00:00The U.S. housing market faces challenges as affordability remains out of reach for many
00:04Americans and prices continue to climb between rising taxes and insurance costs. The question
00:09now is what will it take to truly restore balance to the housing market? Join us now to discuss that
00:15and much more. Veronica Dagger, reporter at The Wall Street Journal. Veronica, really grateful
00:19for your time this morning. Thanks for being here. Thanks for having me, J.D. So there are so many
00:25components to this really crucial story, which is arguably the most important story of everything
00:30in the broader markets, is the housing market. How would you diagnose where we are in terms of
00:37the general market at the end of 2025? How would you describe it to someone? It's a really tough
00:42market. It's a tough market for homebuyers because they've got a lot working against them. Home
00:48prices are still high. They're still growing not as fast as they were in the past, but they're still
00:53growing. Mortgage rates are high. Looked at this morning was a 6.34 percent according to Mortgage
01:00News Daily. So those are high compared to just a few years ago. Home prices are high. Mortgage rates
01:05are high. Incomes are growing, but not nearly as much as people need to afford a house. And there's
01:12a lack of inventory. There's not a whole lot of houses to buy in areas where people actually want to buy.
01:18So supply. Let's drill in on this crucial supply question. How did we get to a place where there is
01:26this gap between the inventory that is needed and the inventory that we have? Have there been
01:32particular things that have happened over the last, let's say, 10 to 20 years that have sort of put us
01:37in this little bit of a generational pinch? Yeah, we've been in a generational pinch. And there's a
01:43couple issues. So home builders weren't building as much as they were historically. So we had that going
01:48against us. And then we had 2021, which was in the pandemic when interest rates were artificially or
01:57actually very low. And that gave a lot of buyers a lot of confidence and purchasing power. And so they went
02:05out into the market and say, well, now because of these low interest rates, I can afford a house that I
02:12probably wouldn't have bought in the past because I can essentially afford it. I can take out a bigger
02:18loan. And people did that and they bid up the price of houses. And there weren't enough houses in places
02:23like New Jersey and New York and Connecticut and some places in California to begin with.
02:28And then home prices just hit this very high level that we haven't seen in years or near records.
02:35And so we're in this situation where not a lot of houses, home prices really aren't coming down
02:42in any time soon in most markets. And it's a very difficult situation for buyers. Home sellers,
02:50on the other hand, are in this tricky situation as well. Many of them have locked in some of those
02:55low rate mortgages. They don't want to give them up. They don't want to sell their house because
03:00they've got all this equity. And so there's this huge divide between homeowners and those who don't
03:06own a home. The wealth level between the homeowners and the renters, it's getting even more spread
03:14apart because of the home equity that the sellers, the owners have that renters just don't have.
03:22It's a, I mean, that is as good an answer as I could possibly hope for. And it's a complicated one.
03:28I feel like we could do an hour-long kind of break apart for each of those. One phenomenon I notice
03:35in my neighborhood, I live in Queens, New York, where we tend to live on top of each other,
03:39a lot of old units. You kind of have this NIMBY phenomenon and a fight that happens at the community
03:44level with regards to proposals for affordable housing. And a lot of existing homeowners who say,
03:51maybe with all due respect, not so much in my backyard. How has that fight across key markets
03:56played itself out to make a lot of these existing challenges maybe that much more difficult?
04:01It's huge. I mean, it plays a huge role in the shortage of housing. It's always funny when you
04:06hear owners say like, oh, I feel so bad for my kids who are in their 20s and they can't afford a house.
