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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 zoomers

5:21

and millennials who are looking to buy

5:23

homes in their 20s and 30s? Like

5:25

it just feels so, like, I don't

5:27

know, I just think of, oh baby

5:30

boomers, they got to get their house

5:32

for like $5 and now the rest

5:34

of us have been priced out and

5:36

they're aging in place? Like there's just

5:39

so much and I don't want to

5:41

just blame baby boomers. It's very easy

5:43

to do that. baby boomers, especially when

5:45

they've been so fortunate in the housing

5:47

market at large. But I think one

5:50

of the things you have to think

5:52

about too is the demographic side of

5:54

things and we had this huge wave

5:56

of millennials currently the largest living generation.

5:59

in the US. We knew that they

6:01

were going to be hitting their prime

6:03

home buying years around the turn of

6:05

the decade, 2010s, going into

6:07

2020, and there was just not

6:09

enough building happening after the Great

6:12

Recession to keep up with all

6:14

of that demand that was on

6:16

the horizon. So you had people

6:18

who were also starting to work

6:20

remotely, and so they wanted more space.

6:23

And it can be tough to

6:25

have an optimistic outlook for home

6:27

buying chances when all of these

6:29

forces seem to be conspiring against

6:32

younger generations in ways that older

6:34

generations just didn't have to deal

6:36

with. I think we're still feeling the

6:38

effects of the Great Recession in that

6:41

respect. A report released today

6:43

by the National Association of

6:45

Realtors paints a picture with

6:47

housing data. The Great Recession

6:49

hits, employment there fell 1.5

6:51

million. We have not recovered that over

6:53

all these years. We are still

6:55

short of around 500,000 workers in

6:58

construction. Another reason why you saw

7:00

home prices rise so dramatically is

7:02

not only were millennials competing against

7:04

their generation, but they were also

7:06

competing against baby boomers in the

7:08

market who had cash, who had

7:10

substantial savings, and were able to,

7:12

in a lot of cases, bid

7:14

up home prices. And we're seeing,

7:16

as you mentioned, baby boomers staying

7:18

in their homes longer than ever,

7:20

but eventually... they will be aging

7:22

out of the market, which is

7:24

a kind of a euphemistic way

7:26

of saying dying. And when you

7:28

look ahead to that, and substantially

7:30

less people competing for homes in

7:33

the US, you see household growth

7:35

slowing down as well, more deaths

7:37

from boomers combined with lower birth

7:40

rates over the next couple of

7:42

decades. And all that equates to

7:44

weaker demand for homes going

7:46

from 2030. through 2040. Yeah, can

7:48

you sort of run through kind

7:51

of what the home buying experience

7:53

and you know growth has been

7:55

like from the boomer side and

7:57

then sort of compare it to

7:59

how it goes now. Yeah, so

8:02

you think of a baby boomer

8:04

who maybe they bought a home

8:06

in 1994 and they hold on

8:09

to it for the life of

8:11

their mortgage for 30 years and

8:13

then they sold last year for,

8:15

if you look at typical home

8:18

price increases, a 305% gain. So

8:20

that's, you know, say they bought

8:22

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

8:25

than a million dollars by the

8:27

time they sell it. Whoo, okay,

8:29

you can retire with that. It's

8:32

a crazy return. It's really mind-boggling

8:34

to think about. And, you know,

8:36

the same millennial who maybe bought

8:39

a $300,000 home in 2010, they

8:41

might not see as substantial increases

8:43

over the next 30 years, but

8:45

they still got to reap all

8:48

the benefits of those crazy pandemic

8:50

years when home prices were rising

8:52

around 50 percent. And so you

8:55

bring that forward and you consider

8:57

all the gains since 2010. And

8:59

then you look at people who

9:02

are buying homes today and it

9:04

starts to raise questions about will

9:06

younger buyers today get the same

9:09

financial benefits of home ownership as

9:11

their predecessors. What would it mean

9:13

for the economy if housing wasn't

9:15

this go-to-way to build wealth? Like

9:18

if that was not the answer

9:20

for how do I get a

9:22

net worth? We don't know because

9:25

for so long it has been

9:27

looked at as the primary method

9:29

of wealth building. You think about

9:32

the typical elder millennial who's born

9:34

in the 80s, they saw their

9:36

wealth, the value of their assets

9:39

increased by more than 57%, just

9:41

between 2019 and 2022. And 41%

9:43

of that, 41 percentage points, was

9:45

attributable to real estate. Wow. So

9:48

it's a huge portion of people's

9:50

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

9:52

stuff because for every person who

9:55

that real estate is all concentrated

9:57

in this one asset that's not

9:59

diversified. It's not like it's in

10:02

the stock market and if one

10:04

of your one of the companies

10:06

in your portfolio tanks it's okay

10:09

because you're you spread out the

10:11

risk amongst multiple companies it's really

10:13

all concentrating this one thing that

10:15

can be threatened by a wildfire

10:18

or a flood and that can

10:20

be concerning for anyone looking at

10:22

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. This

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on Women Who Travel for more

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Adventures wherever you get your podcasts.

