Drew & Jonathan Scott: Housing affordability crisis is worse than ever

All right. When I need to know anything about the U.S. housing market, I drop a line to the Property Brothers, Drew and Jonathan Scott. Good to see you gents again. Always good. I appreciate it. Welcome to Yale Finance Headquarters. Last time we spent five minutes. Talk about toilets, boys. Well, you spent five minutes on the toilet. We kept trying to change the subject. That's true. Yeah, yeah. Did you get our little gift? I did. I'm going to after this. I'm actually I sit right over there. I have it on my desk and I didn't want to put it on here because I'm like, it's really super weird. Yeah, it's weird to join up. That means we're specialty. You are special. You guys like super nice. You guys have a new show pressure. Property still cranking these things out like they're nothing. You know, it's it's a time where Jonathan and I, you know, our faces are fading fast. So we're like, give me all this possible. Yeah. So we've done over a thousand renovations. We've done about 600, 650 episodes of our shows. But property goes under pressure as a whole other level because it's so relatable. The housing crisis and the pressure everyone is under when it comes to finding a home that actually works for your family. And we're kind of showing it almost doc style, where a lot of the stuff that used to happen off camera, behind the scenes, we're just showing it. You see everything. You see the crew. You see like last minute, you know, butting of heads. You see everything. The stories are so impactful as well and emotionally connecting for the audience because there's a lot of things you can relate to. For example, our first episode is a family that lost everything in the fires in L.A. and the fire. And so this is them trying to build back their lives. They literally lost everything of theirs from their home. We have other families that can't afford to live where they work. And so family members have moved together with their kids to have two families in one house to try and be able to afford where they want to be. Every story is very, very unique. But I love it because it's so relatable. I'm glad you mentioned the housing affordability. There's I live in Long Island and there was a house, a tiny house that just sold for three hundred thirty thousand dollars. It has no rooms. It is as you walk in. It's just this blob of a thing. I mean, that's what we're looking here. That's a real crisis. And I wish people would take it more seriously, because every time, you know, we're talking about affordability, we're talking about the housing shortage. And then a year later, we're talking about it again, except the stats have gotten worse. And so people need to start figuring out at the government level. We need to figure out financing programs that incentivize people to build affordable housing. And then at the everyday level, people need to understand affordable housing is good for the city. We need it. But the NIMBYs are the ones who block a lot of it and say, I don't want another apartment building or I don't want to have low income housing. They don't understand that low income does not mean that it's, you know, it's drugs and, you know, you know, crime and things. It's nurses and teachers and police officer. It's all this work in a space where they can live and work in the same community. But the stats are saying like this is in modern history, this is the worst for affordable housing. This is the worst it's ever been for first time home buyers. And you see first time buyers are 25 percent or less of purchases right now. So it's, you know, I saw a stat that was crazy. It said that the new median age in America for a first time buyer. Sorry, it's not first time. It's fifty five. Fifty five. Really? Fifty six. So the new median age for the average buyer, first time buyer, but the average buyer is fifty six. Like we hear that is crazy. We hear so many different roadblocks that the houses cost too much. There's not enough supply. You mentioned some of the challenges from the government perspective. What is the biggest challenge? Is it the government roadblocks? Supply is the biggest problem. Supply. And then the reason for supply is a number of things. You know, there's another stat that was saying that, you know, there are so many. I can't remember what the surplus is, but there's so many houses in the country that the government keeps saying, OK, well, here's how many houses we have. But a huge portion of that is people who own second and third homes and they just leave these extra houses empty or these apartments empty. They got to sell these things that. Well, it's fine if somebody has the means and wants to have something else, but that shouldn't that shouldn't come out of the inventory that we need. We're about four million houses short in the country from a healthy supply of houses. More people are renovating right now because they can't afford to get a new place. They can't even afford to sell their house and find something new. And so, you know, renovations have gone up. I think it's up 30, 30 or 40 percent or more. However, with people with their properties that they're owning, I think that the hardest thing, the supply side rates don't matter. Rates have come down, which is great. It makes people excited to buy. But if you have no supply, the rate change doesn't make that big a difference. So we need to solve some of these issues. Building more density, the government side of it. If we have the process for getting your permits and getting things in place is a little bit easier. Incentives for developers to do affordable housing is a huge thing. We come from Canada, great incentives up in Canada that really help developers dive in here. We don't have any of that. And also, I think something that would be great is everyone's so scared of A.I. and what A.I. is going to do. If A.I. could shorten the permit timeline, that alone would make A.I. worth it. You know, you could do everything else. If everyone wants to join me on my crusade to work with the utilities and the cities to reduce the weight on all of those services. There are so many projects where I have the project either ready to go and we're waiting for six months or eight months or even a year just on permits. Or the only exception actually was rebuilding my fiance's family home in the Palisades of Bern. My permit was approved in less than three weeks. They have they're so focused on making sure they can help people build back that they've created pop up permit offices. But everywhere else, it's either the utilities or it's the cities that are delaying these for no real reason. So if I'm I'm fifty five and I want to buy my first house today, what