Marketplace - Solutions to the housing shortage

Episode Date: November 8, 2024

he U.S. is somewhere between 3 million and 7 million units short of meeting the nation’s housing needs. What can be done to build up the supply of homes? We asked five experts for their solutions. Also in this episode: A new program to cool down electric grid demand comes to Texas and an Iowa soybean farmer stays optimistic in the face of a bad harvest and a potential upcoming trade war.

Hey, if you're listening to this, I will assume you're at least interested in money, understanding the economy and finances as well. Some of us now want to get the next generation interested as well. Check out Million Bazillion, Marketplace's award-winning kids podcast that breaks down money to help dollars make more sense. Tune into Million Bazillion wherever you find your favorite podcasts. A whole new season is out now. Million Bazillion is presented in partnership with Greenlight,

the debit card and money app for kids and teens. Greenlight helps kids and teens learn to earn, save, spend wisely, and invest. When you sign up for a Greenlight account, go to greenlight.com slash million. Well, that was a week, huh? From American public media, this is Marketflash. In Los Angeles, I'm Kyle Rizdal. It is Friday today. This one is November the 8th.

Good as always to have you along, everybody. We have so very much to talk about. Never enough time. David Gura is at Bloomberg, Catherine Rampell is at the Washington Post. Hey, you two. Hey, guys. Okay. So Catherine, let me begin with you and this observation, and I suppose we'll point out

that there was a Fed meeting and blah, blah, blah, quarter percentage point, all that stuff that's been in the news. We are in a place now, Ms. Ramampel, where inflationary fiscal policy from the Trump administration and a new Congress is going to run headlong into a monetary policy regime that is loosening and therein be dragons, yes? Yes. Well, Powell, the Fed chair, was very disciplined about not commenting on what the next administration will do and basically said they don't want to speculate.

And it's worth noting that when Trump was waging trade wars before, I believe the Fed continued cutting rates for a while. Because there were, you know, tariffs have multiple effects. One is to raise prices, but another is potentially to slow growth. So it can cut both ways. I do think it's going to be a real challenge in the next couple of years to manage, you know,

to have this sort of push-pull between fiscal policy, not just tariffs, but unfunded tax cuts, among other things, and monetary policy that they may not be working in the same direction and we could be setting ourselves up for something of a showdown depending on how much political independence the Federal Reserve retains, which is another... Hang on, you're skipping ahead in the interview, Katherine. You're skipping ahead. Cut it out. David, it has to be, you know, Katherine in the interview, Catherine. You're skipping ahead, cut it out.

David, it has to be, you know, Catherine said Powell was disciplined, but one does not have to try too hard to read between the lines to understand that this is going to be a challenge in running this economy. There were some odd vibes at that press conference yesterday, and when he was asked about politics, he was really reticent to engage with those questions. When he was asked about the economy, he was happy to expound at land length on what the Fed had done and sort of to an extent what it's thinking. But you know, this is something that you've pointed out many times, the pressure on Jay

Powell is going to get more and more extreme. And there was that very intense Q&A with Victoria Guido of Politico where she said to him, if the incoming president has to resign- You guys are stealing all my questions, but go ahead, David. Oh my God, I'm sorry. No, go ahead, since you're on it, go ahead. Would you resign if he asked you to? And he emphatically said no, quickly said no,

and then she asked him to expound upon that. Would it be legal? No, he said as well. And then they moved on. It was kind of a remarkable moment, but this was a, Jay Powell in that moment who looked like it was the last thing he wanted to talk about, but you could tell just by his expression

The way he was comporting himself. This is this is weighing heavy on the Fed chair shoulders So Katherine since you two have taken control of this interview I'm gonna keep I'm gonna keep going with whatever it is. You guys want to talk about there was a follow-up actually to that No, I'm not gonna resign question in which Powell said not he was asked, you know I'm not gonna resign question in which Powell said not he was asked, you know Not permitted under the law. It sounds a lot like he's saying I don't want to put words in his mouth But you know what? I mean see you in court, right? I Think the hope is that the confrontation won't if there is to be one In which Trump is unhappy with Fed policy. It may not happen for a while, right?

