The Best One Yet - 🏠 “The Housing Pod” — Our 3 Best Stories on the Housing Market

Starting point is 00:00:00 This is Nick. This is Jack. And today's housing pod is the best one yet. Our top three stories about the housing market of the last year. Best is Nick and Jack here. And if you're here in this episode, then Jack's baby just came. Jack's on paternity leave right now. A Melboe deep in diapers, Nick.

Starting point is 00:00:17 I know, I know. You're doing well. So all week long, we're dropping our best ones yet of the best one yet. And today's show, well, we've done one bonus pot on parenting. We've done one on innovation, but this one is on housing. So send this to a buddy who's trying to. They sell a house, trying to buy a house, someone who's renting a house. I'm just complaining about their landlord.

Starting point is 00:00:36 Jack, three stories for today's show. What have we got? For our first story, we're going back to September 24th, 2024. Costco was launching their first ever Costco apartment building. And the solution to your high rent, it may actually be Kirkland Condos. For our second story, we're going to July 23rd. Because a top cause of America's housing crisis may actually be our elevators. Because an American elevator costs $4.

Starting point is 00:01:00 five times more than a Spanish elevator. And our third and final story, we're going back to July night. The fastest growing city in America is a Texas retirement community, median age 73. But the real winner of boomer boom towns is actually millennials. But yeties, before we hit that wonderful mix of roomy story. Fantastic mix of stories, Jack. Do you rent, do you buy, or do you cry? Oh, the housing market right now.

Starting point is 00:01:28 It looks like a typo. Mortgage rates. are at 30-year highs. Home prices hit all-time highs every month, seemingly always. So home sales have fallen to the lowest level since your parents' kitchen had dunkeros. Ah, that era, they had better snacks and a better housing market. They did. In the 90s, you could buy like all of Tribeca for the price of today's latte. Today, you need a guarantor to rent a space for a scooter. It's ridiculous. It is ridiculous. In this economy, the housing market ain't moving. But on this podcast, we've explored the solutions. So, if you,

Starting point is 00:02:00 If you want to understand why the housing market always feels so funky, or if you want to find hope in a new housing strategy, we got the lowdown on your future con. To kick back on your couch, like ill in the place. Because after this show, you're going to know more about the state of real estate than Barbara Corcoran. Or Blackstone. Or all the Oppenheim brothers.

Starting point is 00:02:18 Yeties, email that super about the leaky faucet because we're hitting our three housing stories. Fifteen years before this song, two boys from the Northeast met in the dorm. They had an idea to cause a cultural storm. It's the best one yet, but the best is an norm. Jack Nick, that's it. I don't even think they need to practice.

Starting point is 00:02:37 50% that's a fat tip. Tea Boy City on your at list. If you know, you know, because we're ready to go. We can't wait no more, so just start the show. Start the show. First, a quick word from our sponsor. For our first story, we're going to September 24th, 2024. Ah, Kirkland Condos.

Starting point is 00:03:06 Love this one. Let's hit it. Costco fans are rejoicing over the construction. of the first ever Costco apartment. But if you think you're getting bulk-sized living space for Costco-sized price, which is what we thought, think again. Jack, can we just kick things off talking about the financial stats over at our buddy's Costco? Based in Washington State, this 41-year-old company is worth $400 billion.

Starting point is 00:03:31 It's the 20th biggest company in America, and yet the stock is up 40% this year like a young buck. What year is Costco not up 40%? I know. I know. What is going on? on over there. But did you know, Yetis, that Costco members can even book vacations through Costco? I'm a Costco member, but I didn't know this one until we learned about it randomly in a business call last week. We were chatting with someone on like a biz dev call, and they mentioned that you can get

Starting point is 00:03:55 five nights with airfare to Tahiti in French Polynesia for like $3,600 a Costco member. Five nights with airfare on one of those gorgeous huts that just sits above the water and you can like open a door and land in the ocean. So, Yetis, you're probably thinking right now, if Costco got into the housing market, I'd rent a Costco apartment. I trust Costco, I'll buy anything they put their brand on. Well, here's the news. It's happening. A new Costco in Los Angeles is under construction right now. And it includes 800 Costco apartments right above it. Now, Jack, could you describe our vision when we heard about this first Costco apartment? The unit must come with like a 12 pound tub of peanut butter. Unlimited Costco Kirkland toilet paper and a fridge that just keeps really.

