The Prof G Pod with Scott Galloway - Office Hours: Advice to a First-Time Home Buyer, Why did The Prof G Pod Leave Spotify in 2022?, and Putting Yourself out there After a Breakup

Episode Date: December 6, 2023

Scott gives advice to a listener looking to buy a home for the first time and shares his thoughts on where mortgage rates are headed. He then discusses why he decided to pull The Prof G Pod from Spotify back in 2022, and then returned a year later. He wraps up with his thoughts on how to get back out there after a breakup. Music: https://www.davidcuttermusic.com / @dcuttermusic Learn more about your ad choices. Visit podcastchoices.com/adchoices

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NMLS 1617539. Welcome to the Property Pod's Office Hours. This is the part of the show where we answer questions about business, big tech, entrepreneurship, and whatever else is on your mind. If you'd like to submit a question, please email a voice recording to officehoursatprofgmedia.com. Again, that's officehoursatprofgmedia.com. First question. Hi, Prof G. My name is Mariana. My husband and I are big fans of your podcast, and we would love to get some advice from you. We live in the U.S. We are both in our mid-30s and comfortably employed. We just had our first baby, and we are now looking to buy a house, as we have been renting for most of our lives. We just had our first baby and we are now looking to buy a house as we have been renting for most of our lives. We are waiting for interest rates to lower.

Meanwhile, we have been saving and considering how to approach the biggest purchase of our lives. We split our current savings in three categories, an emergency fund, which currently has enough to keep us going for one year, a fund for when we retire, entirely invested in stocks. And finally, an amount we are putting into bonds every month,

and which we will definitely use as a payment for the house when the time is right. However, we don't believe that the last bucket alone will be enough for a substantial down payment. So we have been debating the alternatives. Should we tap, let's say, six months of our emergency fund to contribute for the down payment too? Or should we recognize some of the earnings we have had in the stock market and sell some of our stocks? And lastly, do you have thoughts on where the interest rates will go next year? Just like everybody else, we want to achieve the dream of owning a house, but we also don't want to put our future at risk. Thank you so much.

Mariana, thank you for the question. I always try to be thoughtful about giving people advice on their hard-earned money. And I'm taking pause here because I want to be flippant or reckless with your hard-earned money. So in October, mortgage rates reached a 23-year high. According to Mortgage News Daily, the 30-year fixed mortgage rate rose to 8%. That's the highest since September 2000. According to Freddie Mac, the typical 30-year fixed mortgage rate at the end of 2021 had a 3.11 interest rate. Currently, the interest rate sits around that same interest rate on the 30 or 7.4, showing a slow downward trend for the third straight week. So it's come back a little bit, but not a lot.

There's sort of this perfect storm of bad things for new entrants into the housing market. One, the average home cost about $290,000 pre-pandemic. It's gone up to $420,000. It's just crazy what's happened here. The Fed accidentally planted a bomb inside the majority of homes in the sense that nobody wants to move because they're sort of trapped. They kind of, you know, they have this 3% mortgage that they just can't leave. And so when you look at the acceleration in home prices and then couple that with a 400% increase in interest rates, you now no longer need to make $70,000 to qualify for the average home. You need to make $110,000. So according to Redfin, someone looking to buy an average price home would need to earn about $115,000 a year, assuming they can make the 20% down payment. This is up from about

$99,000 just one year earlier and about $40,000 more than the typical American household earns. When will mortgage rates fall? The market is pricing in a rate cut kind of the middle of next year and that they think that by the end of next year, it'll come down. One thing I would do is I would try and put in place an instrument or a mortgage instrument that you can adjust downward in, whether it's a variable rate mortgage or there's sometimes, I forget what the term is, there's mortgages where you can, if the rates go down, you can recalibrate down to a different product at a lower interest rate without paying any penalty. So I'd be very thoughtful about trying to ensure that if interest rates come down, that you're not locked in or you don't have to pay a prepayment penalty. And there,

I don't know what state you're in, maybe you said that, but there's a lot of first-time homebuyer programs. I would see if there's anything there. In terms of whether to dip into your retirement fund, I probably wouldn't go into my emergency fund. I think, one, you and your partner are doing what partnership is supposed to do and what it means to be a partner, not only a spouse, and that is you're working together, you're both sacrificing. It sounds like you're on the same page financially. That's one of the keys to a successful marriage. To your question, do you tap into your bond and stock investments to help with the down payment on the house? Given where you are, given that you have a new kid, given that the psychology and the comfort you do get from buying a home is really tangible. It's building a life together. On weekends, you'll find yourself going to Home

