few reasons that I rent, but the biggest one is the interest rates. I'm not interested in a house at 6% interest.

I definitely wasn't interested at 7, and the only house I've ever owned I bought in cash, so thank you, Bitcoin.

Jordan Harbinger: Yeah, nice. Look, you're a, a semi-normal person with a job. Having to purchase your house using magic internet money, it might prove some of your points that you're going to make later in the episode here.

Nick Pell: Learn how to take profit, people.

Jordan Harbinger: Yeah.

Nick Pell: That's lesson number one.

Jordan Harbinger: Yeah, there you go. Man, crypto's a whole thing. I don't know. I mentioned earlier that people were staying in their houses longer and the impact that's had on the housing market. Do you think interest rates are driving that?

Nick Pell: [00:03:00] Yes. I couldn't find any data, but anecdotally I've heard people say they, "I've got a 3.25% mortgage and it doesn't make sense for me to move."

Jordan Harbinger: That was my thing. When I had a 3.25% mortgage, I was like, "We're staying here f- forever. Come on."

Nick Pell: Yeah. In one sense it sucks, because if you want to move, you can't. That's literally how the conversation came up, was like, "I'd love to move, but I'm not going to double my interest payment, you know, to move, so I'm stuck here."

Jordan Harbinger: You know how much money you could save if you don't live in California? Not that because going to be paying twice as much interest on a house. Yes, the house will cost less, but it really takes a nice bite out of the money you think you're going to save moving to another state, depending on how far down the cost of living index you're willing to go.

Nick Pell: So it just doesn't make any economic sense to double your interest rate on the biggest purchase you're ever going to make in your life.

Jordan Harbinger: There's a big idea going around that private equity is the cause of the housing crisis. Companies like BlackRock, they're buying up [00:04:00] all the single family homes in America and then renting them out, and there's usually some apocryphal story attached.

They offered, I don't know, 50% above asking to buy the house out from under a family that was just ready to move in. Now, I'm not saying that that's not true. It may very well be true. Maybe that exact thing happened, but something about it just doesn't really sit right with me. How true is it that private equity is just driving the housing crisis and it's all BlackRock owns all the neighborhoods?

Is that true at all?

Nick Pell: You see this figure bandied about that private equity owns 20% of single family homes in the United States. This, like many scare statistics, is wildly untrue. The actual figure is less than 4%. According to the Urban Institute, which is a left-leaning policy think tank.

Jordan Harbinger: Okay, that's- I'm glad you grabbed a source like that because people love to be like, "Oh, well, they would say da, da, da."

But, like, a left-leaning policy think tank is either this is accurate or if they're exaggerating and it's still only 4%, [00:05:00] right? So...

Nick Pell: Yeah, I mean, if anyone's going to be sounding the alarm about private equity buying up all the single family homes in America, it's going to be the Urban Institute.

Jordan Harbinger: Yeah, okay, so that's kind of good news.

So the idea that you can't afford a home because BlackRock is buying all the houses out from underneath people who want them, basically that's false.

Nick Pell: It's true that investors bought 27% of all homes sold in 2025, but these are overwhelmingly small investors who own less than 5% of the housing market. The private equity thing is slightly more complicated.

We'll get into it later, but yeah, like, a lot of investors own homes.

Jordan Harbinger: Okay, but we've got to clarify what investors means because that's a big group. If my father-in-law owns a condo that he rents out- He's an investor as well, right? So an investor is not a giant corporation buying an entire neighborhood in Phoenix or the Bay Area and renting those homes to 20-something temporary transplants.

It could be like, "Oh, my grandpa got a [00:06:00] windfall from, I don't know, a workplace injury and bought the house next to him, and he rents it out for income now." That's an investor. I feel like if you get into a bidding war over a house and you lose, it's probably just really easy to say private equity did this to me without any evidence to back it up.

I include myself in this. People like having a focal point for their anger. Private equity and big corporations, I mean, that's a convenient target. Sure, why not?

Nick Pell: Not many people shed any tears over private equity, no. So for what it's worth, I think there are tons of social and economic problems caused by private equity, but the housing crisis is not one of them.

I am not here to wave a flag for BlackRock, but if you're mad at BlackRock because you don't own a home, your anger is directed at the wrong enemy.

Jordan Harbinger: Yeah, people get hit, and I've gotten hit with the same thing, this all-cash hammer when you're trying to buy a house and you're like, "You've got to write a letter to the seller," and you're like, "I want to raise my family here."

And he's like, "Look, some dude rolled in, he just cas- [00:07:00] cashed out of LinkedIn. I'm taking his $2 million. I'm not going to sit here and wait for the bank." And so you get hit with the all-cash hammer, and you kind of assume, oh, it's just big money buying out from underneath the little guy when it's, yeah, it's a retired construction worker or a dude who cashed out some stock, and, you know, he's looking to make a little extra cash renting out a house, whatever.

Nick Pell: Yeah, I've been a cash buyer. It wasn't for a rental property, but when you're a cash buyer, all that matters is I have money and I'm ready to buy. You don't need an inspection. You don't need an appraisal. It might be a good idea. I got my house inspected and appraised, but you don't have to, and so that can make the process go a lot quicker.

There's a lot of hoops that you just don't have to jump through when a bank is involved. You don't need institutional big money to do that. I've done that. I'm sure it's very common where you live, where guys who worked at Amazon 20 years ago are cashing out their stock options, or whatever the case may be.

What is true is that [00:08:00] technology has changed the game in terms of private equity buying houses. They can use algorithms and find undervalued properties and make an offer before people like me and you can even book a tour. That's true. From the perspective of the buyer, though, you just take cash and the seven-day close every time.

Jordan Harbinger: Of course. I would do the same. We weren't even mad when we lost some of the houses we made offers on, because we were like, "We would do the exact same thing." I'm not going to pray that some 30-something is not going to screw this up, or the bank's not going to bail, or I'm dealing with a corporate... It's like, nope, I'll just take the check that clears and go on my merry way and have no stress with this deal.

It's funny, my neighborhood's weird, like you mentioned. There's houses and you go, "Oh, I wonder how that old lady there got enough to redo her driveway," because she lives in a one-story ranch with her grandkids. And you find out, like, oh, she worked at Hewlett-Packard in the '90s and just held onto the stock, and it's, that's where she [00:09:00] met her husband, and he passed away, and he held onto the stock.

And you're like, "Yeah, Hildy probably has $10 million." She's just not spending it. You know, she's not throwing it around. So this neighborhood is weird like that. So I, I totally get it. Look, also, the, the media loves David and Goliath stories, like Wall Street versus families with two kids and a baby, you know, two young kids and a baby.

And it's really easy to present these statistics in a misleading way to craft a certain narrative. So they say 30% of homes were bought by investors, and what they don't say is almost all of those investors are normal Americans like you and me trying to get ahead in life. And instead of throwing it into a crappy savings account or throwing more at the stock market, we put some in real estate because we've read that it's a good way to make some money.

Whatever.

Nick Pell: Yes. Yeah. Passive income-

Jordan Harbinger: Yeah, passive income ... or

Nick Pell: investment or whatever it is. So I'm not going to defend private equity, but I will defend landlords, because without landlords, you would have two options of where you could live. You get a [00:10:00] mortgage or you live in government housing. I don't know if you've seen government housing lately.

It's not a place I would want to live.

Jordan Harbinger: I mean, I lived in New York, and I remember going, "Wow, these are the projects, huh? These are not super nice." Yeah.

Nick Pell: No. I've seen them in Boston and Providence, probably New York. Private equity is why you're still renting. That is a much sexier headline than your county's 1974 zoning law means there's no new construction in the county.

And the latter is a lot closer to the truth. We're going to get into the weeds on that in a bit, but we'll get there.

Jordan Harbinger: That makes sense. I think most people, including myself, I never even really think about the fact that you need landlords because... And someone's going to email me about this, and I'm open to being corrected here, but you do need landlords because you're right, I don't want to live in government housing.

I don't even mean the projects. I just mean I don't want the government to manage large tracts of housing for most people. And yeah, I couldn't get a mortgage for a while because I wasn't a [00:11:00] literal millionaire, which is what you need to be in California. And so you need to rent, and I rented from friends and even then from family, and that was a good arrangement actually.