advice would you give me? I'm not fifty five, to be clear. You look great. Yeah, no, I mean, so it's tough. And again, on property under pressure, you see this as well. People are finding creative ways to get into homeownership that they never thought they could get into before. But I think the main thing is understanding what your needs are. If you need to be in a certain area, the tough thing for a lot of families, if they have to be in L.A. or New York because of family or whatever reason, their job. That's the tough thing. There are other people that can float and be somewhere else and go somewhere that's a bit more affordable, that you can get more bang for your buck and it helps. I know we're leaning in on the government side to try and see what we can do. You know, we own a modular company for building homes, and that's one way to bring the price point down. But the thing I find very annoying is there are a lot of people out there, even after the fires in L.A. or just in general, the affordability, they're taking advantage of homeowners. For example, when the Inflation Reduction Act came in, it had a whole bunch of incentives to help families create a healthier home environment, electrify their home. But a lot of the service providers are like HVAC providers. For example, they were just upping their prices by what the difference of the rebate was, and therefore there's no benefit to the homeowner. It just all goes to the manufacturers or the service people. So I should show I should not buy that overpriced tiny home. That $300,000 one room house, not a given. You can move in with us. I appreciate that. What what mistakes you're still seeing people make? Making. So right now, it is very important that people make smart financial decisions when they're buying or renovating a home. And some people will get so emotionally charged that they'll run in a direction, they'll do something that they're never going to recoup that money if they have to sell. There's something I always say, there's two types of renovations that you do. There's renovations that will actually increase the value of a home and you will get more money for that thing that you put in when you sell. There's other stuff that it may help you sell people really like it. It looks pretty, but you're not getting any more money. Yeah, I would say don't over leverage. There's a lot of people that are putting themselves a bit too thin. If you're looking at getting a place, you know, a lot of people are going from a house into a condo because they can't afford a house. But in reality, if you can get a house with a rental suite, that the money generated from the rental suite should be able to offset more than what you end up paying with your condo, along with your HOA fees and everything else. So look for a creative solution like that. Or is there somebody that you could live with? Is there somebody that you can get into a place where you each have your own? I'm not moving back in with my mom. I can't do it. It's like it has not come to that. Oh, my God. Jesus. No way. No, no. So what? You know, if you look at you look at Ford, you're like, what are the biggest trends you're seeing in the renovation market? Well, the last time we talked, you were talking about how we're going to have to remodel our homes at some point because of the baby boomers. We have to add railings in various parts of our home. Is there something else you guys are seeing now? If we do, in fact, get a home? I mean, the big thing I'm seeing mostly is people want specialty rooms at home. So instead of having to get a gym membership and go to a gym all the time, they want to have a home gym or a Zen zone or a sports facility, a cold plunge. So we're seeing all of these requests for spaces that used to be a spa or a gym or somewhere else. People are including those at home. Even because people don't want to be spending their monthly expenses are craziest through the roof. That's one of the biggest issues as well. Right now, when it comes to people living somewhere, they can't afford the monthly payments. So if you can streamline any of that to have the enjoyable life, the entertainment side of it at home, great. But also, we're seeing a lot of people who are getting a place where they can add they'll get a two bedroom home, but add a third bedroom. And we have that one of our episodes as well. We created a bedroom for the kids because they were cramped in their home. So, yeah, I think think of what's important to you, what you're looking at. I know you don't live with mom. No, how about what else would you squeeze into your house? I like the Zen room. Yeah, I like the Zen room. I want ideally I walk in, there's a cold plunge, a sauna and I don't know, maybe a bunch of solo speakers in your kitchen. You want it all in one spot. Yeah, just follow. I want to sit on the toilet. A smart toy. Yes. With my son. Right. I'm going there, guys. Yeah, I go in there. Since we last spoke, I think you are now on a Canadian hockey team. How is that like different than what you do? How do you renovate a hockey team? Yeah, right. Exactly. I mean, it's it's business is business in many ways, but it is very different. It's the Vancouver Giants are a major junior team in the CHL and the Western Hockey League. And Michael Bublé and I are owners. He got me into that. We're both from Vancouver and it's sort of supporting our hometown. We love it. I mean, it's it's I've always been passionate. Jonathan would make fun of me over the years. I'm such a sport nut. And so to now be a part of owning a franchise is so exciting for me. And these kids, they're they're they're one level below pro. I mean, some of them, they're going to have two of our kids are probably going to go top ten in the NHL draft this year. Oh, and they're all teenagers. It's just crazy to me to see the talent level that is at that. I saw a post on X recently. Lastly, that they might want to bring back the Expos. Who doesn't love the mantra? I mean, come on. Why not? Maybe you get involved with that. You know what I want? I want to bring back the we'll be bringing back the Grizzlies, but I want an NBA team in Vancouver. Yes. So that's I'll rally for that. We'll get basketball back. All right. Well, good to see you guys, as always. Thanks for always making time for me. And good luck on the new show. Love the name. Love what you guys are doing. I love that you're not like renovating homes. You're taking people through the buying process. You know what I love? This stuff is hard, man. I love mom. Say hi to mom. She got hit hard in this interview. I really think mom's great. She always wants she already likes you guys. You don't have to do that. All right. Good to see you guys. I appreciate it. Thank you.