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right now to sign up. I'm

1:01

John Quinn Hill and this is

1:03

explain it to me. The show

1:06

where you call 1-800-618-8545 and we

1:08

find the answers to the questions

1:10

that matter most to you. Miranda

1:12

hails from the Twin Cities and

1:14

called in with a question that's

1:16

on more than a few people's

1:18

minds. Is it worth it to

1:21

buy a house? I think that's

1:23

always been the go-to investment for

1:25

like past generations of like you

1:27

buy a house and that's kind

1:29

of your retirement plan. And that

1:31

just doesn't seem realistic or even

1:33

attainable to buy a house. So it's

1:36

like, should I even try to do

1:38

it? Is that something I should do?

1:40

This is a question I've wondered about

1:43

too. Okay, I'm going to be honest.

1:45

I love to scroll through real estate

1:47

websites. But should we be buying homes?

1:50

Given the economy and the interest rates,

1:52

it can often feel like a fantasy.

1:54

The market is just so much more

1:57

different than it was when our appearance

1:59

were looking for starter homes. Is

2:01

this really where our money should

2:03

be going? To get an answer,

2:05

I called up James Rodriguez, senior

2:08

real estate reporter at Business Insider.

2:10

Do you ever just like scroll

2:12

through Zillow dreaming of what it

2:15

would be like to own your

2:17

own home or am I telling

2:19

on myself? Not at all. I

2:21

do that all the time. So

2:24

the conventional wisdom is that buying

2:26

a home is the way to

2:28

build wealth in here. in America.

2:30

Is that true? Has that ever

2:33

been true? Definitely with past generations,

2:35

and I think it especially has

2:37

this hold on people today, when

2:39

they've seen, especially baby boomers who

2:42

may have bought homes decades ago

2:44

and have reaped all the rewards

2:46

from this really crazy moment in

2:48

the housing market where prices jump

2:51

so substantially during the pandemic. If

2:53

you compare the end of 2019

2:55

to the beginning of this year,

2:58

home prices are up about 50%.

3:00

So historically we have seen people

3:02

invest a lot in their homes

3:04

and you know for some people

3:07

it is absolutely true that they

3:09

have reaped substantial rewards. I think

3:11

it's important to look closer at

3:13

that though and see that for

3:16

some people it has been really

3:18

perilous. There have been periods of

3:20

home price declines. We saw this

3:22

during the great financial crisis in

3:25

2008 when some people lost all

3:27

the money that they had put

3:29

into their homes because of the

3:31

foreclosure crisis. And so I think

3:34

it's important to recognize that while

3:36

that has been true for some

3:38

people, it hasn't been true for

3:40

everyone. And it may not be

3:43

something that's true in the future.

3:45

Yeah, I want to talk a

3:47

little bit about why that conventional

3:50

wisdom around home buying and building

3:52

wealth isn't hitting quite like it

3:54

used to. What's different for today's

3:56

home buyers? see the affordability aspect

3:59

people are stretched so thin budget-wise.

4:01

The majority of middle-class Americans say

4:03

that they are struggling financially. Their

4:05

financial stress has increased since before

4:08

the COVID-19 pandemic began. So when

4:10

you look at inflation, economic instability,

4:12

a lack of savings, all of

4:14

these have increased the share of

4:17

Americans feeling financially stressed. Mortgage rates.

4:19

They went super low during the

4:21

pandemic, they were at record lows,

4:23

and that allowed people to get

4:26

in because even if prices were

4:28

rising, the rate on their loan

4:30

was so low that you could

4:32

kind of stomach the monthly payments

4:35

and make it work, whereas now

4:37

we've seen mortgage rates rise to

4:39

more than double those levels. And

4:42

home prices haven't really stopped climbing,

4:44

especially in areas where there's still

4:46

not a lot of homes on

4:48

the market. So there's uncertainty around

4:51

just the future of the economy.

4:53

interest rates are up so that

4:55

all all of that together really

4:57

makes it hard to see a

5:00

future in which People who are

5:02

already stretched in renting. How do

5:04

you save up money for a

5:06

down payment? How do you justify

5:09

these higher mortgage rates? And how

5:11

do you bring it all together

5:13

to become a homeowner? It's it's

5:15

a real challenge right now Is

5:18

this the case in particular for

5:21

zoomers and millennials who are looking

5:23

to buy homes in their 20s

5:25

and 30s? Like it just feels

5:27

so, like, I don't know, I

5:29

just think of, oh baby boomers,

5:32

they got to get their house

5:34

for like $5 and now the

5:36

rest of us have been priced

5:38

out and they're aging in place?

