Is Our Current Housing Market WORSE Than The 2000s Housing Crash? with Morgan Housel

Key Takeaways

if an alien came down from another planet right now and asked Morgan household what is going on with housing in the United States where would you begin I would begin with two points one that kind of starts 10 or 15 years ago and one that is much more recent the point that starts 10 or 15 years ago is it's always fascinating to me how deep the roots of our problems go and this group this route is not even that deep but if you go back to the end of the housing bubble 2006 2007 why there was a housing bubble in the 2000s is because we built way too many homes massive over construction way too many homes that we needed and then everything fell to pieces in 2008 in the housing the Housing Industry kind of disintegrated that's what's caused the financial crisis a big part of that was after the housing bubble burst millions of American contractors and carpenters and electricians and plumbers went out of business they went and found something else to do there was no more work for them so if you were a plumber in Dallas Texas you hadn't found something else to do you did not wait for your employing business to come back you were gone a lot of mom-and-pop contractors just went out of business and what took their place were the giant home builders but there are literally tens of thousands hundreds of thousands of mom and pop contractors that used to build two homes a year three homes a year that went out of business in 2008 and they never came back once demand for housing came back in the mid-20 teens 2013 14 15. those people who found something else to do they did not go back to housing they were working at Auto plants and they were working you know building solar panels they did not come back to housing and you can't just snap your fingers and create a new set of a million electricians which is just to say that for most of the last decade we have been way short of home builders and Home Building technicians Carpenters electricians those kind of people way short so there was a massive under building of homes for the last 10 years we we are probably short today something like three million homes we need three million more homes for sale today than we actually have and that creates all kinds of problems it basically just shifts up the housing uh conveyor belt where it's like it used to be that rich people lived in mansions and middle class people lived in middle class homes and poor people lived in low-income housing and that just shifted up so now it's like you know the the very very rich live in the nice homes the middle class live in the lower end homes and the lower class people there is virtually nothing left literally uh instigated the rise of homelessness and the opioid academic even like you can draw straight lines between these things I just bring that up because I think a lot of what has happened over the last two or three years is we have this massive housing shortage combined with because of the pandemic people are spending way more time at home working for home so housing means a lot more to them than it used to be combined with the third element here which is that because a stock market boomed and crypto wealth boomed you all of a sudden have a small sliver of society not everyone but a small sliver that has tons of money to throw around when you put those three things together home prices in the last two years pretty much since the start of covet have gone vertical in a way that puts the housing bubble of the early 2000s to Absolute shame and so home prices relative to any way you look at it relative to income relative to net worth relative to historical Trends are so broken right now and broken in a way that we have really never seen [Music]