Starting point is 00:04:41 refilling with those $1.50 cent hot dog and soda combos. Oh, what's in the freezer? A double chung chocolate chip cookie. And you can't get into the building unless you flash your Costco card. And that was our vision for the Kirkland condo, as we call it. But these apartments are the least Costcoy apartments ever. Yeah, plot twist slash spoiler. But the Costco is not getting into apartments right now, are they, Jack? No, this is a one-off that they're doing just for their LO location for a very particular reason. But it is a very interesting reason why Costco is doing their first ever apartment. Here's the deal. Local approval of a big construction, like for a big box store in Los Angeles, that would take years and it might never get approved.

Starting point is 00:05:26 But interestingly, California state law AB 2011 allows a fast track approval if affordable if affordable housing is included in the plan. So instead of a purely commercial construction, like for most Costco's, Costco is. doing mixed use for this particular LA location. So it's both a commercial space and a residential space. It's a Costco superstore on the first floor with 800 apartments on top, 184 of which are affordable apartments. It sounds like the kind of thing Adam Newman came up with while he was high at a target, Jack. The apartments though? Yeah, they're 600 square feet and smaller. Yeah, that's the one problem here. The size of these Costco apartments are basically like your

Starting point is 00:06:08 sophomore year dorm room, right, Jack? Instead of like a bowl. bulk Costco size thing, it's like a sample size. It's really tiny. Some people on Twitter actually calling these Costco apartments Costco prisons. Not something a Costco member would want to move into. Still, any new housing is good housing for a city with crazy high rent like Los Angeles. And lovely Los Angeles has rent. That's three times the national average. Plus, there is a Costco literally down the elevator. Yeah, so like if you jump up and down in your bathroom, they will hear you in aisle six by the toiletries. They might even send you toilet paper. to shut you up up there.

Starting point is 00:06:42 We're going to need another pound of peanut butter buddies. So, Jack, what's the takeaway for our buddies over at Costco apartments? Fixing housing requires 50 different solutions. Yeties, unaffordable housing is a problem for all 50 states. It's the biggest driver of inflation, of poverty, and of unhappiness. But each state has their own laws that controls real estate development. So each state needs their own solution to unaffordable housing. Well, in California, that state law we mentioned,

Starting point is 00:07:11 says to developers, hey, if you build affordable housing, we'll wave a bunch of the red tape so you can get going. California also has a new law focused on ADU's accessory dwelling units. Basically, if you got a backyard or like a garage with enough space to build an apartment in California, the state will now give you funding to start building that additional dwelling unit. Today, we're talking about California solutions. Tomorrow, in tomorrow's episode, we're talking about New York's. Because we found a wild one there that the Costco apartment folks are going to love. Because making housing a affordable in America requires 50 different solutions. And the Costco Kirkland condo is just one of them. Our second story is from July 23rd, 2024. Elevators explain everything. Let's hit it.

Starting point is 00:07:54 If you want to understand America's housing crisis, then look to the elevator. Because America invented the elevator, but we've basically stopped installing them. All right, Jack, let's kick off this story with a hero stat. Actually, this is a surprise. prize hero stat that you haven't heard yet. You ready for this thing? All right, Jack, how many elevators are in the Empire State Building? Well, I think there's 86 stories. I know, because you and I were there this summer. A lot of elevators. I'd say like, I don't know, 12. 73 elevators, including service elevators in the Empire State Building. Let me ask you this. Did any of them go entirely from the bottom all the way to the top? I think the answer to that is all of the above.

Starting point is 00:08:37 You have to be an emperor to use that elevator. Yeah, it is in 1930, America built the lovely Empire State Building of New York City. A thousand-foot skyscraper, but it wouldn't have been possible without the elevator. Now, here's the fascinating thing. The elevator was actually invented in the United States 80 years earlier back in 1852. And the elevator's invention was a metaphor for America's industrial rise in the world. The elevator. It was invented by a company called Otis, which is now still around today, a $40 billion publicly traded company. They're based in Bristol, Connecticut, where there's still this huge tower out of nowhere.