And the landlord cared about the building, unlike the government, which wouldn't have cared, right? And I couldn't afford to buy it. So yeah, I just don't really have a problem with it. I know in New York landlords are supposed to be evil, and every time something happens to a landlord people cheer. And it's, you know, your other option is living in projects over he- being in, you know, on a waiting list to move into one of those buildings.

I don't know where- even sleeping on your mom's couch in the meantime. Yeah.

Nick Pell: People don't consider in general that capital risk is a service in a sense. Somebody has to put up capital. The capital is at risk, and they're assuming that risk. That's what they're really providing is capital risk. Because yeah, they put money into the house, they expect it to make money back.

I live in a really nice house, [00:12:00] and it's nice for, like, the town I live in. It's not nice for the town you live in, but I live in, like, a nice house in my town. I got a nice little yard. I can't afford this house. I'm not going to get a mortgage for this house because the banks don't want to hear, uh, that I got a guy to make me look poor to the IRS, and that's why my taxes are so low, you know?

So yeah, it's a whole thing that gets glossed over in all the anti-landlord discourse that's ... Your options without landlords are get a mortgage or move to the projects.

Jordan Harbinger: One thing that got me thinking, and it's an incomplete thought here, but a lot of people will say there's a better system for this.

People who are literally socialist or communist will say there's a better system for this. And I will say when I was in East Germany, I remember asking, "So how did you get your house if the state owns everything?" And people had really interesting different answers. If you lived in an apartment, say, in Berlin or something like that, maybe Berlin's a bad example.

Let's say you lived in a block apartment in a city. You still bought that, which I thought was [00:13:00] kind of weird, right? You still had to buy your home even when it was communist East Germany, which I don't fully get how that worked, and maybe somebody who grew up there can tell me how that worked or I can ChatGPT it.

But the house that I lived in when I was an exchange student, I was like, "Wait, how did they decide you got this house?" And the, the reason was, "Oh, our grandpa built it before World War II, and we were living there when the country got partitioned," and they were kind of like, "Oh, you live here? Okay." And then they just kept walking and, and basically like, "Okay, that's still your house."

So you still had private property. Like, yeah, the state owned it, and the state probably could tell you what to do, and the state could come in and install steam heating whether you liked it or not, but they weren't like, "This isn't your house anymore," unless you were maybe a government official from the Nazi Party and they confiscated it or something, right?

But otherwise, it was like, "Okay, stay put. We got bigger fish to fry." This whole, like, there's no private property, the state redistributes everything, kind of not how any of that worked in East Germany, right? Maybe in North Korea or something where they were just [00:14:00] building everything from the ground up because the place was leveled.

But even Germany had, "Just keep this. Hang onto this. We've got to build houses for other people." Anyway, there's no reason for private equity to buy houses in suburban Morgantown or Buffalo. Like, no one's moving there. So these places are not suddenly going to become hotspots, and so I'm guessing BlackRock isn't like, "We've got to buy up everything we can in suburban Albany."

Nick Pell: Yeah, which is funny because I, I actually love Albany, but I'm probably alone in that.

Jordan Harbinger: Yeah.

Nick Pell: To the degree that private equity is buying single-family homes, it's happening in the Sun Belt because that's where Americans are moving. Americans have basically decided that they're not going to live in cold places anymore- I can relate.

Jordan Harbinger: Yeah ...

Nick Pell: because central AC exists and Phoenix is 115 outside, but it's a nice 70 degrees in my house, and so I'm just going to live there. So that's where they're doing it. Now, you can drill down even more into these statistics by neighborhood. [00:15:00] So 3% nationally, but it may be, like, 30% of an up-and-coming fashionable area in Atlanta or Phoenix or Houston

Jordan Harbinger: or more like that.

Yeah, but if you live in one of those areas, you don't care what the actual statistics are. You feel like you're being occupied, right?

Nick Pell: Yeah, sure. If every third house on your street has a sign from a, a private equity company, a rental company, you don't really care what the nationwide statistics are. And I'm not saying people just go, "Well, you know, it's only 3% nationally.

What do you care if they bought your neighborhood?" It's a real problem for those people, and they're not being unreasonable by being angry about it. But if private equity was buying up your town for rental properties, you would know. It wouldn't be some abstract thing that's happening in, out in the ether.

It would be like, I drive down the street and I see nothing but signs for rental houses from private equity. It's very [00:16:00] geographically targeted is the takeaway. And yeah, if private equity descends on where you live and the housing market was already tight, that's going to have a very big impact. So yes, I absolutely get why people would be angry about this if it's happening in their backyard, but the chances are really good that it's not happening in your backyard, person who is listening to this episode.

Jordan Harbinger: Okay, so what is driving the housing crisis? Why the heck is it so hard to buy a house? First of all, is it harder to buy a house, or is that premise flawed? I should probably start there.

Nick Pell: Is it harder to buy a house today than it was in the past? It's complicated.

Jordan Harbinger: If only we had time to discuss why that was the case.

Yeah.

Nick Pell: I know, right? Yeah. While we're all here, the market is frozen. There were record lows set for the number of property listings during the COVID era, and that's not the case anymore. In fact, in January 2026, the national inventory is up [00:17:00] about 20% from that low. The problem is that where the available inventory is clustered, and most of those houses are between $750,000 and $1 million.

So if you can't afford that, and I know I sure can't-

Jordan Harbinger: Yeah. So if you're anyone making under $400,000 a year or something like that, you can't afford that.

Nick Pell: Or you're willing to be house poor. There's people who, in the town I live in, they buy a house, and every penny they have is going into that house.

Sometimes people buy it in the hope that the interest rates are going to come down and they can refinance. But yeah, I mean, the housing supply is clustered for expensive houses.

Jordan Harbinger: So the villain isn't BlackRock, it's zoning laws and your neighbor Greg who thinks vinyl siding is a war crime. Great. Let's take a quick break and thank today's sponsor, BlackRock.

No, just kidding. We'll be right [00:18:00] back.

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Anyway, many of the guests on the show already subscribe and contribute to the course. It is decidedly non-cringey, very down to earth, very practical, and it's free. No shenanigans. Sixminutenetworking.com. Now, back to Skeptical Sunday. Look, I can see how that might apply to new construction, but what about an older house?

Why aren't people selling older houses?

Nick Pell: Because as we talked about earlier, those are your new golden handcuffs. So you bought a cheap house at 3% interest. Why would you sell it? Where's the incentive to sell it? And if you were going to sell it, why are you going to budge on the price? Because if you paid... I mean, the, the housing market is in a sense being repriced downward, which I've predicted for years, and I [00:21:00] think we have not seen anywhere near the bottom of it.

But if I'm cozy in a 3% mortgage on a $500,000 house that's 60% paid off I don't care that the market now says it's worth $400,000. I'll just live in the house. So this all impacts supply. People don't want to sell houses that they have tons of equity in at peak market prices, but bottom of the barrel interest rates.

They don't want to sell those, and why would they? Why would they want to sell them? So the biggest reason why the housing market is the way it is today is structural.

Jordan Harbinger: Okay, meaning what? What is the structure?

Nick Pell: Government regulations. It's basically illegal to build inexpensive houses at a profit.

Jordan Harbinger: That sounds a little, like, loony libertarian conspiracy.

Is that true? How is it illegal to build inexpensive houses at a profit?

Nick Pell: A [00:22:00] better way of putting it is to say that laws mandate expensive housing.

Jordan Harbinger: Okay.

Nick Pell: Which, for what it's worth, this is, like, the free market argument against over-regulation in general and over-zoning the housing market since forever. So when you regulate, or at least when you regulate construction, you are pricing people out of the market because those regulations come with a financial cost.

Me and other people, we call this the electricity comes out of the wall problem, where people, they know, like, I plug something into a wall and hooray, as if by magic the power turns on.

Jordan Harbinger: Yes.

Nick Pell: But they don't process all the externalities that make the electricity come out of the wall. It's magic. It's like for- some politician got asked, was like, "Where do you get food from?"

"Well, it comes from the supermarket." No, somebody made that food. So in the real world, things cost money.

Jordan Harbinger: Okay. So how bad are regulations [00:23:00] restricting new construction or making it more expensive? Because I assume this is crazy, especially in places like California.

