Taking Stock: How evicting an 87-year-old woman in Spain disrupted the debate on housing

Rahul Tandon (0:00)

I'm Rahul Tandon, welcome to Business Daily. This was the week that the owners of the world's most valuable companies had lunch with President Trump.

Jennifer Pak (0:08)

Dario is great.

Priyanka (0:10)

Whatever he says is okay, be careful.

Rahul Tandon (0:14)

I love that bit there where he tells Dario Amode to be careful with what he says. Taking stock with me today are Justin Wolfers from the University of Michigan, joining us from Ann Arbor, and Jennifer Pak, NPR's China correspondent, staying up late for us in Beijing. It was pretty apparent there who was in charge, President Trump in charge of all those powerful people. I have to tell both of you, I'm in charge today. Are you happy with that? Yeah, of course. Oh, there we go.

Let's see, let's see. Justin, I'm skeptical of you on this one, I think. I think you may well not do that, but let's have some fun on these stories. I'm sure both of you may have seen pictures of those protests that were broken out in Spain this week, where the government in the end approved new housing measures to deal with the country's housing crisis. It's including a potential ban on evictions till 2030 and a ban on investment firms buying houses. It comes after an 87-year-old woman was evicted from her home in Madrid. That led to those huge protests. What's it like where both of you are when it comes to housing? Are there real problems there? I know in New York, Justin, of course, the mayor there, Mayor Mondani, was elected on rent controls, one of the big parts of his campaign. Is it still a big issue in the US.?

Justin Wolfers (1:27)

Yeah, so the US is really, as always, barely one country, it's many countries. So if you look at the big cities, particularly on the coasts, like New York or San Francisco or LA or Seattle, you have very much the same dynamics you're describing. Because I love to talk about economics. Let me explain the economics of it, which is you've got a fixed number of houses and it's very hard to build more houses or apartments. Regulation often gets in the way. And so when you've got a fixed number of houses, but in a growing city, you create a housing crisis. The flip side is where I live, which is affectionately known as the middle of nowhere. Not only that, I live just outside Detroit, which used to be one of the world's great cities and hasn't been in generations. So what we have here is a whole lot of houses we inherited from when it was a thriving metropolis, but not many people because there's not many jobs. And so the price of housing in some parts of America is awfully close to zero.

Jennifer Pak (2:20)

That's kind of the same picture in China as well. If you're a homebuyer versus if you're a renter. So same thing here in Beijing, Shanghai, Shenzhen, Guangzhou. You know, the housing prices across the country has gone down. But in these MAGA cities, the prices went down, but that still means it's unaffordable for an average wide collar worker. Even if there's a couple together earning money, it's still really hard to afford a mortgage without the bank of mom and dad and grandma and grandpa to help you with the down payment. Rents are also coming down, but of course salaries have not gone up, so people are struggling to pay that. And then of course, if you're in smaller areas, the housing prices have gone down. I mean, over the last five, six years, we're talking about 30, 40 percent cut. And that's really difficult because if you're thinking of buying, you don't know when you should because the housing prices are still going down.

Rahul Tandon (3:10)

Just put some figures here on the scale of the problem. According to the UN, the world needs around 96,000 additional affordable and accessible homes every single day. And now 44 percent of households globally spend more than 30 percent of their income on rent. I've been speaking to three young people who cannot afford to buy and are living with their parents. There's Bemi in Nigeria, Adam in the UK and firstly Priyanka in India.

Priyanka (3:37)

I tried living in the other cities too and the prices are going higher. For example, if I was paying 20,000 rupees for a two-bedroom house earlier, I am actually paying close to 35,000 and 40,000 now. So it has doubled over the years.

Rahul Tandon (3:53)

Adam, is that what you've seen as well? Rent just going up much more than your salary is going up.