Because right now, the economy is doing quite well. And in fact, the Fed is cutting rates, which is exactly what Trump wants. That's not why they're doing it, obviously, but it happens to be consistent with his desired outcomes. Maybe Trump will get into office and realize his great fortune that even though he's been poo-pooing this economy for quite a while, he's actually inheriting a lot of really good trends. You know, wage growth above inflation for over a year now, GDP growth pretty

robust, unemployment ticking up but still quite low, and maybe if he's wise, he'll just lay off of the Fed. Now, that doesn't mean their interests will always be aligned, or their desired outcomes will always be aligned, his and the Fed's, and I don't know what's going to happen then. There have been signals out of Trump world that Trump may not outright try to fire Jay Powell, but may do some other things to try to undermine the credibility, the credible independence of the Federal Reserve.

And I really hope it doesn't come to that, but I think it is quite possible. David, let's keep going with this. And just because you and I had this exchange in a separate communication, talk to me about that whole shadow Fed share thing that has been floated and number one, what it is and number two, what it might mean. Yeah, count that among what Catherine was just talking about, the ways to undermine the independence of the Fed. So I think what's been proposed by an economic advisor to Donald Trump, now the president elect, is to have this shadow Fed, somebody who would be telegraphing what he thinks the

Fed should be doing while waiting in the wings, I assume, to be nominated by the incoming president to replace Jay Powell. Now if he serves out his term, that takes us to 2026. So it would be for a while. But I think that that level of engagement in that way would be confusing to say the least and I think that it would sort of undermine how most Americans understand what the Fed is doing and indeed is supposed to be doing. Catherine, you were you were facetious I think this morning when you pointed out that really the smartest thing that the president-elect could do would be to get into office on day one,

claim credit for the economy, and then basically go golfing. I mean I'm not being totally facetious. I actually do think that's the best possible outcome we can hope for. As I just said, economic trends have been quite good. Consumers don't necessarily acknowledge it, in part because I think they're still feeling this hangover from inflation of 2022, 2023. But at some point, I think they're

going to realize that their wages have been outpacing price growth and kind of what the economy needs is a hype man. You know, you want Trump to go in, take credit for all of these, you know, suddenly he wakes up and recognizes that all of these good things are happening in the economy that I just ticked off and say, victory, I fixed it. The economy is great. Everybody should feel great about it.

And that would be the best possible outcome because the things he would actually do that he's proposed doing rather to quote unquote fix the economy would be economically very painful. So we talked about politicizing the Fed. I'm very worried about that. But there's also the universal tariffs. There's also the mass deportations which are likely to cause all sorts, I mean, besides the sort of humanitarian concerns for all of that, it's going to cause all sorts of

problems with the economy and the labor force. So there are a lot of interventions that he would like to do to, quote unquote, fix the economy or fix the country in some other respect that would actually have the opposite effect. And you can see that in the markets. You can see that a lot of Wall Street economists have revised upward their inflation expectations downward their growth expectations, etc. David, girl, I'm gonna give you the last word and I'm not gonna steal your line What's gonna happen in this next administration? We were just talking about it Maybe the stock market will be the economy but um, David girl at Bloomberg

We'll be here all week, folks. See you through later. Thank you, Kyle. Oh my lord. A strong week on Wall Street ends with a strong day. We'll have the details when we do the numbers. You want to know what's really going on in this economy, you've got to check with consumers, which the University of Michigan helpfully does for us every single month. Their consumer sentiment index, how we all are feeling about the economy,

the prices we're paying, the income we are earning to pay those prices, that came out this morning and it shot up heading into early November, rising for the fourth month in a row to the highest it's been since April. And consumer expectations of future economic conditions are at their highest point in more than three years. In other words, before inflation did its worst. Marketplace's Mitchell Hartman reports on those improving consumer attitudes

and whether they're likely to last. First, it's important to note the most recent University of Michigan survey was done before the election, says director Joanne Shue. Consumers have been looking forward to the resolution of this election for some time. Of course, still quite a bit of uncertainty remains. What we do know is, leading up to the election, Americans have been getting steadily more

