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hey there so uh we have an interesting article today I was I was I don't know if this is cheerleading for the administration or if it's just somebody that doesn't really follow Economic Policy very well on housing or what but I I think that we should go over this and just kind of I'll show you where the tell was for me that things were off thead else and then we can we can go from there so here it is this was on um I believe it was business yeah businessinsider.com in the headline Biden's top Economist says the key to ending the housing crisis is giving cities and developers monetary incentives to build more affordable homes now if you're familiar with the stuff that I've put out and my beliefs you know that I don't think that it's necessarily A Supply issue and the reason why I don't think it's necessarily A Supply issue is how many Americans own more more than one home I also don't think that the definition of affordable housing is uh like what we think it is meaning oh you could go afford to buy a house and what the administration thinks would be the same thing now I'm not I'm not saying this in the realm of being political okay so should there be another Administration down the road that has a policy that's that's absolutely ridiculous you know I'll mention it I don't I don't I don't have any interest in playing that particular game so so let's get to the article I actually highlighted so much of it because it was so fascinating to see what's what's going on here it says Americans aren't happy about the state of the economy consumer sentiment is low and it may be getting even worse that's despite a remarkable economic recovery since the pandemic thrust the country into a recession we've managed to see inflation come down while maintaining low employment unemployment something many economic experts said couldn't happen so off the bat the premise of the article at least I would to be that I'm understanding is it is hey you know things aren't so bad really inflation isn't bad at all and you should go about your day it's going to get better now so just so you know where I stand inflation is a terrible tax on the poor inflation is eating our lunch when I go to when I go to McDonald's it was $7 or below $10 for a quarter pounder meal and now it's like 13 that's ridiculous uh Energy prices are going to be going up as of uh October 11 2023 um which hasn't been really an issue for the last two years since the Strategic Reserve has been depleted um I mean I just don't I just cannot believe I mean I don't even I don't even know where to begin with with that but let's let's continue it says I think it all comes down to inflation so this is Jared Bernstein he used to be on CNBC he used to be on Fox with cudow and you know I whatever I don't have any I don't have anything animous against him he's he's a bright fellow he says I think it all comes down to inflation Bernstein said during a Wednesday policy briefing at the economic policy Institute in Washington I think it's about prices I think we're trying to talk people trying to talk to people about disinflation and what they really want is deflation they want their old prices back down so see he's not dumb it is in contrast to the top the ne you know the beginning paragraph I mean it's absolutely we've managed to see inflation come down while maintaining low unemployment something many economic experts said couldn't happen the it's ridiculous but let's continue it says price growth has slowed in recent months but broad price levels themselves are unlikely to fall without a deep massively destructive recession okay so let's just go price growth has so inflation has slowed in recent months still ridiculous but it's slowed and then the broad price levels so you know like the Topline prices they're unlikely to fall without a deep massively destructive recession okay well I mean then it goes on to a threat if people knew how badly the economy would need to be doing to cause deflation they might think otherwise Bernstein added so yeah if we coll the economy we'll get the the deflation but you don't want that you don't want that you want to keep paying higher prices I mean it just it's it's bizarre to me it says one cost that doesn't look like look as if it's coming down any time soon as housing rent and home prices are through the roof and housing affordability has reached record lows well why is that why have we seen Rising costs is it because is is it solely because of um is it solely because of uh a shortage of Supply does it not have anything to do with the massive amount of money printing the FED has done for the past I don't know two to three years we knew that inflation was coming that's what happens when you print a bunch of money and keep an artificially low interest rate it says a severe housing shortage is the main culprit for Steep housing costs now see this is directly opposed to what I think it says the US short is from anywhere between an estimated 1.5 million and 5.5 million homes how many how many investors own homes single family homes in the United States more than a million High interest rates are scaring off both would be buyers and sellers and slowing rates of Home Building and and high mortgage rates haven't brought down home prices as much as expected creating but Bernstein said was an interesting headwind for the economy that's right housing is a huge portion of the economy and it's not working the way it's supposed to because it's kind of broken but I don't like I said so I don't agree that the severe housing shortage is an issue um High interest rates are more of a demand issue okay I mean it can hurt Supply in the sense that they can't build right but we're we're seeing massive amounts of units come online right so I don't I don't really agree with this article at all says the government needs to step in Bernstein says because affordable housing is suffering from market failure and and and my response to that would say the government has been involved in housing for the last 100 years and this is what we have we have gotten I mean if do you think that the government isn't stepping in when the FED lowers interest rates massively lowered interest rates the government has been stepping in the whole time do you think the government doesn't step in when they tell you what to build where to build and how they will um Finance it through Fanny and Freddy I mean it's like okay so the government is is already involved okay but says building affordable housing doesn't pencil out in the current economic environment and we both agree with that if you were a developer and you were going to develop attractive land why would you put any affordable housing units there and this is different now that's those would be set asdes okay set asides for affordable housing versus Market priced housing okay that would be affordable and that's where I have the problem okay if you build a neighborhood and and 200 of the houses are $500,000 okay and you tell the developer you can build this as long as you build 10 homes that you sell for $150,000 okay what do you think the size of those homes are going to be and how do you think that fits in with an overall neighborhood got all these half a million houses then we've got 10 $100,000 houses it doesn't make any sense it doesn't make any sense so this this is problematic but it says demand siiz policies which focus on subsidizing demand for housing including rental assistance programs such as Section 8 vouchers are important Bernstein says but the administration is very very focused on the supply side that means the government is more concerned with subsidizing increase in Supply to address shortages so what they're saying is okay what the article is saying well we need to stimulate more demand for affordable housing affordable housing being set asides so we should increase the number of Section 8 vouchers but that does nothing for this the the the cost of the actual cost of housing would do nothing if anything it would make it more expensive and says the being the administration being very very focused on the supply side well that's great okay that's great so what are they going to do right it says in May Biden unveiled a housing Supply action plan which I mean it's October and I do nothing about it which doesn't mean anything it's just maybe they're not getting their message out uh which includes efforts to in incentivize denser development and more affordable housing construction Bernstein says the Administration has two main strategies okay what are the strategies one is incentivizing local governments to eliminate ex eliminate exclusionary zoning which often makes it illegal to build anything but single family

