America’s housing crisis is bananas
Jun 7, 2022
Episode 688

America’s housing crisis is bananas

So why can't we (just) build more homes?

This country had a problem with housing before the pandemic. But it got real bananapants in the midst of it.

A large part of why we’re in this mess comes down to supply and demand. There’s just not enough homes to go around, which is driving up prices. Home prices are up 20% from last year, and experts say we need up to 6.8 million units to meet demand.

So if it’s a supply problem, why can’t we just build more homes?

“Builders like to talk about the three L’s that go into housing: land, labor and lumber. And all of those things are harder to get. And more expensive,” said Amy Scott, a senior correspondent at Marketplace who covers housing.

On today’s show: Amy explains how we got here and why solving the housing shortage is a lot more complicated than it sounds.

In the News Fix, as the Jan. 6 committee prepares for public hearings this week, authorities continue to make arrests in connection with the attack on the Capitol. Plus, we’re talking stagflation.

Then, we’ll hear from an educator who is rethinking the teaching profession. And who knew so many of you loved popcorn?!

Here’s everything we talked about today:

When you’re done listening, send us your answer to the “Make Me Smart” question. We’re at and (508) 827-6278 or (508) U-B-SMART.

Make Me Smart June 7, 2022 transcript


Note: Marketplace podcasts are meant to be heard, with emphasis, tone and audio elements a transcript can’t capture. Transcripts are generated using a combination of automated software and human transcribers, and may contain errors. Please check the corresponding audio before quoting it.


Kai Ryssdal: Tell you what. You just fire up and we’ll see what happens.


Kimberly Adams: Wing it. Hi everyone, I’m Kimberly Adams. Welcome to Make Me Smart, where none of us is as smart as all of us.


Kai Ryssdal: I’m Kai Ryssdal. It’s Tuesday, our weekly single topic program. Today, the nation’s housing crisis. Home prices are up 20% year-on-year, a touch above I think, right? It’s either 19.6 or 20.6 I can’t remember. But our guest is going to tell us, she knows everything about housing. And part of the reason we’re in this mess with housing is because supply and demand, right? There’s just not enough housing supply, specifically affordable housing, to help people find the shelter they need.


Kimberly Adams: And so if it is a supply problem, ideally, we’d just build more homes. But obviously it is not that simple. And so here to break it down for us is Marketplace’s senior correspondent, Amy Scott, who knows all about housing.


Amy Scott: Good to be with you, everybody.


Kimberly Adams: Amy, are we correct with the premise that this is actually a supply problem that we need to figure out how to fix?


Amy Scott: Oh, heck yeah. Absolutely. I mean, the shortage has been basically going on for years, it’s just gotten more and more bananas in the last couple of years post pandemic. And really, the quick summary of why we’re here is that we way overbuilt in the lead up to the housing crash of the mid 2000s. A lot of builders went out of business, workers left the industry, and they were kind of just catching up before the pandemic. Then boom, COVID made it really hard for builders to build. And add in the persistent labor shortages, supply chain issues, higher costs for everything, and the industry just can’t build fast enough to meet demand.


Kai Ryssdal: Is there a spitball number of how many houses we need?


Amy Scott: You know, there is a spitball of varying sizes. Alright, moving away from the spitball, back of the napkin estimates are something like a million houses to the higher end – which is the National Association of Realtors estimates – five and a half million houses. And this comes to down to sort of how they’re counting and who they’re counting. But basically, we have at least a million, I think, of housing units that we need on top of what we need to build every year just to keep up with new households forming, you know, replacing aging homes. There’s been a lot of demand for new homes. So there’s just way, way more demand than there is supply.


Kimberly Adams: So what does that look like in real life? I’m sure all of us are seeing versions of it as we move about our lives. But who in this market is getting homes and who is left out of the market?


Amy Scott: Well, if you are an existing homeowner who has built a lot of equity over the years, and you want to upgrade to a new home, maybe move from California to Miami and buy a condo, you’re in good shape. Higher-end housing is doing really well. Builders have been focusing on higher-end housing because they can make more profit when inflation is cutting into their margins at the more affordable level. Those who are missing out are of course first-time homebuyers, people who would like to get in the market, have seen their rents go up dramatically cutting into their savings, and now are seeing mortgage rates go up. You know, they’re over 5% now for 30-year fixed. They were like 2.65% at the lowest in January 2021. So it’s just getting harder for a lot of people. Although I should say, you know, we’re starting to see signs of the market slowing down that should at least interrupt that crazy price increases somewhat. And there might be more houses coming on online basically for sale which should make that a little bit less disastrous for the first-time homebuyer.