Nick Pell: Oh boy, is it. It's called the regulatory floor, and what this means is this is what it costs to build a house.

Any house whatsoever has this cost built into it. There are costs associated with building a house. It doesn't matter how small or how simple. That includes, for example, paying for permission to even break ground on construction. So according to the National Association of Home Builders from their 2025-2026 data, regulations imposed on all levels of government account for roughly 24% of the final price of a new single family home.

So to make it into hard numbers, a $400,000 house is $100,000 in these regulatory costs before you even buy a single plank of wood, a single Piece of drywall, [00:24:00] anything.

Jordan Harbinger: Wow, okay, so you're already in for 100 grand if your house is 400 grand before anything gets built because of building codes and zoning laws and is that, like, permits and stuff and the survey where the water drains?

Like, is that what we're talking about here?

Nick Pell: It is all kinds of stuff, some of which is, like, you're going to go, "Yeah, I don't think that you should be able to, uh, build a swimming pool at a child's daycare center out of uranium." There's your law against that.

Jordan Harbinger: There's a graveyard in my backyard. I'm just going to dig up all these bodies and chuck them in the recycling bin and put in a pool.

Yeah.

Nick Pell: A lot of it is not that. A lot of it is very silly. Not silly to libertarians who think there shouldn't be any laws for anything. I think a lot of this, as we drill into it, is patently silly. Multifamily dwellings, which we're not really talking about much today, but cheap housing, well, the costs there are 40% higher than they are for single-family homes.

Even more [00:25:00] government bloat and regulation there Mandatory lot sizes is one. So if land costs $200,000 an acre and the local zoning law says you need a half-acre lot, now you're buying $100,000 worth of dirt just to build a house on. You cannot build a small, efficient starter cottage on a tiny slice of land because the law says the grass has to be bigger than the house.

Jordan Harbinger: Essentially, it bans the kinds of starter homes and bungalows and, I don't know, row houses that used to be the entry point for the middle class. So there's no more starter homes. There's no more places to start building equity while you save up for a bigger house and you trade up. 'Cause I don't know if this is out of line, but this is what I did, right?

I ended up getting super lucky on a piece of new construction where the builder fixed the price, and y- they were basically like, "This is not the market price because we need to sell all of these things so we can build a subdivision." And so they basically said instead of it [00:26:00] being best offer, maybe it's a million-plus dollars, they were like, "These are all 900 grand."

And you had to wait in line at 5:00 in the morning, and everything was sold. Like, nobody went and looked and went, "I'll think about it." Every single person was like, "I want to buy this right now." And my father-in-law stood in line from 5:00 in the morning and called us and said, "Get here by 8:00." And we showed up, and we were like, "Here's our mortgage paperwork," and they were like, "Great.

Congrats." It was like that. Those don't exist. The reason this existed was because it was a new subdivision where, again, my father-in-law got up at 4:00 AM and went there to stand in line before anybody got to the office. Like, that's crazy. If you have to do that to get a house that's not insane, and I think for most people 900 grand or whatever the price was is crazy objectively, and I needed, like, tons of help to even get that.

This is not normal. This is not a good sign for people who are like, "Yeah, I work at a normal job, and I want a ni- nice starter home so I can have babies here." Like, it's impossible.

Nick Pell: And normal job isn't, "I'm a cashier at Dollar General." [00:27:00] It's like, "Okay, I'm a mid-level coder." Or graphic designer or whatever, like middle-class office jobs.

We're not talking about the guy who changes your oil down at Jiffy Lube, which no disrespect to that guy either, but like in terms of income, like these are middle-class jobs and they can't afford these places.

Jordan Harbinger: Exactly. Everybody who was in line, I remember the other people because they were all my neighbors later, almost nobody was young.

And in fact, the first person who helped us when we got there said, "This is incredibly rude," and we stopped dealing with her immediately. But basically she said, "The only reason I'm dealing with you is because your father-in-law is here." And he laughed because he's like, "It's funny because you're the one with the money."

And I'm like, "She literally doesn't believe you. She literally doesn't believe that I'm 35." 'Cause everybody there is like 40 plus, right? Who the hell's buying a million dollar fricking condo, dude? So she was like, "The only reason I'm even entertaining you is because your father-in-law is standing in front of [00:28:00] me."

I was like, "Okay. Can I deal with somebody who's not a total asshole?" But yeah, like it's impossible for people to get housing in California even when you get new construction and the prices are essentially anchored below market. So why not just pass affordable housing laws? They have those, right?

Nick Pell: They do.

They're a bad idea. It's a save the puppies law that I talk about. It's that combined with electricity comes out of the wall. You say affordable housing and everyone says, "Great, sign me up." But here in the real world, the government cannot just wave a magic wand and create more housing that you actually are going to want to live in.

Jordan Harbinger: Yeah. That's the rhetoric anyway, but what's the reality?

Nick Pell: Cambridge, Massachusetts passed laws in 2025 mandating that 20% of all new construction needed to be affordable. Sounds great, right?

Jordan Harbinger: Sure. Yeah, I don't know enough about it, but I don't know. You're probably [00:29:00] going to explain why it's not great at all.

Nick Pell: So real estate developers exist to turn a profit.

The risk, capital risk thing we talked about earlier. When you get down to it, real estate developers don't exist to build new houses. They exist to make money, and more than that, they expect a certain margin on their investment. They want a certain return. That's what they need both to keep the business running, because they're not non-profits, and to make the risk of their investment worthwhile.

If the return isn't worthwhile, they can just go get a job. Like, there's no headaches. "Okay, I'll go be a property manager," or wherever you pivot from being a real estate developer. You make it so there's easier ways to make money, they're going to go make money easier ways. So when your town passes affordable housing, developers are going to respond one of two ways.

They are either going to pass that cost along to everyone else buying a house in town. [00:30:00] Some people may say, "Great. Rich people can pay more for their houses." As we've established, these are not rich people. Or they're just going to build in the town next door that doesn't have them. And by the way, like, absolutely no one is stopping anyone from starting a private charity to build as much affordable housing as they want.

But if it were that easy People would be doing it. It's not a simple s- problem with a simple solution.

Jordan Harbinger: This is interesting, right? Because if you say, "Hey, rich people can pay more for housing," what you're saying is anybody who buys a house has to subsidize the other house that is the affordable part, and that's all fine and good.

Let's say it's somebody like me, and I've got to pay 10 grand more for my place because I've got to subsidize another house. Okay, whatever. Them's the breaks. But what if the difference is now I can't afford to buy a house because I have to subsidize... So there's all these people who are kind of, like, right on the line who are not in the D-bag, one-percenter lucky guys, dudes like me who lucked out and started a company that actually took [00:31:00] off.

They can't afford a house, so they're going for the affordable housing. So the demand has got to be through the freaking roof for the houses that are essentially subsidized. And I remember we had that in our neighborhood. There was a house where we had an HOA, which was funny. That's a whole different show.

But we were like, "Who are the people that have, like, five dogs in crates all day long for 20 hours a day in their garage, and there's no room for a car, and they never seem to be a- anywhere but home, but the dogs are always locked up and barking?" And it was like, "Who are these people?" Then it was like, oh, actually, they got the subsidized unit.

And we kind of felt bad because it's like, are we just picking on the people who couldn't afford to buy a house here? But it's like they're breaking all of these HOA rules, and they're, like, dog breeding in their garage, but, like, in a way that was really gross and smelly and loud. And we're like, "This can't be legal at all."

And it was like, yeah, we can't do shit about that. Basically, th- we can't do anything about it because [00:32:00] we're all subject to HOA rules, but they kind of can go, "What are you going to do about it?" And the answer is, "Not much," because their housing was essentially subsidized. That's a California thing. I don't think anybody who gets subsidized housing is automatically some kind of weird criminal, but we just got unlucky with that.

Anyway, I want to go back to this regulatory floor issue because I think it's a really tangible way for people to understand how regulations are impacting construction of new housing as well as the cost of houses.

Nick Pell: So it varies what the regulatory floor is from place to place, as one would expect, but the national average floor is $94,000.