homes well like zoning is a big topic okay now in the 1930s in St Louis okay we had single family homes mixed with multif family homes with uh retail on the corners they were bought bars and restaurants and things of this nature you could walk to them it was in the 1930s okay but we got away from that right now you can all of a sudden only build single family homes here multif family homes there you could never mix the two with commercial and even if you did you'd have a terrible time with getting mortgages for the single family homes I mean even during like the last downturn in housing uh there had been uh before then people had convered ConEd huge um old office space and Commercial spaces to residential okay and then made the bottom floor uh commercial and you would have a very very T hard time getting through either the square footage requirements for residential uh for a mortgage in those condos or the occupancy because see nobody wants to buy expensive condos when um when there's no there's there's there's no ability to buy them and at that time there was it was a tough time time financing so what you were having was a lot of rentals and so if the rentals are more than 50% I think it's even less than that but if they're 50% or more you can't get a single family Mortgage in that condo really a mess really they should really kind of look at that probably if they wanted to make some changes but but anyway so that is one of thing they're going to change they're going to work to change zoning and then he says um if you can get extra points in your bid to build a Transportation Hub under the bipartisan INF infrastructure law because you're putting affordable housing in that area well that seems to us like a pretty good deal and that's exactly what we're

doing so what they're saying is hey we want you to build mass transit okay and then next to the man mass transit we want you to build affordable housing and then we would be surprised by what happens in 10 years to the value of those properties the second way Biden is working to lower housing costs is by helping developers with costs by expanding tax credits now look tax credits are wonderful if you have an opportunity zone for instance those are great right if it's identified as that I mean it's great it's I have no issues but helping developers with cost by extending expanding tax credits how does that work exactly the lowincome housing tax credit subsidizes purchasing building and renovating affordable housing and it's broadly popular amongst a variety of interest and I will give the article credit for that okay how much can you really do in this space that anyone's going to approve of not much the answer is not much so the only problem I have with tax um the tax credits okay is you have to be profitable to worry about taxes low-income housing people like it Bankers like it because they buy the credits and use them against their tax liability and Builders like it so that's a nice triumphant there see he's already said look people can use these credits to buy down other things but that doesn't build the affordable housing it doesn't actually get it built so there we go and it says but the administration's efforts aren't enough right okay so now now watch this Congress has failed to pass larger grants that Biden has proposed to get rid of single family zoning experts say the federal government needs to be much more aggressive in rewarding and punishing state and local governments based on their housing efforts right right so it's not Biden's fault it's the congress's fault H they need to pass they need to do whatever Biden

says which is crazy to get rid of single family

zoning experts say the federal government needs to be much more aggressive in rewarding and punishing state and local governments can you believe that what do you think what do you think I mean it's just blows me away the idea that I mean there's there's like that to me is a halfhearted effort to fix unaffordable housing in the United States I mean if you just look okay just look at median income okay and the median affordable house or medium home median home price in the United States okay and then tell me that's going to get fixed by these policies it's a joke it's a j joke so I'm sorry I've had I've had buzzing I've had alerts going off my phone hasn't run but man I've been I think the bird upstairs is going crazy so I I appreciate you uh sticking with me through this one um let me know what you think I don't I don't mean to be harsh I don't mean to be harsh on the administration or anything like that I just I mean let's be a little bit close to realistic on that if you think fixing zoning and giving somebody a few tax credits is going to fix the the supply of how in the United States or increasing Section 8 vouchers it I mean it's just it's just crazy but what do you think maybe maybe I read it wrong maybe I have problems with reading comprehension I don't know put your uh put your response in the comment section and maybe uh we'll read some of the best ones down the road with that I'm going to head out out thank you for watching thank you for listening and I'll catch you on the next one