04:12And, but sometimes those parents are the same people who said, no, I don't want that affordable
04:16home built in my neighborhood. And so all these things are connected. And the housing market,
04:21it's all these puzzle pieces that fit together. And we do need more affordable housing. Now,
04:27there's a lot of things that go into that. There's that NIMBYism, but there's also things
04:31like really tough zoning in certain areas. There's also the building costs that you look at the inputs
04:37of the house these days, especially because of tariffs. Those costs have gone up. And then,
04:42of course, immigration plays a role in this today, too. I mean, immigration has changed so much
04:47in recent years that it makes it difficult for many home builders to find the staff,
04:53find the people to actually build the houses. And so all of that factors into costs and is
04:58hurting that first time home buyer. Let's get a comment on the politics of it, but that's not
05:04actually where I thought you were going with the immigration component, only because Vice President
05:08J.D. Vance yesterday says part of the affordability challenge is because we have so many undocumented
05:14immigrants in this country who have sort of exacerbated some of the supply issues.
05:17That's at least part of the political argument down in Washington, D.C., and I certainly won't ask
05:22you to comment on how the administration is framing it, but at least in terms of proposed
05:27policies from the administration. Among others, the idea floated on social media by the president
05:32last weekend, a 50-year mortgage. It's been very rare. I've been doing this a long time that I've seen
05:38so much, pretty much condemnation from all sides about why that's not a great idea. But I wonder what
05:44your takeaway has been since that conversation emerged last Saturday and some of the other
05:50adjacent proposals that we've heard, like portable mortgages or et cetera.
05:55Yeah, that one definitely, the 50-year mortgage definitely went viral, a lot of negative reaction,
06:00and somewhat understandably, right? Because if you extend the life of the term of the mortgage,
06:06yes, you might have shorter monthly payments outright, but at the end of the day, you're going to
06:11probably pay three times as much interest for the same house. So that is going to have people stay
06:18in debt for a very long time. If you're paying interest only for even more months or years of
06:23the life of your mortgage, it's going to take you forever to build up equity. And then as a result,
06:28your ability to pass on your asset to your heirs, you're not going to be passing on an asset. You're
06:34going to be essentially passing on a liability, a debt to your heirs, because you won't have that same
06:39amount of equity built up. It's also really risky for some investors too, because if you have a 50-year
06:46term, there's a lot more chance of a person defaulting on a loan because of life. You know,
06:51life happens, people lose jobs or get divorced and they can no longer afford their home. And so
06:57there's a lot more risk involved for a lot more parties here. And as a result, it's very possible.
07:02I mean, we don't know a lot of information about this, but it's very possible that that 50-year
07:07mortgage could have a higher interest rate than the 30-year mortgage. And then what's the point?
07:13How does that help anyone? I think I'm not into politics, but what I do know is a lot of housing
07:19analysts and a lot of people in the industry will say these proposals like the 50-year mortgage or
07:25the assumable mortgage, all these things are ideas and like no one faults them for trying to
07:31brainstorm. However, the key issue here is inventory and supply. And so how about the
07:39administration might want to think about how to address the supply issues? And that's what a lot
07:44of people in the industry are saying. I think that's why we heard so much pushback because it's
07:49like, okay, don't just put like lipstick on a pig. Like, let's get to like the core issue here,
07:54which is supply. Yeah, that's a great point. But almost out of time, before I let you go,
08:02are there particular markets, at least in the United States, where we're seeing a little bit
08:06more alleviation of these pressures? Obviously, here in the New York area, we know it's a really
08:10big challenge for the adjacent states, but how about the rest of the country?
08:14It's super bifurcated. So places like the South, Texas, Florida, you could go down there right now.
08:20You've got your choice of homes, you can get a lower price than you could have a couple years
08:24ago. So we are seeing some prices drop in certain areas there. So and you have your ability to
08:29negotiate and get some concessions from sellers and take your time making a deal. And so if you're
08:37shopping in the South, you've got some real opportunities right now. As you said, it's a very
08:42different market for people in the Northeast generally. Yeah, man, I wish we could continue the
08:49conversation. We'll have to do this again soon, because I do feel like the proposals that are
08:53being put forward by the administration, they're somewhat evolving over time as you're trying to
08:58address the underlying crises. And it's a really important conversation. Veronica Dagger, come back
09:02anytime. Veronica is a reporter at The Wall Street Journal. Thanks a lot for being here today.
09:06Thanks for having me. Great questions.
Comments