It's simplifying it, but basically it's illegal to build a house that costs less than $94,000, and the average house in America has $94,000 baked into the cost that's all going to regulations. That's the thing is people, I think when they hear about, "Oh, regulations increase the cost of housing," they're thinking it like it's making my [00:33:00] quarter million dollar home cost $260,000.

And it's like, no, it's making your quarter million dollar home cost $344,000. In high regulation states like Washington, those regulatory costs are going to be over 200K. In California, it's over 150K. And for multifamily dwellings, again, which this isn't really about, but it does inform the discussion because it's like If I'm not going to build a house with $94,000 baked in, I'm sure not going to build a multifamily building in Los Angeles or San Francisco where there's a million dollars baked in.

And that's what you're looking at in LA and San Francisco is about a million dollars.

Jordan Harbinger: That's crazy. So the higher the regulatory floor, the more expensive the cheapest house in any given area is going to be. And obviously, this isn't the only reason that LA is expensive. I mean, because lots of people want to live there, but [00:34:00] it is a driver for why so many people can't afford any kind of house anywhere in the Los Angeles metro area.

Nick Pell: There's also what's known as the delay tax, because a lot of these houses are built with borrowed money, so the developer pays interest every month the house isn't completed and sold. And that can be tens of thousands of dollars every month, depending on that. It's a lot of money. It's not pennies.

Atlanta is a really good example. In 2025, their permit approval took 40 weeks, and surrounding counties took 4 weeks. Now permitting, you're going to say, "Well, it's related to safety." Do you really believe that the houses in Atlanta are 10 times safer than the houses in surrounding counties? Because it's 10 times the wait.

It's not the difference between four weeks and 40 weeks. So that 36-week government delay difference, that adds 20 to $40,000 [00:35:00] to the cost of every single house in the Atlanta city limits. '

Jordan Harbinger: Cause you've got to pay the interest and the, whatever, the taxes and stuff. I feel like I'm just being a snobby complainer on this episode, but my house took something like.

It was either four or six months to get permits and inspections. Look, part of that was COVID. That's not normal. But guess who had to pay essentially the rent and the mortgage and the property tax and the loan payments and all this stuff during the time when the city of San Jose sent the dumbest idiots, literally stoned inspectors over who would forget paperwork and have to come back four weeks later with the right documents they should have had the first time because they were high and have five functioning brain cells.

And then they'd go like, "Cool, bro. Yeah, it looks fine." And then they would stamp something, and I'm like, "Cool, that just cost me $8,000, or 18,000 if you count the full wait time." Like, it's infuriating, really. There's no other way to explain it.

Nick Pell: he total impact is that [00:36:00] new construction under a quarter million dollars is gone because anything below that just isn't going to be profitable.

So you don't build those. You build a half a million dollar home or in California, a two or $3 million luxury home because that's where the money is.

Jordan Harbinger: We went looking for a conspiracy. Turns out it's just math, incentives, and a bunch of city council meetings you didn't even go to. We'll keep unpacking that, but first, sponsors.

We'll be right back.

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It's a fun time all around. It's over there on the Jordan Harbinger subreddit. Now, back to Skeptical Sunday.

I think something important to remember about the regulations is they have an impact beyond just the building of individual houses. You know, what you have is years of this building up, so all the supply of [00:38:00] housing is clustered outside the reach of most Americans, and the supply of housing that is available to the middle class is limited and dwindling.

Nick Pell: Right, because the houses don't last forever. They don't build them like they used to. I know that in my town, I don't know a single person who's happy with their new construction house. That's where I live. The best and brightest do not live here, I'll just put it that way. But they don't build them like they used to.

You could look at things like the size of the studs and support stuff. It's just the houses are not really built to last the way that they used to be. The housing market never really recovered from the 2008 crash, so the country has been under-building for almost two decades, and we're really starting to see the long-term effects of that.

It's a total collapse in the supply of housing. I think it's important that we also talk a bit about the ways in which the private sector makes this worse, because it's not really about greedy developers. It's about HOA [00:39:00] busybodies.

Jordan Harbinger: Okay, I want to get back to HOA busybodies. My earlier story, this guy was like, "I can't have a band saw in my garage to do woodworking, which is my job, but these people can freaking breed pit bulls in their garage-

like, which is, like, illegal, and we're not going to do anything about that?" I took Jen to, to France because I had a conference, and I was like, "Let's go to Paris," right? I've never been there. We took a tour of these fancy areas where we, where we were on bikes, and this guy explained, "This is where the aristocrats used to live, and there used to be soldiers guarding this neighborhood."

And there's this giant statue of Napoleon on a pillar in the middle of this neighborhood in France. And, like, everything around it, it's sort of this OG luxury area, I guess you would say. Like, there's a Rolex store, and, like, all these different jewelers have their building there, and it's kind of any jeweler worth their salt has a building here where they have their office and they're designing things.

And it was basically like the king's crowns were designed by one of these jewelers, and they're still there. It's like that kind of place in Paris. And I said, "Surely not all of these are offices. Some of these look [00:40:00] just like fancy residential." And the tour guide goes, "Oh, yeah, this is some of the most expensive real estate anywhere.

This is where the aristocrats used to live. This is old money. Anybody who lives in this building has some sort of royal title from an age gone by," right? This family used to live in Versailles, and now their nephews and nieces and grandnieces, whatever, they live here. And I said, "How much is this?" And he goes- Oh, yeah.

I looked this up recently. In US dollars it's about 15, uh, uh, da, da, da, da, whatever, and he told me the same price per square foot as my fricking normal ass neighborhood in Saratoga, California. And I was like, "Wait, wait. I could buy that penthouse right there and it would be cheaper than the house I live in that has plastic grass in California?"

And he was like, "Wow, you're probably overpaying for your housing, pal." My neighbor could have been the Princess of Monaco or whatever, and instead it's... I don't know, Hildy's pretty cool. But still, come on man. That shows you where the market is here [00:41:00] in California, when you could live cheaper in the nicest part of Paris.

Tell me about the HOA thing, because I would think that the HOA would affect the environment that you live in only after you buy a home. I'm lost on how it's going to impact the cost of new construction, especially for places that don't have an HOA, because not everybody has one of these. Can you explain what an HOA is, by the way?

I don't think everybody knows what these are, especially people who don't live in the States.

Nick Pell: Yeah, it's a homeowners association. I don't even really get it. I just know they have a bunch of rules and everybody hates them.

Jordan Harbinger: It's basically like if you live in a neighborhood and the neighborhood is all... I don't know if it's only condos, but mostly usually they're condos.

I can't really tell. Anyway-

Nick Pell: They're zoned as condos, I know that. My parents live in an HOA, or did, and it was a house, but it was zoned condos so they could have an HOA.

Jordan Harbinger: Yes. So basically what this is, it's a... Think a board, a committee. It's made up of your neighbors, and the builder might have a person on the HOA or whatever, at least in the beginning, and they say, "Okay, there's no overnight [00:42:00] parking in the guest spots.

There's no dogs allowed on the common area grass because play there. We're going to take certain amount of HOA fees and we're going to turn this part into a playground. All right, who wants to build a pool? Okay, a majority does. Here's where the pool's going to go and how much it's going to cost. Oh, we don't want noise louder than X at night, so people who have a, a saw in their garage can't use it."

People were getting pissed off about all this stuff because it's democratic, but it's also like, "Hey, this one rule really only affects me. You can't use power tools after 8:00 PM." And this guy's like, "I got a side hustle as a woodworker. I'm working till 10:00 PM using my band saw," and people with babies are like, "Please don't do that."

And you get into this big kerfuffle. Or a guy who has... The dog breeder guy, he would get into it with the HOA because he didn't have room for his cars in his garage because he had dogs in there, so he parked his cars permanently in the guest spots. Now there were no guest spots, because he was an inconsiderate a-hole.

And so the HOA was like, "We're [00:43:00] going to fine you into oblivion." And he was like, "I don't care. I'm not paying for this housing." It was like that. So it was a, a whole thing, and if you don't pay and you do enough HOA screw-ups, you can lose your house. They can fine you, and if you don't pay the fine, they can foreclose your property. So it's like when you say HOA Karen, it's not just somebody who's sending you nasty letters.

They can actually cause you a huge amount of expense and hassle. Jen had problems with her HOA because this woman was like, "Don't open the garage unless you're moving a car through it. No walking through the garage," even though it was the fastest way in from the road, because it does wear and tear on the motor system.