Starting point is 00:09:13 Like, it's like rural Connecticut, and then there's a 38-story tower that's used just for the testing of the elevator shaft. You can see it from all the way up here! But here's the surprise. Fast forward to today, and the data shows that we've basically stopped building elevators in the United States. Get this, besties. The United States has one million installed elevators, which, Jack, that sounds like a lot,

Starting point is 00:09:35 you know, man, a million elevators. But it's actually very few. Jack, could you sprinkle on? more context, please. Spain and Italy have the same number of elevators as the United States, even though our population is seven times bigger. Now, Basties, in Western Europe,

Starting point is 00:09:49 two or three-story buildings, it is common for them to come with elevators. It's just a standard. But in the United States, not a chance. No, you are huffing and puffing up to that six floor of a new building. New apartment buildings that are six stories tall are being built without elevators.

Starting point is 00:10:05 Jack, when we lived in the East Village, we had a four-floor walk-up. That was not a fun situation. my friend. And the reason for all these stairs and no elevators is cost. Do you remember, our buddy Timmy barely made it up there? We'd like carry him from the third floor to the fourth floor sometimes. But back to the shocking cost. Yeties, the basic four-story elevator costs $160,000 in New York City. In Switzerland, they cost less than a quarter as much to build today. Because in Switzerland, They don't cost 160 grand. They cost just $36,000. And according to a nonprofit dedicated to lowering building costs in America, there's one reason

Starting point is 00:10:43 why we have to pay four times as much for an elevator as the rest of the world does. Jack, take us to the lobby and tell us the answer. The one reason is regulations. Regulation. Because yet he's in the United States, elevators are bigger. Because regulations dictate they must be able to hold an ambulance stretcher. So we have elevators twice as big as the rest of the world. And in the United States, elevators are custom. Here, elevators must pass a special code, not the uniform code that the rest of the world uses. And in the United States, labor costs are just much higher. Elevators must be built by documented workers here due to regulations. Every high-income country, they use lower-cost immigrant labor for apartment construction, but in the United States, you can't really do that. Because of immigration policies and regulations. American exceptionalism in construction. It's made elevators economically. unviable. And this elevator problem we have is actually a microcosm for our entire housing problem

Starting point is 00:11:38 nationwide. If you want to understand the housing crisis, it's the elevator. It's not the elevator. For us, it's the Darth Vader. Yeah. Second Vader reference of the show. Take me to your lobby. That's not a good Darth Vader impression, to be clear. Well, Jack, can we at least pause the elevator and press all the buttons for a moment? Looks like a Christmas tree. It does look like a Christmas tree. So Jack, What's the takeaway for all our buddies who are anyone riding an elevator? We have too many houses, not enough apartments, and elevators show why. Yet is every year, our population grows faster than the number of new houses being built. In the past 20 years, we're actually 5 million housing units short to keep up with our growing population.

Starting point is 00:12:21 Interesting thing, Bessie's, Jack said housing units because people can live in a single-family house or in a multifamily apartment. And that's the issue. We have too many houses. houses, not enough apartment buildings. Yep, the regulatory problems that make elevators crazy expensive also make apartment buildings crazy expensive. But single family homes, which only hold one family, not a bunch of families, single family homes have much less red tape and no elevator to go along with them. So what can we do about it? We can streamline regulations to let builders build apartment buildings for a lower cost. Until then, we've got too many houses, not enough apartments, and elevators show us why. Now, a quick word from our

Starting point is 00:13:04 sponsor. And our third and final story is from July 9th, 2024. Boomer Boomstowns. Let's hit it, Jack. The number one fastest growing city in America for three years straight is Georgetown, Texas. But it's filled with baby boomers. We're covering the phenomenon of baby boomer boom towns and why they're actually good for Zillenials, too. You're going to want to hear our takeaway. But first, Jack, one second. Let me just get the pamphlet. Okay. I'm looking at the pamphlet here. It looks like skydiving, concerts, classic cars. You're looking at the Boca Vista template?

Starting point is 00:13:43 Jack, I think Aunt Linda's doing jello shots over at the bowling alley. It looks like a cruise ship, but on land. It feels like college, but everyone has $3 million in the bank. It's like spring break, but everyone here is over 70 years old. Yeah, it is Jack and I are talking about Georgetown, Texas, which represents one of the booming retirement towns sprouting up across the South of America. They represent Boomer Spring Break, or not dead yet, is how the Wall Street Journal put it in an article. Sun City, Texas. It is a planned and gated community targeting retirement

Starting point is 00:14:18 funds. I mean, retired people. Water aerobics at nine, pickleball at one. Hey, Debbie, drinks her half off at the Gator Grill at three. I'll see you there. I mean, it's like Debbie's pledging cap a cap of five, Jack. I kind of love it. Sun City, which is in Georgetown, Texas, has attracted 17,000 retirement people to move in to benefit from the pool, the golf course, and the lack of income tax. And Jack, what is the median age over in the population of Sun City, Texas? 73 years old. Not too shabby.