positive for purely economic reasons. It's the moderation and inflation expectations, the strengthening and income expectations, and continued belief that business conditions will improve in the year ahead. In fact, the Conference Board, which also reported a big improvement in consumer confidence before the election, finds that most Americans don't think which political leader is in power has a major impact on their economic lives. Chief economist Dana Peterson says when surveyors ask consumers what does, Two words continue to be the biggest in the word cloud, and that's prices and inflation. Consumers are still preoccupied with the fact

that prices are much higher than pre-pandemic. Still, says Peterson, It hasn't stopped them from spending. Even after stimulus checks ran out, they were still working and they had money coming in. And lately, consumers have been cheered by lower gas prices, down about 10 percent nationwide since last year and likely to dip below $3 a gallon soon, says Andrew Gross at AAA. For this Thanksgiving, it's going to be really low.

He says that'll leave consumers with a bit more to spend for the holidays. I'm Mitchell Hartman for Marketplace. Much has been said and written about the power grid in Texas. You remember those blackouts after that big ice storm a couple of years ago, surging air conditioning demand in those hot Texas summers? Now though, hundreds of thousands of Texans are going to have a chance to save on their electricity bills thanks to a new virtual power plant that's going to be in place next spring. Virtual power plants don't actually generate power, of course. They optimize it.

From Houston, Marketplace's Elizabeth Troval explains. Imagine you keep your house at 69 degrees on a hot day, says Renew Home CEO Ben Brown. Power prices could go up 30%, 50%, 100% within a given hour. His company's new virtual power plant in Texas would have a smart thermostat cool your house to 68 degrees at the top of the hour when prices are lower. And then in the second half of the hour, when electricity prices spike by double,

let it rise up to 69 degrees. That is a perfect example of how you're saving customers money, but also the grid itself. He says those energy savings add up when you multiply them by thousands of customers. Energy consultant Doug Lewin says this project helps shift demand around so we can get more out of the electricity we're already producing. Rather than just curtailing it, which happens a lot now, we literally just let power go to waste. And we have that extra electricity because of the nature of renewables. The sun is shining and the wind is blowing, whether we use that energy or not.

Karen Palmer is with Resources for the Future. Those are resources where the supply of electricity doesn't necessarily come when people are demanding it. But if you provide incentives, you can switch. Incentives like a cheaper energy bill, which is what consumers can get if they move their energy usage away from peak times. I'm Elizabeth Troval for Marketplace. Coming up.

We can just start making it legal to build more types of homes in more places. Oh, okay. First, though, let's do the numbers. making it legal to build more types of homes in more places. Oh, okay. First though, let's do the numbers. Dow Industrial's up 259 on this Friday, 6 tenths percent, 43,988. The NASDAQ added 17 points, about a tenth percent, 19,286. The S&P 500 up 22 points, four tenths percent, 59 and 95.

For the five days gone by the Dow up 4.6 percent the Nasdaq surged five and three-quarters percent the S&P 500 grew about four and seven tenths percent. Axon Enterprises up 28.7 percent today the company manufactures tasers body cameras drones and other law enforcement gear. Geo Group which owns leases and manages correctional facilities expanded 3.8% today. Bonds up, yield down, 10 years at 4.30%. You're listening to MarketPlanes. Understanding personal finance can feel like an impossible task, but it doesn't have to

be that way. I'm Janelia Espinal, and on Financially Inclined, I'll guide you through simple money lessons that will change your financial future. Learn about credit scores, how to avoid scams, and why you need a savings account. Plus, we explore the brain science behind FOMO and what you can do to make smarter money decisions. Listen to Financially Inclined wherever you get your podcasts. What do they say? More money, more problems, and way more questions from your

kids, right? But not to worry. Million Bazillion, a podcast from Marketplace has you covered. I'm Bridget Bodner and with my co-host Ryan Perez, we take you and your young ones on grand adventures and comedic sing-alongs to answer all the questions your little ones have about money. Join us as we explain how banks work, why name brands are more expensive, and what happened to Black Friday sales. Listen to Million Bazillion wherever you get your podcasts. This is Marketplace. I'm Kai Rizdal.