12:35

We're back, it's explained it to

12:37

me, and we're talking about whether

12:39

it's a good idea to buy

12:41

a house these days. It's 2025,

12:44

and climate change is definitely a

12:46

factor. So I called up Dr.

12:48

Jeremy Porter. He heads up research

12:50

into housing and climate for First

12:52

Street. They analyzed the climate risk

12:55

of homes and shared that analysis

12:57

with websites like Zillow and Redfin.

12:59

It really is the point at

13:01

which your standard American feels climate

13:04

change. I mean, we're seeing that

13:06

there's more hurricanes, breaking news, hurricane

13:08

barrels, slamming Texas, making landfall just

13:10

a few hours ago near that.

13:12

Transcane is now a hurricane in

13:15

the Gulf of Mexico, heading for

13:17

Louisiana. Whipping winds. torrential downpours and

13:19

communities submerged. Hurricane Debbie wreaking havoc

13:21

across the coast. This is the

13:23

city of Asheville in the western

13:26

mountains of North Carolina, 2,000 feet

13:28

above sea level and hundreds of

13:30

miles away from the nearest coastline.

13:33

But such was the force of

13:35

Hurricane Helene. We're seeing that there's

13:37

more extreme precipitation events. What we

13:39

saw in LA is that there's

13:41

more wildfires, more severe wildfires than

13:43

we've seen in the past. But

13:45

the way that it's affecting individuals

13:47

is that we're seeing more property

13:50

damage, more people be impacted by

13:52

these events directly to their properties

13:54

or to their communities. Fear and

13:56

concern is growing tonight as flames

13:58

light up the Los Angeles hillsides.

14:00

Firefighters are scrambling to contain several

14:02

major fires tonight. Just into our

14:04

newsroom, we are learning of another

14:06

fire erupting this time in Silmar

14:08

in the San Fernando Valley. Overnight

14:10

catastrophic damage reported as severe storms

14:12

slam the central U.S. A tornado

14:15

emergency in northeastern Arkansas, powerful twisters

14:17

destroying homes. In Missouri, an EF1

14:19

tornado winds nearing 100 miles an

14:21

hour, causing widespread destruction in the

14:23

town of Nevada. Homes and businesses

14:25

reduce to rubble. Lots of times

14:27

people live in places like Miami

14:29

or they live in Houston and

14:31

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

14:33

the weather's always been like this

14:35

in the area that I'm at,

14:37

and they'll say, well, what about

14:40

insurance? And they'll say, well, insurance

14:42

is killing me. And lots of

14:44

times people won't make the connection

14:46

that the reason insurance is spiking

14:48

is because there's more damages and

14:50

there's more payouts from the insurance

14:52

companies. That's really interesting. Our caller

14:54

is in her late 20s. Miranda,

14:56

she lives in the Twin Cities,

14:58

and she's considering whether buying a

15:00

house is the right decision for

15:02

her, what would you say to

15:05

someone like her? I think we're

15:07

at a point at which we

15:09

finally have data to help make

15:11

decisions like this. And I think

15:13

one of the biggest problems that

15:15

we've seen so far in the

15:17

way that climate and real estate

15:19

are being covered is that climate's

15:21

driving down the value of home

15:23

prices. It's sort of reversing the

15:25

trend that we've had in the

15:27

US for a century where the

15:30

American Dream was owning a property

15:32

and people have aspired to do

15:34

that. I think what we're seeing

15:36

though is that there's a lot

15:38

more nuance to the decision-making process

15:40

than simply avoiding home ownership because

15:42

of climate risk. I don't think

15:44

people should avoid home ownership. I

15:46

think it's still a good investment.