Kai Ryssdal: So if I’m a renter, and I decided I want to get in to a property that I own, whether it’s you know, a condo thing or a single family home or what have you, what should I do? Oh experienced housing senior correspondent!


Amy Scott: Well, I guess. Gosh, I’m so bad at giving advice.


Kai Ryssdal: Well, so first of all, consult your own financial advisor, right? That’s advice number one. But yeah.


Amy Scott: I practically fainted when we bought our house. Um, what I do tell people though is don’t try to time the market, we sometimes get questions like, should I wait? Or is there going to be a crash? I mean, I think my advice is, if you are in a position to buy a house and you can without overextending, that’s the time to do it. Because it’s really hard to know where things are going from here. A lot of the trends that are keeping demand so high are still in place, you know. We have population growth, people, new households forming that shortage that’s underlying this market is not going to be closed anytime soon. So I always say if you can, go for it now. If you can’t, I think, man, I think we’re gonna get to why we can’t just build more housing, but let’s hope builders start to catch up, which could put a dent in this challenge.


Kimberly Adams: All right, well, let’s get that one. Why can’t we build more housing?


Amy Scott: Did I just give you a question? Well, so I don’t know how much time we have, but the builders like to talk about the three Ls that go into housing: land, labor, and lumber. And all of those things are harder to get. And more expensive. Although lumber prices have actually been falling recently, but by and large, it’s just more expensive, and it takes longer to buy a house. And we’ve heard about all these supply chain issues. It’s not just lumber, but door handles, garage doors, windows, all of that thing. All of those things are making it more expensive and take a lot longer to build houses. Land is a big one, because zoning restrictions in many communities just make it harder to build housing, especially multifamily housing or even duplexes. A lot of cities and towns have rules that you can only build single family homes, which makes it harder to build the quantity of housing we need. Then labor is the big one. There’s, you know, not just in the past couple of years, but going back many years, there’s been a shortage of people who want to work in construction. Again, it’s going back to what happened in the recession. But you know, a lot of kids have been told they need to go to college, they’re maybe not taking shop classes. When they graduate from high school, they’re going to college or maybe looking for something that’s not, you know, what they see as hard dirty work. And so the industry is really trying to kind of shake its perception and recruit more young people, more women and people of color into the industry, who have often been kept away.


Kai Ryssdal: Let me take you sideways for a minute, Amy, and ask you to make the connection for me please between the squeeze we’re seeing in the housing market now, and our general economic fortunes, right? Because houses are the biggest investment that most people make. They are long-term investments. They’re incredibly expensive. There’s a monthly nut that has to come almost before everything else. And yet, we all want to. Well, most people want to buy houses. And that ties into how we do as an economy too, right?


Amy Scott: Yeah, absolutely. I think for me, the biggest sort of factor to come out of this is the deepening of the wealth divide in our country. The haves and the have nots. Because as I said, if you are a homeowner, you’ve seen your equity, you know, almost in every market, even here in Baltimore, which is a historically depressed market, houses are just worth so much more than they were even a few years ago. And so if you can tap that equity to, to, you know, add an addition on your house or pay for your kids college, you’re just in better shape than someone who doesn’t have that nest egg that’s been growing and growing and growing. In fact, there’s this maybe. Well, savings are up overall in the economy, but if you’ve been paying more and higher rent, you’re just not able to save like that. And so I worry that it’s just deepening inequality in our economy.


Kimberly Adams: But what are the solutions, then? Because I mean, when I talk to friends who are renting, it’s just, it’s impossible, because their rents have gone up. And whereas they would have been able to maybe save to one day have enough for a down payment on a house, they’re paying twice what they would in a mortgage just on the skyrocketing rents. How do you fix that?


Amy Scott: Yeah, so the Biden administration last month released its Housing Supply Action Plan, which it hopes will help close the housing supply gap. You know, there’s a lot in there that could help with the margins. For example, incentivizing local governments to relax their zoning, so that people can build duplexes or quadplexes instead of one house on a lot. Or the AD use, you know, the backyard cottages you see in California and Denver expensive markets? Yes, exactly. And also like helping build manufactured housing, and modular housing. Cheaper to build, and you can do it more quickly and efficiently. I think, you know, the five-year timeline that they put out is probably pretty optimistic. But at this point, I think housing advocates and builders are like, just make it easier for us to build, you know, and we will do it. They would love to sell more houses, right? And we may need to relax some regulations to get that done.


Kimberly Adams: You know, I thought I was done. But it just reminded me in terms of who is buying houses. What about all these investment companies buying houses? I remember after the 2008, you know, when the housing market crashed, you had all of these investors coming in and buying up houses, and that had a big effect on the market for a long time. Where does that stand? And how is it playing into all this?