5:40

Like there's just so much and

5:43

I don't want to just blame

5:45

baby boomers. It's very easy to

5:47

do that. baby boomers, especially when

5:49

they've been so fortunate in the

5:51

housing market at large. But I

5:53

think one of the things you

5:56

have to think about too is

5:58

the demographic side of things and

6:00

we had this huge wave of

6:02

millennials currently the largest living generation.

6:04

in the US. We knew that

6:07

they were going to be hitting

6:09

their prime home buying years around

6:11

the turn of the decade, 2010s,

6:13

going into 2020, and there was

6:15

just not enough building happening after

6:18

the Great Recession to keep up

6:20

with all of that demand that

6:22

was on the horizon. So you

6:24

had people who were also starting

6:26

to work remotely, and so they

6:28

wanted more space. And it can

6:31

be tough to have an optimistic

6:33

outlook for home buying chances when

6:35

all of these forces seem to

6:37

be conspiring against younger generations in

6:39

ways that older generations just didn't

6:42

have to deal with. I think

6:44

we're still feeling the effects of

6:46

the Great Recession in that respect.

6:48

A report released today by the

6:50

National Association of Realtors paints a

6:53

picture with housing data. The Great

6:55

Recession hits, employment there fell 1.5

6:57

million. We have not recovered that

6:59

over all these years. We are

7:01

still short of around 500,000 workers

7:04

in construction. Another reason why you

7:06

saw home prices rise so dramatically

7:08

is not only were millennials competing

7:10

against their generation, but they were

7:12

also competing against baby boomers in

7:14

the market who had cash, who

7:17

had substantial savings, and were able

7:19

to, in a lot of cases,

7:21

bid up home prices. And we're

7:23

seeing, as you mentioned, baby boomers

7:25

staying in their homes longer than

7:28

ever, but eventually... they will be

7:30

aging out of the market, which

7:32

is a kind of a euphemistic

7:34

way of saying dying. And when

7:36

you look ahead to that, and

7:39

substantially less people competing for homes

7:41

in the US, you see household

7:43

growth slowing down as well, more

7:45

deaths from boomers combined with lower

7:47

birth rates over the next couple

7:49

of decades. And all that equates

7:52

to weaker demand for homes going

7:54

from 2030. through 2040. Yeah, can

7:56

you sort of run through kind

7:58

of what the home buying experience

8:00

and you know growth has been

8:03

like from the boomer side and

8:05

then sort of compare it to

8:07

how it goes now. Yeah, so

8:09

you think of a baby boomer

8:11

who maybe they bought a home

8:14

in 1994 and they hold on

8:16

to it for the life of

8:18

their mortgage for 30 years and

8:20

then they sold last year for,

8:22

if you look at typical home

8:24

price increases, a 305% gain. So

8:27

that's, you know, say they bought

8:29

a $300,000 home, it's worth more

8:31

than a million dollars by the

8:33

time they sell it. Whoo, okay,

8:35

you can retire with that. It's

8:38

a crazy return. It's really mind-boggling

8:40

to think about. And, you know,

8:42

the same millennial who maybe bought

8:44

a $300,000 home in 2010, they

8:46

might not see as substantial increases

8:49

over the next 30 years, but

8:51

they still got to reap all

8:53

the benefits of those crazy pandemic

8:55

years when home prices were rising

8:57

around 50 percent. And so you

8:59

bring that forward and you consider

9:02

all the gains since 2010. And

9:04

then you look at people who

9:06

are buying homes today and it

9:08

starts to raise questions about will

9:10

younger buyers today get the same

9:13

financial benefits of home ownership as

9:15

their predecessors. What would it mean

9:17

for the economy if housing wasn't

9:19

this go-to-way to build wealth? Like

9:21

if that was not the answer

9:24

for how do I get a

9:26

net worth? We don't know because

9:28

for so long it has been

9:30

looked at as the primary method

9:32

of wealth building. You think about

9:34

the typical elder millennial who's born

9:37

in the 80s, they saw their

9:39

wealth, the value of their assets

9:41

increased by more than 57%, just

9:43

between 2019 and 2022. And 41%

9:45

of that, 41 percentage points, was

9:48

attributable to real estate. Wow. So

9:50

it's a huge portion of people's

9:52

assets. I think it's just, it's

9:54

stuff because for every person who

9:56

that real estate is all concentrated

9:59

in this one asset that's not

10:01

diversified. It's not like it's in

10:03

the stock market and if one

10:05

of your one of the companies

10:07

in your portfolio tanks it's okay

10:09

because you're you spread out the

10:12

risk amongst multiple companies it's really

10:14