Starting point is 00:14:47 They're not working anymore, so they're working on their handicap, getting that down to one digit. And these retired boomers are spending down their pensions and their inflated stock and their real estate assets all in this one town in Texas. And they've made this one town, Georgetown, Texas, the fastest growing, city in the United States for three years straight. We repeat, this is the fastest growing city in America for three straight years for cities over 50,000 people or more. Now, Yetis, it's easy for pinched and renting Zillenials to be annoyed by the story about these booming boomer boom towns. Look, Jack and I are the core of the millennial demographic here. We feel

Starting point is 00:15:24 you on this. The housing market is outrageously tight right now, isn't it, Jack? It's not just enormous interest rates, which make up more than half of your mortgage payment, each month. It's also that there's just no homes on the market available. Have you noticed home sales felt like a 30 year low? People aren't buying and people aren't selling homes right now. And the result is that millennials and Gen Z are renting at much higher levels than previous generations at the same age. And that rent, it is historically expensive. What's the data, Jack? Americans are spending a record high percent of their income every month on rent. On the other hand, Jack, let's head over to that Margaritaville bar.

Starting point is 00:16:03 down in Texas. What's going on down there? Americans 55 and older own 70% of the country's wealth, which is up from 50% of the country's wealth 35 years ago, according to the Fed. So yet he's added all up, and it is easy to be envious, even resentful of Boomer Bob playing his third shuffleboard game at his second home. But these baby boomer boom towns aren't just sources of generational envy. No, they're not. They're also part of the solution. Believe it or not. And that, believe it or not. There's our takeaway. So, Jack, what's the...

Starting point is 00:16:36 I'm sorry. Debbie wants me to get in the pool with her, Jack, and I kind of want to go. I'll be there to sec, Debbie. They're playing John Cougar Malencamp again. It's a whole lot of fun down here. Jack, what's the takeaway for our buddies who are everyone who's a millennial? Building unaffordable housing is the best way to create affordable housing. So yet is, Jack and I jumped in T-Boy style.

Starting point is 00:16:57 And the median home price of Sun City, Texas is actually $500,000. That is not exactly cheap. But the company behind it, a publicly traded company called Pulte Group, is building 11,000 of those homes. And that is what matters. New houses. Our country needs as many new houses as we can get. We appreciate the push to build affordable housing, but here's the problem. Developers don't want to build affordable housing.

Starting point is 00:17:24 No, no, no, no, developers, they prefer building unaffordable housing. That's more profitable. But that is actually cheap. just as good. Because each boomer moving into Sun City leaves behind an empty home somewhere that's probably more affordable. And that boomer's old empty nest can now become a Zillennial's new full nest. Pulte Group is building 11,000 unaffordable homes in Texas, which opens up 11,000 affordable homes somewhere else. So it sounds counterintuitive, but this is how Jack and I think about the housing market. The best way to create affordable housing is to build unaffordable housing.

Starting point is 00:18:00 Now time for the best fact yet. This one whipped up by Jack and me. According to Zillow, 35% of us would buy a house that's haunted if it meant it was more affordable. That's how tight this housing market is. Here's another one. Nearly 70% of prospective buyers would buy a haunted house if it checked all their boxes. Basically, there is a haunted house premium. Like if you want to sell your house, you might be able to get a higher price if it's haunted jack. I don't know, a higher price. But you might not have to hide. that it's haunted. Basically, besties, if you want a two-bedroom apartment on the Upper West Side, you're willing to ignore the demon in the diving roof.

Starting point is 00:18:38 Oh, don't worry about the demon. He's only there on weekend. It's a big deal. Yeah, it is. You look fantastic for our housing pod. And we've got two more bonus pods coming at you this week. All right. So send this episode to a landlord, to a renter, to a homeowner,

Starting point is 00:18:55 to a wann-e-e-homeowner, to a squatter. If you get locked out, whoever gets you back in, you tell them about this episode, Best. Thanks for enjoying. Jack and I will see you tomorrow and pray for interest rates to come now.

The Best One Yet - 🏠 “The Housing Pod” — Our 3 Best Stories on the Housing Market

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