One of the principles of this program is that economic headlines are all well and good, but they just don't matter if people aren't feeling it in their day to day. That is part of what happened on Tuesday. One of the headlines about the economy to come in a second Trump administration is tariffs. So we've been talking about that a lot this week. And now we're going to talk about it with somebody who definitely feels it in their day to day. April Hemans is our corn and soybean farmer in Iowa. I caught her just as she was setting up

for our interview this morning. All right, new recording. There we go. New recording, there we go. It's like we don't even have to tell you what to do anymore, April Hemmings. I know. Hey, buddy, have you had anything

to talk about this week? No, it's been kind of empty this week. You? Liar. Oh, my goodness. So. What a wild ride. What a week.

I want to start, first of all, by asking the same question I usually do, which is how's business? Except I want to ask you how you think business is gonna be for you? With the change in administrations. what do you think? Here's what I said here's what I said to people before, egg is screwed no matter who gets in

there can I say that on public radio? Yes you can. Okay because you know this administration has done very little for trade in agriculture and the This administration mean the Biden administration the Biden administration Yeah We haven't had any new trade agreements and ag has been screaming for them And then we also know now what the Trump administration is going to do which has us running scared because you know Half of our over half of our soybeans are exported to China.

Corn, our biggest trading partner is Mexico. And quite honestly, I have all John Deere equipment. And if he if he puts a tariff of 200% on John Deere parts coming from Mexico or anywhere else, you know, farmers are going to be in a world to hurt more than we are, but bean market just came in and beans are up $4. That's unbelievable. So. Explain that to a lay person.

I don't know what that means. I don't either because I'm in it. So evidently, the stock market reacted and now the soybeans, but the soybeans went up and I have to go a little bit farther. We had a USDA report come out today and they lowered the yields. So that's my interpretation of why the markets went up. Right.

It seems like every time we talk to you, you are jetting off to one international conference about agriculture or another. Yes. Number one, what are your travel plans? But number two, what do you expect your counterparts either in China, I know you were there, you go to Europe and the Middle East sometimes.

What do you expect them to be saying to you? Well, here's something that happened just last week. They were at the China International Expo, which is a half a million people, all the people China trades with. And the soybean people last year went met with all the Chinese government officials this year USDA one to set up the meetings and The Chinese wouldn't accept meetings with them really so

That tells you and they then I got a text from the United Soybean Board chairman who was there and they said yeah They just announced buckle up.'s going to be a fun ride. Wow. So there you have it. Yeah, that's fun. All right, two more and then I'll let you get back to work. Number one, have you harvested yet? It's November, right?

You've already had your harvest, right? Yes. Okay. Yep, I'm done. And last year, if you remember, I had like one of the best harvests I've ever had. This year was the worst harvest I've ever had. Really? Yes.

And so my husband goes, it's not the worst. And I go, maybe not, but it's the worst since I've been able to glean all the information off of every acre, you know, have the technology to do that. So that's why we have crop insurance. Remember, I always say that. Yeah, no, totally. What happened? Was it like too dry? It was too dry. So it was too wet early, so some spots drowned it out, but not much. And then it just shut off. You know, there was just no rain.

And I'd been in a drought for four years, so I said this is going to catch up to me someday, and we're all hurting in my little part of the world. So that gets me to the last question I have for you and it kind of goes like this you know we've been talking I don't know five six seven eight years whatever and we've talked a couple of times about how how tough agriculture is and how you guys are at the mercy of the weather and you know your price takers not price makers are at the mercy of the market and you always are resilient as all get out. And are you still feeling that? Yeah, I am.

All right, okay, all right. Well, you almost have to be, because like I said, I've been doing this 39 years. It'll come back and you take your profits while you can. And fortunately, I'm old, er, and your age more experienced there I'm a more experienced farmer and I have got a lot of things paid off so I'm lucky that way you know we've been farming this ground for over 125 years and we've made it this far. So it's just like any business, you know, you watch your expenses. So yes, I'm, yes, Kai, I'm still optimistic. All right. Well, hang in there. We'll

talk to you soon. All right. Thanks. Bye bye. We do not have enough housing in this economy. That is the straight-up fact with which we begin the setup for this next story. The unknown is what, if anything, President-elect Trump and the new Congress might decide to do about that fact. Depending on who you ask, we are short somewhere between three and seven million housing units. There are a lot of potential solutions at the local, state, and federal level. So many solutions, in fact, that our housing correspondent, Amy Scott, has been asking experts for their favorite ideas, which she has put into this handy-dandy audio listicle.