all concentrating this one thing that

10:16

can be threatened by a wildfire

10:18

or a flood and that can

10:20

be concerning for anyone looking at

10:23

the housing market and seeing so

10:25

much of that wealth concentrated in

10:27

homes. That

10:31

threat of wildfires and floodshames mentioned,

10:34

it's real. How much has climate

10:36

change raised insurance prices and how

10:39

much should we really worry about

10:41

that when we're thinking of buying

10:43

a home? That's coming up after

10:46

the break. Stores

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11:57

This episode is brought to you

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at lifelock.com/podcast. Terms apply. We're

12:28

back, it's explained it to me,

12:30

and we're talking about whether it's

12:33

a good idea to buy a

12:35

house these days. It's 2025, and

12:37

climate change is definitely a factor.

12:39

So, I called up Dr. Jeremy

12:42

Porter. He heads up research into

12:44

housing and climate for First Street.

12:46

They analyzed the climate risk of

12:49

homes and shared that analysis with

12:51

websites like Zillow and Redfin. It

12:53

really is the point at which

12:55

your standard American feels climate change.

12:58

I mean, we're seeing that there's

13:00

more hurricanes, breaking news, hurricane barrels,

13:02

slamming Texas, making lunch fall just

13:05

a few hours ago near that.

13:07

Transcane is now a hurricane in

13:09

the Gulf of Mexico, heading for

13:11

Louisiana, whipping winds. torrential downpours and

13:14

communities submerged. Hurricane Debbie wreaking havoc

13:16

across the coast. This is the

13:18

city of Asheville in the western

13:21

mountains of North Carolina, 2,000 feet

13:23

above sea level and hundreds of

13:25

miles away from the nearest coastline.

13:28

But such was the force of

13:30

Hurricane Helene. We're seeing that there's

13:32

more extreme precipitation events. What we

13:34

saw in LA is that there's

13:36

more wildfires, more severe wildfires than

13:39

we've seen in the past. But

13:41

the way that it's affecting individuals

13:43

is that we're seeing more property

13:45

damage, more people be impacted by

13:47

these events directly to their properties

13:49

or to their communities. Fear and

13:51

concern is growing tonight as flames

13:53

light up the Los Angeles hillsides.

13:56

Firefighters are scrambling to contain several

13:58

major fires tonight. Just into our

14:00

newsroom we are learning of another

14:02

fire erupting this time in Silmar

14:04

in the San Fernando Valley. Overnight

14:06

catastrophic damage reported as severe storms

14:08

slam the central U.S. A tornado

14:10

emergency in northeastern Arkansas. Powerful twisters

14:13

destroying homes. In Missouri, an EF1

14:15

tornado winds nearing 100 miles an

14:17

hour, causing widespread destruction in the

14:19

town of Nevada. Homes and businesses

14:21

reduce to rubble. Lots of times

14:23

people live in places like Miami

14:25

or they live in Houston and

14:27

they'll say, you know, it... the

14:30

weather's always been like this in

14:32

the area that I'm at, and

14:34

they'll say, well, what about insurance?

14:36

And they'll say, well, insurance is

14:38

killing me. And lots of times,

14:40

people won't make the connection that

14:42

the reason insurance is spiking is

14:44

because there's more damages and there's

14:47

more payouts from the insurance companies.

14:49

That's really interesting. Our caller is

14:51

in her late 20s. Miranda, she

14:53

lives in the Twin Cities, and

14:55

she's considering whether buying a house

14:57

is the right decision for her,

14:59

what would you say to someone

15:01

like her? I think we're at

15:03

a point at which we finally

15:06

have data to help make decisions

15:08

like this. And I think one

15:10

of the biggest problems that we've

15:12

seen so far in the way

15:14

that climate and real estate are

15:16

being covered is that climate's driving

15:18

down the value of home prices.

15:20

It's sort of reversing the trend

15:23

that we've had in the US

15:25

for a century where the American

15:27

Dream was owning a property and

15:29

people have aspired to do that.

15:31

I think what we're seeing though

15:33

is that there's a lot more

15:35

nuance to the decision-making process than

15:37

simply avoiding home ownership because of

15:40

climate risk. I don't think people

15:42

should avoid home ownership. I think

15:44

it's still a good investment. I

15:46

think that there are ways to

15:48

optimize to optimize that process. now,

15:50

though, that do include taking climate

15:52

into account the same way we've

15:54

taken other factors into account in

15:57

the past. How do I, you

15:59

know, optimize the home buying process

16:01

so that I'm reducing the risk?