So you end up with these people that have nothing better to do than find imaginary violations. No kids can play with a drone because it could be used to spy on people, and it's like nobody's spying on Hilda laying on her roof deck fully clothed. No one's spying on you. The kids are flying their toy planes.

"They're against the rules now." Thanks a lot. So there's lots of stuff like, "Don't put your garbage out until Tuesday night [00:44:00] after 8:00 PM. If you put it out at 6:00 because you're leaving town, you're going to get a letter, and if you do it again, it's 100 bucks." It's that kind of crap.

Nick Pell: Yeah. So the HOA thing is complicated with regard to housing prices.

It goes beyond the HOA proper and into how things are going to be built in municipalities generally. Something to remember is that city governments tend to be responsive to their communities in a direct way that the federal government is not, especially in smaller communities. It's just an issue of scale.

I see my county supervisor at the gym almost daily, and when there was gravel all over my road, I was like, "Hey, man, there's gravel all over my road." And he said, "Oh, okay." And then literally that day there were like street cleaners cleaning all the gravel off of my road. Not going to happen in San Francisco, but- No.

Jordan Harbinger: You'd have to do an environmental study about brushing it to the side of the road.

Nick Pell: Environmental impact study on removing the gravel.

Jordan Harbinger: So city governments, especially in [00:45:00] small cities like you live, it's a gym conversation instead of, like you said, you don't have to vote somebody in in three states t- in order to get them to do something.

That seems like a pretty uncontroversial take.

Nick Pell: Well, the flip side of that is that bad ideas are also more likely to get run up the flagpole, and there are tons of bad ideas making housing less affordable. Brick or better ordinances. I mean, this is where we get into like, "Oh, I thought zoning and building codes just kept people from storing toxic waste in their garage."

No, it says that you can't have vinyl or metal siding in a community because brick or better looks more appealing, increases curb value. Like a lot of NIMBY, not in my backyard policies, I understand the motivation for this. It doesn't matter how nice your house is. If you live next door to something that looks like a crack house, your property value is going to take a hit because people don't want to live next door to something that looks like a crack house.

Some municipalities, this [00:46:00] is especially true in the South and the Midwest, they require between 60 and 100% masonry on all four sides of a house. That's going to increase the cost of housing between 15 and $25,000. It is a luxury tax on housing because your neighbor doesn't want to look at vinyl siding.

Jordan Harbinger: So I don't care.

I love my neighbors, and there's old-ass houses here with like cars on the lawn and stuff, and then there's rich people that live down the road that have three-story baller pads. I don't care about this stuff at all. Maybe I'm the exception to the rule. As long as my neighbors are nice and they're cool and they're not literally like letting giant bull mastiffs run around the neighborhood with no leash on.

Even then, like people's dogs run around and they crap in our yard, and then they come and clean it. I don't care. Like I just... Am I the weirdo here? Like, I just don't care about any of this stuff, 'because I'm not going to sell my house next year. I live here. If they're cool, we're cool. Just [00:47:00] don't throw beer bottles onto my driveway a- after you're done partying.

I don't care.

I'm actually going to be the snob here.

Oh, thank God.

Nick Pell: eah. Like, I don't care about vinyl siding, but I'm basically on the side of the HOA busybodies. I think it's good for communities to have standards. The same time, it's like I understand that this comes with cost, not an intangible social cost, like a dollars and cents cost.

I don't know about specifically the brick or better rules or anything like that, but when I lived off grid, weirdly, is the only time I've ever had to deal with a property owners association, which was just an HOA for where I lived, and they had rules like, "Actually, corrugated steel is not a fence. You want to put a fence around your property, it's going to be a real fence."

And it was like, yeah, I like that rule. You know why? 'Cause this whole town is going to be a meth lab if we don't have rules in place that make people respect the community [00:48:00] at large. And I'm so, like, I'm so much more amenable to, like, communities passing laws like this because, okay, I don't like that rule, okay, I'll just go buy property five minutes down the road where they don't have that rule.

It's not like a federal law, you don't like it, leave the country. I'm not going to leave the country. But I can buy property 10 minutes away. That's not a massive hardship.

Jordan Harbinger: That's true. It depends. Those rules are reasonable. I think sometimes they become unreasonable. Like again, Jen can't use the garage to get out to the road in a hurry.

She has to go around the whole building because somebody's like, "The chain's going to wear out." It's like, calm down, Becky, the chain's going to be fine, and also it's 100 bucks and it, you have to replace it every 10 years instead of every 15? Just stop. Why is home ownership a social good? I guess I understand why it would be bad if lots of people are homeless or houseless.

Why does it matter if people are renting instead of buying, though?

Nick Pell: It's a [00:49:00] question of skin in the game. People who own property are necessarily more invested in society on average than those who don't. Homeowners have a direct financial motive to monitor local government.

Jordan Harbinger: Okay. So is there evidence for that?

Nick Pell: Yes, quite a bit actually. Homeowners are consistently 15 to 20% more likely to vote in local elections than renters. Homeowners are significantly more likely to attend city council meetings or join neighborhood associations. They also stay put longer. The median tenure for a homeowner is roughly 13 years.

That's compared to two years for a renter. It's a big difference. Longer tenure correlates to higher social capital metrics like knowing your neighbors, volunteering for local nonprofits, joining local religious groups, involvement in your community.

Jordan Harbinger: So [00:50:00] basically, homeowners are more involved with their communities because they directly suffer if they're not, and they can't just pick up and leave, and they lose money if they do, et cetera.

Nick Pell: Yeah, and it's not bougie, HOA, busybody types either. Low-income homeowners in developing neighborhoods are actually the most invested of all. They often work harder to solve local problems because it is so much harder for them to just pick up and start over somewhere else if things go south.

Jordan Harbinger: But that type of civic engagement can also get directed toward the kind of regulations that we've been talking about that make homeownership more expensive, right?

They could lobby to make this even harder.

Nick Pell: Sure.

Jordan Harbinger: To be clear, the regulations that you're highlighting aren't really tied to safety. Like, you're not talking about- Fire codes. You're not talking about making it against the law to build a children's daycare center out of depleted uranium, like you said before, right on a cliff side that's about to fall into the ocean.

It's not that level [00:51:00] of importance. It's sort of nitpicky.

Nick Pell: Yeah. A lot of this is not anything to do with safety. A lot of these local building codes and zoning laws just take HOA style rules and then enshrine them into law.

Jordan Harbinger: Okay. Like saying all your windows have to be painted white or whatever.

Nick Pell: Yes.

There's a bunch that are just purely aesthetic and go way beyond corrugated steel is not a fence, which is an aesthetic judgment, but I think is a good one because it's going to degrade the entire area. And controversial thing that not everybody would agree with, but broken window policing did a lot for New York City.

When you tolerate things like corrugated steel fences, broken windows, whatever the case may be, you're signaling to people that you will tolerate things and they will take license with that, and it begins to degrade your community over time, in my opinion. But I think there's evidence for that, but it's not the subject we're talking about today.

Examples of aesthetic judgments being [00:52:00] enshrined into law are things like there's municipalities that ban houses with flat roofs because they're boring looking. Now, if you live somewhere where I grew up in the Northeast- A flat roof is a very bad idea. It's dangerous because the weight of the snow on the- Yeah,

you're going to die.

Nick Pell: Yeah, it's dangerous. Everywhere else, someone just decided that they'd rather look at gables, and that's m- a more important thing to them than there being affordable housing in their town.

Jordan Harbinger: Yeah, okay. I get that. Gables are pointy parts of the roof? Is that what that is?

Nick Pell: Yes.

Jordan Harbinger: Okay. And so what about the gables again?

Nick Pell: There's municipalities that mandate a certain number of gables.

Jordan Harbinger: I see, and it's more expensive than just building a flat roof. Is that the idea?

Nick Pell: Yes, by tens of thousands of dollars. So a simple box is the cheapest and most efficient way to build a house.

Jordan Harbinger: And in a large part of our country, that's [00:53:00] against the law, not because you're going to get a ton of snow over there in Arizona.

Same with the vinyl siding. It's just about aesthetics, but the problem is, yeah, cha-ching. Yeah.