You know, doing a list on the radio is kind of hard. So when you hear this doorbell, that's a new idea. Ready? Solution number one to the housing crisis. We can just start making it legal to build more types of homes in more places. David Garcia is policy director at Up for Growth, a pro-housing advocacy group. Most of the residential land in this country is zoned for detached single-family houses, and minimum lot size and square footage requirements and height limits make it really hard to build

anything else. Garcia says just allowing more apartments and duplexes and those backyard cottages known as accessory dwelling units would make a big difference. So that is one thing that can be done that can unlock a supply of a really popular type of housing that doesn't cost any money. It is really just a change either that a city itself can make or the state legislature can make. But many homeowners and their elected officials are resistant to zoning reforms that might change their neighborhoods, which brings us to our second solution from Lisa Rice, CEO

of the National Fair Housing Alliance. Incentivizing zoning reform. Rice says tying federal money for housing and community development, transportation, even disaster relief to zoning reform could motivate officials to do more. Congress could say things like, look, if you're a community that is building your fair share of affordable housing, when we have a disaster, you're first in line.

But if you've got all these exclusionary zoning policies, you can foot your own bill for certain things. All right. Solution number three to the housing shortage. Cut tariffs on Canadian lumber. We're adding thousands to the cost of framing a new house because of a TIF with our closest ally. This is Salim Firth with the Mercatus Center,

a free market oriented think tank at George Mason University. I understand the idea of being protectionist towards China and that free trade is traded off against security. There's no security trade off with Canada. And the spillover is massive in terms of the cost to constructing new houses. Now, housing solution number four would help more people become homeowners.

A moratorium on capital gains tax for investors who are selling to first-time homebuyers. This one comes from Laura O'Connor, a real estate industry consultant. She says, though we hear a lot about big institutional investors buying up single-family homes, most are owned by smaller landlords with fewer than 10 properties, and a lot of them may not even want to be landlords. There's a significant number of investors today that are accidental. They inherited a home. They don't know what to do with it.

But if they sell that home, their tax bill could be 15 or 20% of the proceeds. If Congress suspended that tax for a year or two, We can help spur them towards turning that property over and allowing it to become something that feeds that entry level buyer. Finally, number five comes from Reed Hunt, CEO of the Coalition for Green Capital. Allow office building owners to put all of this unused space into the market as residential. This is very well understood, but it's not cheap. To make it more appealing, Hunt suggests creating a tax credit for developers who convert office space into housing

that kicks in when it's occupied. And the more quickly that happens, the bigger the credit. Let's not let people rebuild only for the high end and then wait a long time for the occupant. Let's have the tax credit be monetized when the person moves in. That way, they'll be pricing to the market. Each of these solutions has potential downsides. Tax credits and incentives cost money.

Cutting tariffs on Canadian lumber could hurt U.S. producers. Freeing up more housing for homeownership could take away much-needed rental housing. But all the experts I talked to agree there's no single fix to the housing shortage. It's going to take all the fixes. I'm Amy Scott for Marketplace. As of the close on Wall Street this afternoon, Tesla is worth a cool trillion American dollars. Shares are up 29 percent since the events of Tuesday. The CEO of that company, of course, a key donor and close advisor to the president-elect.

Tesla is now worth about 16 and a half General Motors is. GM sells more than six million cars a year. Tesla, not quite two million. Our theme music was composed by BJ Liederman, Marketplace's executive producer is Nancy Fargalli, Donna Tam is the executive editor, Neal Scarborough is vice president and general manager. I'm Kyle Rizal. Have yourselves a great weekend everybody. We'll see you back here on Monday. This is APM.

Understanding personal finance can feel like an impossible task, but it doesn't have to be that way. I'm Janelia Espinal and on Financially Inclined, I'll guide you through simple money lessons that will change your financial future. Learn about credit scores, how to avoid scams, and why you need a savings account. Plus, we explore the brain science behind FOMO and what you can do to make smarter money decisions. Listen to Financially Inclined wherever you get your podcasts.