16:03

And maybe I'm buying a home

16:05

that has, you know, a flood

16:07

score. a five instead of a

16:09

flood score of a ten. What's

16:11

an example of that? The quintessential

16:14

example in Miami has been sort

16:16

of this movement from parts of

16:18

the Miami Beach, sort of coastal

16:20

region, into an area called Little

16:22

Haiti that's further inland in Miami-Dade

16:24

County. It's right along the railroad

16:26

tracks. It's the high point of

16:28

Miami-Dade County. And people on the

16:31

real estate market at that time

16:33

were asking their realtors for, you

16:35

know, three bedrooms, two bathrooms, two

16:37

bathrooms, two thousand square feet, and

16:39

a certain level of elevation. They

16:41

wanted to be a certain level

16:43

above sea level because of tidal

16:45

flooding events along the coast and

16:48

sort of the limestone bedrock in

16:50

Miami meant there really wasn't anywhere

16:52

safe. The water... got underground and

16:54

it rose up through the ground,

16:56

but high points, places like Little

16:58

Haiti became much more valuable than

17:00

they had been prior to this

17:02

because people were aware of the

17:05

flooding risk within that market. I

17:07

wonder how all of this plays

17:09

a role in like inequity and

17:11

gentrification and things like that, like

17:13

who's getting pushed where, who's having

17:15

the impacts of climate change. Yeah,

17:17

that Miami example that I gave

17:19

earlier, it was part of an

17:22

analysis back in. 2017 and the

17:24

title of the paper that it

17:26

came out in was called climate

17:28

gentrification. It was people leaving the

17:30

Miami Beach area. moving into the

17:32

little Haiti area, which had been

17:34

a less desirable area. It was

17:36

primarily a more vulnerable socio-economic community,

17:39

a minority community, and people were

17:41

moving in. They were driving up

17:43

the cost of real estate in

17:45

the area. So having the information

17:47

and integrating it into the process

17:49

of the home buying process, I

17:51

guess, did... does have consequences in

17:53

terms of potentially giving those that

17:55

have the means to avoid climate

17:58

risk, the ability to do so,

18:00

and those that don't have the

18:02

means are ultimately unable to. You

18:04

know, we've been talking about these

18:06

climate scores as a way to

18:08

help people find a home to

18:10

buy, but so much of our

18:12

wealth in America is tied up

18:15

in home ownership. I wonder... if

18:17

there's a flip side to this

18:19

where it's negatively impacting home values?

18:21

There absolutely is a negative impact

18:23

to having a high climate risk

18:25

score. I think we've already seen,

18:27

even through the integration of the

18:29

data on one of the sites

18:32

on redfin.com, they did an analysis

18:34

where they exposed half the people

18:36

that came to the site, to

18:38

the data. They didn't expose the

18:40

other half of the people to

18:42

the data and the people that

18:44

were exposed to the data. systematically

18:46

searched for lower risk homes. That

18:49

means the higher risk homes are

18:51

staying on the market longer. They

18:53

have a lower list of sale

18:55

prices, or sale to list prices,

18:57

sorry, on the market. And they

18:59

are losing property value because of

19:01

that. Ultimately, that makes its way

19:03

into the transaction record and depresses

19:06

the value of property value in

19:08

specific neighborhoods. Overall, how much of

19:10

a science versus an art is

19:12

it to factor in climate change?

19:14

predictions. Like, you know, there's geopolitics,

19:16

there's a human factor on top

19:18

of weather and all these external

19:20

events, like how do you do

19:23

that? Yeah, and it's an important

19:25

part of our of our analysis

19:27

because a lot of research that

19:29

exists today basically says, hey, sea

19:31

level rise is happening on the

19:33

coast. Millions of people are going

19:35

to move away from the coast.

19:37

But if you just if you

19:40

go back and model the data

19:42

historically and you layer in to

19:44

your point all this geopolitical information

19:46

all of this economic investment information

19:48

Really the the social political and

19:50

economic drivers of place why people

19:52

choose to live where that where

19:54

people end up living Those things

19:57

outweigh climate risk in a lot

19:59

of cases So the story is

20:01

bigger than just climate and in

20:03

fact the story of home buying

20:05

is bigger than any one single

20:07

factor. What that means for those

20:09

of us still considering opting into

20:11

the home ownership society and also

20:14

what to do if you aren't.

20:16

That's coming up after this break.

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Ambition. what to do working on a show

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30:29

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