Depot and you won't mind painting the house and you'll get a lot of reward out of decorating the kids' room together and investing in the home, recognizing you're investing in something that you will own and ultimately hopefully recognize the upside in. I think it is okay to tap into your investments and transfer that equity into what will be another investment, and that is your home. So what you're doing essentially is you're reallocating your portfolio from 100% or, you know, 60% equities, 40% bonds, and 0% real estate to more like 30, 30, 40 in real estate. And then hopefully over time, hopefully as interest rates come down, hopefully as your income continues to increase, you're going to be able to put more back into stocks and bonds and be able to catch up. I also want you to talk to a few other people

just to get a sense who might know your specific financial situation. Are you in stable jobs, both of you? Would the mortgage payment put a real strain on your life? Do you have great rent right now? Are you in a rent-controlled or did you get a great deal somewhere and you're saving money? Sometimes it makes sense to continue to rent. I would also get all over real estate. Don't get emotionally attached to any one property. Don't be afraid to wait or be patient. Don't be afraid to wait or be patient. Don't be afraid to lowball offers. Take everything your broker says with a grain of salt, given that their job is just to get the transaction done. So don't be afraid to walk away from deals.

Get all the comps for all the properties around. It's an enormous purchase. You want to be really thoughtful about it. Force you and your husband not to become too emotionally attached to any one property because that's how you end up overpaying. Be patient. And again, make sure you get into an instrument that if interest rates do in fact come down next year, you can ratchet down with them. And congratulations on your emerging family. And again, you're doing so well. An emergency fund of a year. My God, if only the rest of America was like that. So congratulations on the life that you have built and are building. Thanks for the question. Next question.

Hi, Scott. I'm Michael, living in London, and I'm a longtime listener of your pod. I recall during the time of COVID, you decided to leave Spotify because you disapproved of some of the content on vaccines that was being discussed on the shows. But after some time, you decided to come back to Spotify. Maybe there were other reasons for that, but I was always curious to know

how you've reflected on that decision and whether you'd do the same thing again. I find that the hardest decisions in my life have been the ones that fall between my interests and my values. Your part always helped me a lot in reflecting on my life and my career decisions. So thank you, And I look forward to hearing your answer. Michael, thanks. That's a generous question. So just to recap, I was upset at Spotify specifically. I felt that Joe Rogan, and by the way, I think Joe Rogan is an immense talent. I think anyone in podcasting, including myself, that makes good money from podcasting should probably send a royalty check to Joe Rogan. He sort of busted open the whole medium. I get the sense he's a good man. I think he's a

good role model for young men. He's in great shape. He's great at what he does. I think he's fearless. Some of his approach and his content around vaccines I felt was irresponsible. One day, and what was sort of the worst thing about it is you had these far-right commentators who were just so anti-vax they came across as irrational. I didn't find that was the real threat. And by the way, many of them died. Many of them were older, obese gentlemen that truly believed you shouldn't get vaccinated. And then, you know, one day they didn't have the pod because these guys had contracted COVID, ended up in a ventilator and died. The thing that bothered me most about Joe's approach to this was the false equivalence. And that is one day he would have on Sanjay Gupta to give, quote unquote, the pro vaccine. And then he would give equal time to someone, a doctor who had been debunked by all of his colleagues saying that mRNA vaccines altered your DNA. And he created sort of this illusion of what I'll call a real debate around things that, in my opinion, had been settled by science. Also, I had some personal tragedy, which triggered, I think, an emotional response. And I

don't think that's necessarily a bad thing. My cousin, Andrew Levine, at the age of 51, tall, strapping, handsome, thin, absolutely no comorbidities, wife, rabidly anti-vaccine. That's unfair to say rabidly anti-vaccine, just anti-vaccine. And both of them decided to not get vaccinated. Andrew contracted COVID, so did his 81-year-old mother and his 54-year-old sister. The mother and daughter, his sister, both survived, both vaccinated. Andrew, through a series of unfortunate events that probably included bad decisions, poor health care, ended up on a ventilator. They thought he was getting better, said, we're going to take him off the ventilator, took him off the ventilator. He crashed and died.

And obviously, this has been an enormous blow to his family and friends. And then essentially, you know, a beautiful little 10-year-old boy no longer has a dad. And then nine months later, the son's mother committed suicide. I would imagine that some of the guilt and trauma she went through over Andy's death contributed to her deciding to take her own life. So I think these decisions and this spread of what I think was misinformation around the dangers of vaccines did real damage to America. And so I decided, I've tried to, as I get older, and I'm going to recognize my privilege here, there's a difference between opinions and principles. And opinions are, okay, I think that vaccine misinformation is wrong. A principle is something you're willing to sacrifice for. I just felt this was doing real damage to America, this false equivalence between pro- and anti-vaccine commentary.