Nick Pell: And it gets a little crazier because some cities have a city architect or design review board whose job it is to review the plans for each and every house.

Jordan Harbinger: Yeah, and not for safety, right? They're not looking to make sure it's not going to collapse on you.

They're just being dicks about everything.

Nick Pell: Yeah. They just want to make sure that the look of your home matches the look of the community.

Jordan Harbinger: Yes. They want to mandate things like, I don't know, window trim, expansive front porches, which is going to make the actual house that gets built more expensive, stuff like that.

Nick Pell: It's going to add $10,000 to your home, which $10,000 to your home is not very much. I just got a $250,000 home, and now it's $10,000 cheaper. Maybe $250,000 monthly mortgage was all I could afford. Now I get nothing.

Jordan Harbinger: Turns out you don't need a [00:54:00] conspiracy when incompetence does the job just fine. Anyway, let's pay some bills.

We'll be right back.

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I'll happily dig it up for you. It is that important that you support those who support the show. Now for the rest of Skeptical Sunday.

Jordan Harbinger: eah, I've got a buddy who lived in San Francisco. He was in Candlestick Park, which was a, a stadium. I think they got rid of the stadium and built a bunch of homes there, but it was also a neighborhood around where the stadium was, okay?

So he's like, "Oh, it's an amazing house. I live next to this park and it's on the edge and I got views out of the bay or whatever." And then he's like, "I want to redo some stuff because I got these icky single-pane windows and it's kind of loud because there's a road out there, and I want to build some upgrades to this house, this [00:55:00] nice house."

So he puts in windows, and then this committee was like, "You didn't wait for our decision, and we're offended by that, and these windows don't exactly match the other windows in Candlestick Park and it's going to change the appearance." And he's like, "The appearance to what? The oil tankers that are in the bay?

Who's looking at these windows?" And he's like- they're like, "People will walk by and people can see them from the highway." And, and he's like, "Yeah, with binoculars." And they're like, "We don't care. Remove the windows, and also you have to undo this other thing that you did." And he's like, "I just put $30,000," or whatever, maybe it's $130,000, "into upgrading this house.

You want me to rip that out and then put in more expensive upgrades? I'm not doing that." And they were like... I can't remember if they wouldn't let him, like, occupy the place or they were, like, fining him. And he basically went, "Here's what I'm going to do. I'm going to move to Mexico, and I'm not going to pay any of the bills or any of the HOA fees, and I'm going to abandon the property, and you can now deal with it."

And they were [00:56:00] like, "Well, wait a minute, you're going to lose your property." And he was like, "Good, I don't care. The bank's going to take it and you guys can have an abandoned property." And they're like, "You better cut the lawn." And he's like, "LOL, no. You're going to pay for that now." So now his neighborhood is stuck with an abandoned property that's going through litigation for the next decade, and the bank is foreclosing on it, and it's all overgrown, and the HOA has to pay for the maintenance and the upkeep because they wouldn't let him use the brand-new windows he put in because they were, like, the wrong shape.

Really. I'm not exaggerating.

Nick Pell: No, I don't think you're exaggerating one little bit at all.

Jordan Harbinger: Yeah. These people are just asking to get punched in the face, by the way. Who are these tyrants, these petty tyrants?

Nick Pell: Yes. Exactly. Sometimes the buildings are rejected not because they've failed to meet any objective criteria, it's vibes.

Jordan Harbinger: Yes, it's vibes.

Nick Pell: The windows don't create visual interest.

Jordan Harbinger: Yeah. The

Nick Pell: rhythm of the facade is off.

Jordan Harbinger: Exactly.

Nick Pell: But it's like, how am I supposed to correct that? Read your mind and know what [00:57:00] the rhythm of the facade is going to vibe with you?

Jordan Harbinger: Like- Exactly. This is what I'm talking- but this is, people are like, "Punch her in the face."

Now people know what I'm talking about. Yes, exactly. Imagine getting a bill or a demand to undo 100 grand worth of stuff and redo it with 150 grand worth of stuff because the rhythm of the facade is off. What do you mean by that? "Eh. I don't know. Yeah." Eh, that doesn't create visual interest. Sorry, Mike, what do you mean by that?

Ah, you know it when you see it. Okay, no I d- Yeah, exactly. No, sir.

Nick Pell: Yeah.

Jordan Harbinger: So on the one hand, it sounds like a nightmare for developers and buyers alike. On the other hand, I know some people don't want their neighborhoods being filled with, what was it? Vinyl siding because they're massive snobs. Clearly some people think this is important.

Again, I really don't. I think these laws sound really dumb to me.

Nick Pell: Yeah, put me in the massive snob department because I don't want to live next to a guy who doesn't cut his lawn.

Jordan Harbinger: No, but I feel like you're strawmanning this. Yes, you should have to cut your lawn. Do you care what shape your neighbor's windows are?

Nick Pell: Like, there's just got to be a line somewhere.

No, I agree with [00:58:00] you that there's a line somewhere. I'm just saying that if the response is there shouldn't be any standards in any community whatsoever, we can all just live in dilapidated RVs, which I used to live in, or shipping containers or whatever. Yes. I got a friend who's in the New Hampshire State Legislature, and he's been fighting the fight for years against laws that make it so you can just buy 50 acres or whatever it is in some town that nobody lives in in New Hampshire and throw a bunch of RVs on them, and all of a sudden you've got a new housing development.

He wants them to have to actually build a real house there, and I get it, but the number of gables and stuff, no I'm off on the number of gables, I'm off on the color of the window trim, I'm off on is it the vibe, all that stuff. But the idea of there being any kind of visual or aesthetic or quality standard in a community, I'm sympathetic to that.

But again, we need to be clear that this [00:59:00] is going to increase the cost of housing.

Jordan Harbinger: Yeah. No, you're right. Our neighbor has, like, an ugly yellow house, and we're just like, "What the hell were you thinking?" But you know what? Like, not really the end of the world, and I doubt anyone's looking at our house if, say, we're selling it, and goes, "You know what?

I'm not living next to that yellow house. I can't do that. I'm not doing it." It's three houses down. It's just hopefully they'll repaint that.

Nick Pell: So the thing about zoning laws is they suck, but without them, there's nothing stopping someone from building a pork processing plant next to your neo-Victorian luxury home.

Jordan Harbinger: Yeah.

Nick Pell: By the way, this is one of the oldest forms of law is saying that you can't do stuff like that. This goes back to, like, pre-modern England that there'd be like... They have laws going back forever about this because people understand there's externalities involved that need to be managed. You don't hand wave them away, and you don't allow the zoning laws to be like nothing can be built anywhere because somebody's [01:00:00] going to be unhappy about it.

You find where the rubber meets the road, and you make a law for that. And I think that local communities are much more capable of sorting this out in a way that works for, if not everyone, then almost everyone than regulators in Washington are going to be.

Jordan Harbinger: Yeah, I think having your pad above a pork processing plant nowadays is peak hipster shit, and you'd be able to charge a premium for something like that.

I think it's- In New York, it's like, "Oh, are you downwind from the wastewater treatment plant? Oh, that's going to be a premium. You've got to be able to say you live in a gritty area."

Nick Pell: My former in-laws actually live near a pork processing plant, and it stank.

Jordan Harbinger: Yeah. I don't want to know exactly all the details about what goes on at a pork processing plant, but you're throwing out a lot of parts.

Ha. And there's probably a lot of excrement and stuff too, and it's just, yeah, that's icky. So please tell me, though, there are not cities that require people to build, I don't know, in-ground swimming pools.

Nick Pell: No, but there's tons demanding you have a [01:01:00] two-car garage or a certain number of mature trees on the lawn, which- Jeez

that's going to add 30 grand to the cost of a house. But hey, developers already don't want to build anything under 250K, so I don't know, maybe it's not a big deal.

Jordan Harbinger: It seems like there's a cascading effect, like, that it's not just one thing. It's the cumulative cost of all these things together. You ask me to put three mature trees up, that's going to be expensive.

But if I have to do that and gables, and a certain kind of window, and a certain kind of, I don't know, gravel or whatever, and the driveway has to be concrete and not asphalt because they like the lighter co- Like, all that stuff, that's where you start getting into the tens of thousands.

