This video addresses the global housing affordability crisis. The speaker argues that the commonly held explanations—local policies or insufficient construction—are insufficient and that the root cause is the increasing concentration of wealth among the rich, driving up asset prices across the board.
The speaker explains that the increase in average mortgage size is directly linked to wealthy individuals pushing up house prices. While the wealthy don't necessarily directly buy large quantities of housing, they heavily influence the market. They do this either by directly purchasing houses or by lending large sums of money (through mortgages) to others who then purchase houses. The end result, in terms of house price inflation, is the same. Because the wealthy have access to substantial capital, their actions in the mortgage market contribute significantly to the increase in average mortgage size and, consequently, to inflated housing prices.
The speaker cites the post-World War II period as a historical outlier in terms of housing affordability. The explanation given is that this period was characterized by lower levels of wealth inequality compared to most of history. This lower inequality meant that assets, including housing, were more widely distributed among ordinary people, resulting in greater affordability. The current situation, marked by increasing inequality, reverses this trend, with the wealthy controlling a larger share of assets and driving up prices beyond the reach of ordinary people.
The speaker argues that simply building more houses is an ineffective solution to the housing crisis because it fails to address the underlying issue of wealth inequality. Instead, the speaker advocates for policies that directly tackle wealth inequality, such as taxing the wealthy more and taxing working people less. The core of the proposed solution is to redistribute wealth and resources more equitably, thereby reducing the competitive advantage of the wealthy in the housing market.