Amy Scott: Yeah, that’s a great question. I don’t have the statistics at my fingertips, but investors have been making up a larger share recently of single-family home purchases. And those can be investors who just own one or two rental properties all the way up to institutional investors, and, you know, private equity funds. One of the things that the Biden plan includes is a provision to make it harder for investors to buy government owned properties. So like those foreclosures that they snapped up, recognizing, I think that this is making it more challenging for regular people to become homeowners. But I think that’s definitely playing a role in demand. And it’ll be interesting to see how that reacts to the changes in the market, because a lot of those investors don’t need mortgages, right? And so, is it going to make a big difference if borrowing is more expensive?


Kimberly Adams: Marketplace’s senior correspondent covering housing Amy Scott, thank you so much.


Amy Scott: Thank you. Glad to be here.


Kai Ryssdal: Always learn some talking to Amy Scott. Always learn some.


Kimberly Adams: Always, always, always. And I have to say, this sense of hopelessness I hear from so many people, people I know, people I talking to online. It’s just this idea of homeownership being the American dream, what happens when you make the American dream impossible?


Kai Ryssdal: Yeah. Yeah, I’m not sure. You know, I said, everybody wants to buy a house. And I don’t think that’s actually true, right? I think there’s a large slice of the population in this country that’s happy not to. A lot of people do want to, but I think it goes to Amy’s point about the wealth gap in this country, right? Because that’s the primary store of most people’s wealth, is the accumulated value in the home that they buy. And if people opt out, that changes the dynamics in this economy. It changes it by race, it changes it by location, it changes it by a bunch of things.


Kimberly Adams: Yeah. And I mean, even, like I didn’t want to buy a house when I was in the market, because I don’t want to cut the grass or shovel the sidewalk and all of those things. But I also didn’t want to keep paying the steadily increasing rents and I was, you know, fortunate enough to be in a position where I could buy a house thanks to some down payment assistance, first-time homebuyer programs and all the things. But, you know, when even those pathways get closed off, especially if your rent is going up, that makes it so much… I think it’s just so frustrating for people.


Kai Ryssdal: Yeah, yeah, totally agree.


Kimberly Adams: Okay, well, let us know what you think. What is the housing market like in your neck of the woods? Have you noticed any signs of as they say, a vibe shift in the housing market?


Kai Ryssdal: What? Okay.


Kimberly Adams: Oh, yeah, vibe shift is the thing. It’s this whole, like think pieces about the vibe shift, but we’re gonna apply it in this context. Is there a vibe shift in your housing market? You can let us know. Our number is 508-827-6278, also known as 508-U-B-SMART. Or you can send us a voice memo as in email us a voice memo, which is different than phone call at We’ll be right back.


Kai Ryssdal: All right we’re gonna do some news, Kimberly Adams, you go first?


Kimberly Adams: Yes, my first one, I’m not going to spend a lot of time on it, because it’s super grim, but very, very important. ABC News did an interview that I strongly encourage folks to watch, of one of the teachers who was in one of the classrooms in Uvalde. He was badly injured, he was shot several times, and survived. But as I understand it, none of the students in his classroom did. And he has an incredibly compelling interview. And, you know, in line with what we were talking about yesterday about the importance of looking at difficult things, I would encourage everyone to watch and listen to what he has to say about his experience and what he wants to happen next. And then the other story that I’m very fascinated by and you know, I’ve been looking at this for a long time, it’s just all of the people who have been charged with crimes in the Capitol attack, more than 800 people have been charged with actual crimes. And I think it’s important to hear that number and think about the amount of work and evidence gathering and legal processes that go into charging just one person with the crime. And they’ve done this for more than 800 people, because we still have a lot of folks who are diminishing how bad things were that day. And the Associated Press has a guide looking at these 822 people who’ve been charged with offenses so far, breaking it down by the type of charges and where are these people were coming from, who had weapons, who’s been charged with actual sedition versus just like disorderly conduct. And, you know, who’s actually been fined on home confinement, on imprisonment, community service, probation, or supervised released restitution? Some of these folks are going to jail. Sorry, prison, some of these folks are going to prison. And I think that there’s some really interesting infographics that the AP has done and it’s worth having a look as we get ready for these hearings coming up this week.