Nick Pell: Yeah. People want a magic bullet that's just going to undo this Gordian knot of problems, and it doesn't exist.

Jordan Harbinger: Yeah. Excellent mixed metaphor, by the way. I'm not trying to suggest there's no real problem here, but I do think it's reasonable to suggest that maybe the internet is making people feel worse about a real problem than maybe they might otherwise. So I guess a good place to start with is how many [01:02:00] people prefer to rent rather than to buy.

Nick Pell: We have some good data on this. In any of this data, though, I always want to know what the percentage of people saying they don't want to rent a home because they don't think they can actually have one is.

Jordan Harbinger: Yeah. The people that are kind of coping, essentially, because it seems totally out of reach forever. I don't want somebody to say, "Oh, I don't want to buy."

Why? "Because I don't want to spend $10 million and be in debt slavery." Okay, that's not exactly the same thing as you not wanting to own a home.

Nick Pell: There's no real way to know this, but I think it's fair to say that it's non-trivial. A good example of this manifesting is the always renters. Roughly 12% to 15% of Millennial and Gen Z renters now say they always plan to rent.

That's a nearly 50% increase from a decade ago.

Jordan Harbinger: I think this is a really telling insight into what you said. It doesn't actually say that they prefer to rent, it just says that they always plan to rent. And I think it's safe to assume that at least some part of that is pure, unadulterated [01:03:00] despair over the housing market and the rising housing costs.

Nick Pell: A clear stat is a 2025 survey where 72% of Gen Z adults viewed renting as financially smarter than buying in the current economy. I'm obviously way outside of Gen Z, but this is where I live. I'd love to own a home again, but I just don't think it's a smart financial decision in the current environment, mostly because of interest rates.

Among high-income earners, that's over 150K, renters by choice grew 20% between 2023 and 2026. These are people who prefer to keep their capital in the stock market rather than a single illiquid asset like a house.

Jordan Harbinger: So it's not just that everybody is giving up and saying they never plan to buy a house.

There are lots of people who genuinely prefer to rent over buying, and could conceivably own a house if they actually wanted to.

Nick Pell: Yeah, that's a fair assessment.

Jordan Harbinger: I guess the question is why. You mentioned they want their capital to be more liquid. Maybe there's more going on than just that. I don't know.

Maybe if you're a person who changes job [01:04:00] locations all the time, you work on oil rigs and they're always moving you all over the place. Like, you don't know where you're going to live in two years. I would rent if that were the case.

Nick Pell: We do know that more younger people are freely deciding that they don't want to own a house.

83% of younger people cited mobility as a reason. Like you said, like they just want to be able to pick up and move. For what it's worth, my wife is over a decade younger than I am, and she doesn't want to buy a house in the town we live in because we're going to leave when my son grows up. She doesn't want to have to own a house in this town that we're going to leave.

Jordan Harbinger: So people, particularly young people, are saying they don't want to buy because owning a home ties them to a specific place, whereas renting means they can pick up and move. That totally makes sense to me.

Nick Pell: 75% said that renting was just less stressful than owning, and there's a point there. You're renting and the house needs a new roof, it's not your problem.

Pipes break in winter, not your problem. My fridge broke, not my problem.

Jordan Harbinger: Really? Your landlord takes care of your fridge? That's actually unusual, I think.

Nick Pell: [01:05:00] It's the law. If it comes with an appliance, it's his responsibility.

Jordan Harbinger: No way. So that's interesting, because every place I've ever rented, they're like, "You need to buy a refrigerator."

And I was like, "Why would I buy a fridge that only fits in this one specific spot? I'm not going to move it when I move." That makes sense, because then it's their responsibility, so they're trying to get around that by making me buy a fridge. Okay.

Nick Pell: Yeah. Like I know a guy who rents a property here that when he gets a new tenant, he sells them the fridge for a dollar.

Jordan Harbinger: That seems legit. Okay. I'm not trying to work my way around this, but here's a $1 brand-new Samsung refrigerator. Sure.

Nick Pell: So home ownership means there's no one to call when the plumbing breaks. You're just the guy who deals with it.

Jordan Harbinger: Yep. It's also one of the best times ever to rent instead of buying, just from a financial point of view, isn't it?

Nick Pell: Yeah. So in the top 50 metros in the United States, it's $900 a month cheaper to rent than buy. This is maybe the metric that's most indicative. If this factor were different, I might buy. [01:06:00] What we discussed earlier, about the zoning laws, other factors making it difficult to build new housing.

Jordan Harbinger: The housing market sucks, and that's part of what makes renting more attractive to young people, correct?

Nick Pell: Yeah. The other two main drivers don't have anything to do with housing policy Opportunity cost, very real. All the money that you're putting into saving for a house is money that you're not putting into the market or other investments.

Jordan Harbinger: I guess if you're saving for a house, you could put it into a CD or something, but I know what you mean, right?

You're not putting it into an index fund and letting it sit there. Ooh,

whoopdee, a CD, I'm going to get

Jordan Harbinger: 1%. Yeah. Well, now, yeah. It sounds like a lot of people, especially younger people, are at least semi-content with not owning a home. But what about the people who are struggling with feelings of inadequacy about not being able to buy a home?

The internet really seems to exist to make people feel worse about their otherwise good lives, and I'm guessing there's a lot of people doom-scrolling Zillow and despairing because they're not living in a million-dollar home in Bel Air at age 25.

Nick Pell: I don't think a million bucks is going to get you a lot [01:07:00] in Bel Air these days, man.

Jordan Harbinger: No, maybe you should add a zero. Probably not, you're right. But is there any data about the people who aren't buying houses that actually want to buy a house?

Nick Pell: We call this person the trapped renter. 86% of current renters say they would like to buy a house. Remember the stats from above were mostly about Gen Z.

And man, if you want to feel old, the oldest Gen Z person is about to turn 30 this year.

Jordan Harbinger: Jeez. Okay. Yeah, that makes me feel old, for sure.

Nick Pell: My wife, who is definitely not Gen Z, didn't know what a rotary phone was.

Jordan Harbinger: How is that possi- wh- I'm not that old. Are we?

Nick Pell: She didn't know how they worked. It was like a, to her it's like a old-timey crank phone where you're like Get Agnes on the line.

Jordan Harbinger: Yeah.

Nick Pell: St. Louis.

Jordan Harbinger: Yeah. Agnes, John Smith in Slidell, Louisiana, and they're like, "Oh, well, there's only one of those. Let me put the cords into the right holes." Yeah. Man, you must feel old, so old every day if you're living with somebody who's in that position.

Nick Pell: Mostly because of [01:08:00] my creaking bones, actually.

Pre-COVID, 17% of these trapped renters could afford a home. It has now dropped to 12.7%.

Jordan Harbinger: Damn, that wasn't that long ago. Plus, you'll have maintenance costs on top of the mortgage, and the cost of ownership can be a significant premium on renting.

Nick Pell: Nationally, it costs 108% more per month to own than to rent. In high-cost frozen markets like Orange County or parts of the Bay Area, the cost of ownership premium can exceed 300%.

Jordan Harbinger: That sounds right to me. So if you live where I live, owning is going to cost three times more than just renting. Yeah, I could see how people would prefer to rent.

Nick Pell: And these are comparable properties, too, is the thing that's worth saying. If you get a house that's three times as much, it's like this is a comparable property.

There are markets where the reverse is true, where it's better to buy than to rent. Flagstaff, Arizona is a really good example. It's like two hours from me, and the rental market there is [01:09:00] horrible because it's a college town, but if you buy a house, you can get a really nice house for not a ton of money.

People who live in Flagstaff are going to be like, "What?" And it's, I've priced out houses in Flagstaff. They're really not that bad.

Jordan Harbinger: But that gap in cost can be a driver of despair because you might actually want to own a home, but the market is pricing you out. I say that you prefer to rent because it's cheaper, but if it were cheaper, you'd want to own a home.

Nick Pell: 49% of Americans believe that it is unrealistic that they will ever own a home.

Jordan Harbinger: See, this is where we start seeing the despair, right, the hopelessness about ever buying a home.

Nick Pell: Yeah. But what surveys like this don't tell us is whether or not these people can buy a home, and if not, why they can't. If it's income, that's a cost issue.