15:48

I think that... There are ways

15:50

to optimize that process now, though,

15:52

that do include taking climate into

15:55

account the same way we've taken

15:57

other factors into account in the

15:59

past. How do I, you know,

16:01

optimize the home buying process so

16:03

that I'm reducing the risk and

16:05

maybe I'm buying a home that

16:07

has, you know, a flood score

16:09

of a five instead of a

16:11

flood score of a ten. What's

16:13

an example of that? The quintessential

16:15

example in Miami has been sort

16:17

of this movement from parts of

16:20

the Miami Beach, sort of coastal

16:22

region into an area called Little

16:24

Haiti that's further inland in Miami-Dade

16:26

County. It's right along the railroad

16:28

tracks. It's the high point of

16:30

Miami-Dade County. And people on the

16:32

real estate market at that time

16:34

were asking their realtors for, you

16:36

know, three bedrooms, two bathrooms, two

16:38

bathrooms, two thousand square feet, and

16:40

a certain level of elevation. They

16:42

wanted to be a certain level

16:45

above sea level because of tidal

16:47

flooding events along the coast and

16:49

sort of the limestone bedrock in

16:51

Miami meant there really wasn't anywhere

16:53

safe. The water... got underground and

16:55

it rose up through the ground,

16:57

but high points, places like Little

16:59

Haiti became much more valuable than

17:01

they had been prior to this

17:03

because people were aware of the

17:05

flooding risk within that market. I

17:07

wonder how all of this plays

17:10

a role in like inequity and

17:12

gentrification and things like that, like

17:14

who's getting pushed where, who's having

17:16

the impacts of climate change. Yeah,

17:18

that Miami example that I gave

17:20

earlier, it was part of an

17:22

analysis back in. 2017 in 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

17:37

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, it does have consequences in

17:53

terms of... potentially giving those that

17:55

have the means to avoid climate

17:57

risk, the ability to do so.

17:59

and those that don't have the

18:02

means are ultimately unable

18:04

to. You know, we've been talking about

18:06

these climate scores as a

18:08

way to help people find

18:10

a home to buy, but so

18:13

much of our wealth in America

18:15

is tied up in home ownership.

18:17

I wonder if there's a flip

18:20

side to this where it's negatively

18:22

impacting home values. There absolutely is

18:24

a negative impact to having a high

18:26

climate risk score. I think we've already

18:29

seen, even through the integration of the

18:31

data on one of the sites on

18:33

redfin.com, they did an analysis where they

18:35

exposed half the people that came to

18:38

the site, to the data. They didn't

18:40

expose the other half of the people

18:42

to the data and the people that

18:45

were exposed to the data systematically searched

18:47

for lower risk homes. That means the

18:49

higher risk homes are staying on the

18:52

market longer. They have a lower

18:54

list of sale prices, or

18:56

sale to list prices, sorry,

18:58

on the market, and they

19:00

are losing property value because

19:02

of that. Ultimately, that makes

19:04

its way into the transaction

19:06

record and depresses the value

19:08

of property value in specific

19:11

neighborhoods. Overall, how much of

19:13

a science versus an art is it

19:15

to factor in climate change

19:17

predictions? You know, there's geopolitics,

19:19

there's a human factor on top

19:22

of weather and all these external

19:24

events, like how do you do that?

19:26

Yeah, it's an important part of our

19:28

analysis because a lot of research that

19:31

exists today basically says, hey, sea level

19:33

rise is happening on the coast. Millions

19:36

of people are going to move away

19:38

from the coast. But if you just

19:40

if you go back and model the

19:43

data historically and you layer in to

19:45

your point all this geopolitical information all

19:47

of this economic investment information Really the

19:50

the social political and economic drivers of

19:52

place why people choose to live where

19:54

that where people end up living Those

19:56

things outweigh climate risk in a lot

19:58

of cases Okay,

20:04

so the story is bigger than

20:06

just climate, and in fact, the

20:08

story of home buying is bigger

20:10

than any one single factor. What

20:12

that means for those of us

20:15

still considering opting into the home

20:17

ownership society and also what to

20:19

do if you aren't. That's coming

20:21

up after this break. They

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a good number. 100 million. That's

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how many data points Lifelock monitors

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Terms apply. You

30:05

can find her on her podcast, working

30:07

Ambition. what to do working on a show

30:09

about what to do after you

30:11

graduate. in If you're in middle school

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or high school and have thoughts about

30:16

what you want to do after

30:18

you get your diploma, to give us

30:20

a call, you get 1 -800 -618 us a call. 1,800,

30:22

618, This episode was produced by Hadi

30:24

by and Carla and who also runs

30:26

our show. It was edited by a

30:28

different Miranda Miranda

30:30

Kennedy, caller, with fact -checking by

30:32

Melissa Hirsch and engineering by

30:34

Hirsch, and engineering by Special thanks to

30:37

Bird daughter. Special I'm your host,

30:39

John Pinkerton. I'm Talk to you

30:41

soon. Glenn Bye! Talk to you soon. Bye!