Kai Ryssdal: Yeah, biggest investigation in the history of the FBI. I mean, it’s a lot of people. Okay, so mine is super quick. I just want to point this out for those of you paid close attention to the fortunes of this economy, which are now a very hot button political issue, obviously, in Washington with the midterms and 2024. A looming report from the World Bank, World Bank, who tend to the pessimistic side, I must say, but the World Bank today was out of the forecast that says and I’m going to quote the journal reading from the World Bank report:

Setting damage from the war in Ukraine and the pandemic, the World Bank says global growth this year is expected to slump to 2.9% in 2022. That’s down from its earlier estimate of 4.1%. More troubling, actually, is what David Malpass, the president of the World Bank said, which is this: years of above-average inflation and below-average growth now seem likely, the word you’re looking for there is stagflation.

That is not a great thing. We are a long way from there, I think. Right? I mean, I think we have to see what the Federal Reserve can do. I think we have to see what economic growth comes in, in this country in the second half of the year. But it’s not that it’s gonna get worse before it’s gonna get better, but it’s gonna stay bad before it gets better, if that makes any sense. Makes sense? Not good sense. Like not happy sense. That’s the news. That’s what’s on our minds. Let’s do a little mail, shall we? Okay, we learned last week, I learned, about lifetime warranties. Holy cow. It’s not what you think they are. I got an email from Lorraine out here in California about that. Here you go. It says my dad bought a lifetime wheel alignment warranty for his 1983 Volvo 245 station wagon in 1985 from Sears Auto Center. The car is still around and the warranty was used as recently as last August, but unfortunately Sears Auto Center is no more. His lifetime warranty outlasted Sears. That’s sort of funny in a not funny kind of way, because Sears has gone. Well, has fallen on a harder time, shall we say.


Kimberly Adams: But where did they take the car for service then?


Kai Ryssdal: I don’t know. That’s a good question. That’s a good question. Lorraine, you got to follow up with that one. Where do you take the car for service? Come on.


Kimberly Adams: Yeah, is it that whatever company like bought out…?


Kai Ryssdal: Okay, we’ll do a follow up, right?


Kimberly Adams: Yes. And it turns out that like me, many of you also have a love of popcorn.


Steve: Hi, this is Steve from Grand Rapids, Michigan. I wanted to let you know that Kimberly Adams, you’re my new hero. We make popcorn using our Whirley Pop, three or four times a week as well. Some of our friends had no idea that you could make popcorn without a microwave, so we’re trendsetters. Thank you very much.


Kai Ryssdal: That’s actually funnier to do.


Kimberly Adams: And I should have added more context. On Friday when we were doing half full half empty, I was informed I had not heard that there’s like a popcorn shortage and I had a little panic definitely. Made an emergency run to the store this weekend.


Kai Ryssdal: Oh, now you’re hoarding! Great, great, great.


Kimberly Adams: Yeah, exactly. The exact terrible thing to do in this economy. I mean, it’s not like I’m mourning baby formula or anything like that. So I’m gonna maintain my popcorn. I also heard from a lot of people about that they tried putting Old Bay on popcorn as per my recommendation. Okay, but before we go, we’re gonna leave you with this week’s answer to the Make Me Smart question, which is: What is something you thought you knew, but later found out you’re wrong about?


Dave: This is Dave from Michigan. I’m a math education professor, which means I teach teachers promising ways to teach mathematics. I used to think that the job of a math teacher was to transfer to students the knowledge and skills needed to be successful in math class. Now, I think that the job of a teacher, any teacher, is to support students as they try to make sense of their classroom experience. In other words, learning is about making sense, not acquiring knowledge.


Kai Ryssdal: Oh, I totally agree. Look, I will deny this if any of you repeat it to my children, but you’re not in school to get straight A’s. You’re just not, you’re just not.


Kimberly Adams: In school to learn and learn how to learn.


Kai Ryssdal: Right, totally, 100%, 100%. That’s great answer. All right, keep sending us your answers to the Make Me Smart question: What is something you thought you knew but later found out you’re wrong about? A voice memo through our email at, or leave us a message at 508-827-6278, 508-U-B-SMART is how you can spell that. I’m not even going there. Just. Just no.


Kimberly Adams: I didn’t say anything.


Kai Ryssdal: I know, but I can hear the chuckles.


Kimberly Adams: Make Me Smartest is directed and produced by Marissa Cabrera. Our intern is Olivia Zhao. Welcome Olivia! And Ellen Rolfes writes our newsletter.


Kai Ryssdal: Jayk Cherry engineered today. Juan Carlos Torrado is going to mix it down later. Ben Tolliday and Daniel Ramirez composed our theme music. The senior producer is Bridget Bodnar. Donna Tam is Director of On Demand. And Marketplace’s Vice President and General Manager is Neil Scarborough.


Kimberly Adams: Olivia just started too! So excited. Have you ever tried Old Bay on popcorn?


Kai Ryssdal: I never had. As I said last week, I’m not a big popcorn guy.

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