If it's credit- You know, I got a 550 credit score. Whose fault is that? Lifestyle changes are a very easy barrier to overcome in that regard. Getting your credit moving is actually a lot easier than you think. I've raised mine like 120 points in less than a year just by paying down [01:10:00] debt.

Jordan Harbinger: Speaking of credit scores, what role do mortgage rates play in keeping people out of homes?

Nick Pell: Well, like I said, mortgage rates are my reason for not wanting to buy a home. The estimate is that 6% is the sweet spot where people are going to start looking again. Anecdotally, I've spoken to realtors and people are not jumping at 6%, but that we're at right now. It needs to be sustained is part of the issue.

People have lived through fluctuations in the credit market, so they're going to want to see 6% hold for a while, especially if all they're going to qualify for is a variable interest mortgage. I'm waiting for 5%. For me, it's not about income. 6%'s nuts to me. I'm a ch- I'm a child of 4% interest rates.

Jordan Harbinger: Sure. Yeah, I get that.

I remember there was a proposal during the 2024 election to create some kind of grant for people to buy a house, and I know you're probably opposed to that. But what I want to know is why, beyond some kind of hand-wavy thing about how the government is bad and it's immoral for the government to do [01:11:00] anything, why is it bad to create a grant for people to buy a house?

Nick Pell: So I think what you're specifically talking about was a $25,000 grant proposed by the Harris campaign for first-time home buyers. The issue here, beyond my usual philosophical gripes, is that the government would, again, be stepping in to increase demand for housing without increasing the supply. I'm not really sure what it would have accomplished beyond making every house in America $25,000 more expensive.

And the thing is, we don't have to resort to abstract reasoning to get to this conclusion. We have an example from California.

Jordan Harbinger: Of course we do. Okay.

Nick Pell: Yeah. The California Dream for All Act offered 20% down payment assistance. It was a $288 million program, and it was all tapped out in 11 days.

Jordan Harbinger: Wow, they blew through that pretty quickly.

So what were the tangible effects of that?

Nick Pell: Housing prices in California went up by 10% in a single year [01:12:00] because all that it accomplished was spiking demand of a limited resource. This is called inelastic supply. It doesn't matter how much money the taxpayers fork over. It is not going to magically increase the supply of housing.

Jordan Harbinger: Yeah, that makes sense. That explains why my property got more valuable and I didn't do anything but live in it. Okay. At least in part because of local zoning laws and regulations that make building more expensive. Yeah.

Nick Pell: If you think more people who want to own homes should be able to purchase them is a worthy goal, and by the way, I do, what you need to do is make building houses cheaper.

That means a lot of legislation to undo existing legislation, and most of it is going to have to take place at the local level. The federal government can't just slap a Band-Aid on it because, for the most part, the root of the problem exists at the local level.

Jordan Harbinger: Huh, okay. Couldn't they just ban a bunch of the ownerist zoning [01:13:00] laws that we've been talking about?

You said it's a Gordian knot, but some of it seems like you could just undo some of that crap. I don't know. Clearly I'm fit to run for office. Just, uh, Control-Z on a bunch of that stuff. Come on.

Nick Pell: Yeah. I have an extreme lack of faith in the federal government to decide what zoning laws and building codes are appropriate for Boise, Idaho.

Jordan Harbinger: Okay. So what about lowering interest rates? I kind of know why this might be a bad idea, but I'll ask you anyway. Why not just lower interest rates?

Nick Pell: I'm sure that lowering interest rates would make more people interested in and more capable of buying, but there's problems that come with that, like the interest rates were raised for a reason.

Jordan Harbinger: What reasons are those, in case people listening to this don't follow American finance?

Nick Pell: One big reason is that the housing market was just out of control. Lowering the interest rates is another solution that increases demand while doing nothing about supply. According to the National Association of Realtors in early 2026, every one percentage point drop [01:14:00] in mortgage rates, so dropping them from six to five, for example, that brings an estimated 5.5 million additional households back into the buyer pool.

Jordan Harbinger: Which is going to make prices go up because now all kinds of people are going to buy houses, and the supply hasn't exploded along with the demand. So the people who are locked in at a 3.25%, they're not going to sell unless they can get a competitive rate, which means rates have to be cut almost in half before those people are going to start to look to move and free up those houses.

So yeah. So if you just lower rates, it's like, "All right, we can borrow more cheap money. Great." Okay, so now there's 10 times as many people looking for the exact same amount of houses. Yikes.

Nick Pell: Yeah, and the 3% interest people still don't want to sell. The problem of new construction is not solved, et cetera. If the Fed cuts rates too fast, they could trigger a new round of 9% inflation.

Forecast from Morgan Stanley and Redfin says 6% is the new normal and that 3% is not coming back.

Jordan Harbinger: Huh. Not good news for [01:15:00] you personally if you're holding out for 5%.

Nick Pell: Maybe not, but my wife doesn't want to buy here anyways. I'm pretty happy renting. I got a nice house. It sucks that- Pay someone else's mortgage, but is what it is.

I will say that the one place where lower rates can help buyers is that it can make construction in general and construction of less expensive houses in particular more attractive. Developers usually build these houses on credit, so the interest rates could potentially have a ripple effect.

Jordan Harbinger: I see. So where does that leave us?

Nick Pell: Don't ask me, man. I don't have any answers, just complaints.

Jordan Harbinger: That's on brand. Yeah. All right, we started today looking for a villain in a black suit from private equity firm, but it turns out the call is coming from inside the house. Scarcity is a policy choice. We've created a system where we treat housing like a high-yield investment account for existing owners, but then we act shocked when the buy-in price for the next generation is a quarter million dollars higher than they can actually afford.

And look, I get it. If you own a home, you want the value to go up, but we have to be honest. You can't [01:16:00] have affordable housing and housing as a guaranteed wealth builder both at the same time. One of those things has to give. Thanks to Nick Pell for helping us put a roof over this conversation. And thanks to you all for listening.

Topic suggestions for future episodes of Skeptical Sunday directly to me Jordan@jordanharbinger.com. Advertisers, deals, discounts, ways to support the show all at jordanharbinger.com/deals. This show is created in association with PodcastOne. My team is Jen Harbinger, Jase Sanderson, Tadas Sidlauskas, Robert Fogarty, Ian Baird, Gabriel Mizrahi.

Our advice and opinions are our own, and I'm a lawyer, but I'm not your lawyer. Also, we try to get these as right as we can. Not everything is gospel, even if it's fact-checked. Consult a qualified professional before applying anything you hear on the show, especially if it's about your health and well-being.

Remember, we rise by lifting others. Share the show with those you love. If you found the episode useful, please share it with somebody else who could use a good dose of the skepticism and knowledge we doled out today. In the meantime, I hope you apply what you hear on the show so you can live what you learn, and we'll see [01:17:00] you next time.

You may think you don't have an accent, which is exactly what your accent wants you to think. Every voice carries clues about class, identity, and belonging, and why what sounds intelligent, trustworthy, or normal often has more to do with power and familiarity than language itself.

JHS Trailer: Every person has an accent, but what really is driving our attitudes towards what's a beautiful language and what's not is our familiarity with that language, so the more familiar a language is or an accent is, the more we tend to like it, but also our beliefs about the speakers of those languages, and that is like 50% of what drives our attitudes towards language.

When we're talking about someone speaking a different dialect, what we're talking about is that they're using differences at many levels of linguistics, not just sound. So they're saying syntactic or sentence structure differences. They might be adding different endings or deleting endings. That's morphology.

They might be using different vocabularies, but an accent refers to [01:18:00] only differences at the level of sound. So when we're attending to accents, we're attending to sound differences, and what that general description of the difference it shows you, there are so many different things you have to learn when you're learning a new language.

There is more cognitive processing power when you hear a foreign accent. You have to recruit more neurons to unpack what you're hearing because it's less familiar, so you are exerting more processing effort. A lot of people actually experience that as something more difficult and unpleasant, but in other contexts where paying attention is important, it probably actually does help you, but you are actually using more processing power.

Here's a great piece of evidence as how much our speech says about us without us being aware of it.

Jordan Harbinger: Listen to linguist Valerie Fridland on episode 1349, and you may never hear anyone, including yourself, the same way ever again.