And so for me, this was a principle. And so I pulled my pod from the PropG pod. My other pod, I talked to my co-host, Karen, said, I think we should pull Pivot from Spotify. And she disagreed. She felt that there's, that center's voice is important here. And I think there's a really valid argument. So we kept Pivot on Spotify, but I pulled PropG off. I pulled it off for exactly a year. And then I went back on. I like the people at Spotify. I love Spotify. I'm still a paying member of Spotify. And I don't think everything has to be forever. I wanted to make my point to Spotify that I was upset about this, and I was willing to sacrifice some capital. I'm a pimple on the elephant of Spotify. Their business did not suffer not having my ad revenue or reason

to subscribe. As I've gotten older, I've decided I don't want to be someone with just opinions. I want to have principles. I can afford to make these types of decisions because I have the two most important things in the world. One, because I live in America. The second most important thing, I hate to say this, let me just say it, most important thing is health. Let's just assume it's health. But the other two things are financial security. That puts me in a position where I can have, I can vote more with my wallet than most people. Most people aren't in a position where they can be purists or engage in a luxury item of principles as I can because I don't need the money. And then the most important thing is I have people who love me. And that if I say something or I go off Spotify or I'm critical of Joe Rogan or of Elon Musk, it might disappoint my boys or whatever.

But they love me regardless. But what I've decided is on important things, I'm going to decide if it's not just an opinion, if it's a principle. And a principle means one thing, that you are willing to sacrifice for it. Anyways, that is my code. I'm not perfect. I get it wrong all the time. But that's how that's how I want to live my life. Michael from London, I really appreciate the question. We have one quick break before our final question. Stay with us. Welcome back. Question number three. Hi, Scott. This is Dakota from Pittsburgh. What advice would you have for someone who just ended a six and a half year relationship right after turning 30? I'm in pretty good shape, own a house

in the suburbs and make a decent salary working remotely for a firm headquartered in D.C., but I haven't been single since my early 20s and I also don't really know anyone in the area. I moved here right after grad school for a job, but then the pandemic happened. I feel like I'm having to start completely over at 30, and I'm not sure how to go about it. I would love to get your opinion on this. Thanks for all of your content and the work that you do. I'm a big fan. Dakota from Pittsburgh. So first off, you're doing well. You're a young man. You're clearly articulate. You're in young man. You're clearly articulate. You're in good shape. I mean, and you make a decent salary. So you need to do whatever it is

you need to do to convince yourself that you are an enormous catch. You could make, I remember, I try to always, when I'm in front, you know, when I'm feeling down about myself or what I tell other people is to professionally tell themselves I could be the answer to this firm's problems. I could add a lot of value here. And by the way, if they don't think so, that means there's another firm where I could add more value. I could make someone really happy. I remember I was single through, I've been single a lot through most of my life. And I remember being in like high school and college and then right out of college and thinking, I so badly want to be someone's boyfriend because, hey, I would like that relationship and affection and companionship. But also I thought I would be the best boyfriend.

I'm funny. I'm supportive. I'm affectionate. I just, I couldn't wait to be a boyfriend to somebody. And I would tell myself I'm supportive. I'm affectionate. I just couldn't wait to be a boyfriend to somebody. And I would tell myself I'm going to be a great boyfriend. And then I would try and prepare for it. Tried to stay in good shape. Thought a little bit about the clothes I was wearing. Reach out to friends who can become wingmen. Be honest with other people and women that you are interested in being set up. Say yes. Find interesting activities, you know, classes, softball leagues, nonprofit work, religious institutions, anything that puts

you in the company of strangers. And having been out of the game, you've probably lost a little bit of your mojo. And distinctive what you're going to read in The Atlantic and see on MSNBC, most of the surveys show that most women want the man to initiate dialogue. They because the key to punching above your weight class economically or romantically is the ability to endure rejection. And if you approach somebody or a stranger or you express some interest, ask them out for coffee, you are going to get some rejection. And you know what? That's okay. You're both going to be fine. But try and get in the practice. What I used to do when I would walk into a bar or a strange situation where there were other single women, I would say to myself within 15 seconds of walking into this room, this bar, this environment, I'm going to start talking to a stranger, a strange guy, a strange woman.

Just roll up. Where are you guys from? Let people know you're interested. Maybe think about a dating app. Put yourself in a bunch of random situations. Get your mojo around approaching strangers. Figure out the skill to express interest while making them feel safe.

Hang in there, brother. If you are getting rejected or people, you don't get people a lot of dates online or occasionally express interest and that interest is not reciprocated, that means you're on your way to finding someone. And then be open to new ideas and new relationships. If you talk to couples, a lot of times what they'll say is one person was more interested than the other in the beginning. Even if it's not, doesn't blow your socks off maybe on the first date or the first coffee,

be open to a second just to see where things go. And also, realize, my friend, Dakota from Pittsburgh, you have a lot to offer. Get out there. That's all for this episode. If you'd like to submit a question, please email a voice recording to officehoursatpropgmedia.com. Again, that's officehoursatpropgmedia.com. This episode was produced by Caroline Shabrin. Jennifer Sanchez is our associate

producer and Drew Burrows is our technical director. Thank you for listening to the property pod from the Vox Media Podcast Network. We will catch you on Saturday for No Mercy, No Malice as read by George Hahn and on Monday with our weekly market show.