P
eter Thiel, a billionaire venture capitalist and co-founder of PayPal, has been sounding the alarm on America's real estate crisis. He warns that the issue is a "catastrophe" for young Americans, but also sees a "giant windfall" for one class of baby boomers. Thiel draws upon the insights of 19th-century economist Henry George to highlight the problem.

    The core of the issue lies in the "extremely inelastic" nature of real estate, particularly in regions with strict zoning laws. As cities grow, housing prices skyrocket, while salaries don't keep pace. This creates a massive wealth transfer from young people and lower-middle-class families to older homeowners and landlords.

    Thiel notes that this problem is not unique to the US, but is also playing out in other "Anglosphere countries" like Britain and Canada. The surge in US home prices has been alarming, with a 50% increase over the past five years. This has significant implications for prospective buyers and renters alike, who are struggling to keep up with rising costs.

    Thiel argues that the issue boils down to supply and demand. As cities grow, but new housing isn't built due to zoning laws, prices skyrocket. This is an "incredible wealth transfer" from young people and lower-middle-class families to older homeowners and landlords.

    Federal Reserve Chairman Jerome Powell has also highlighted similar concerns, noting that the US is on track to continue having a shortage of housing. A June Zillow analysis estimated the US housing shortage to be 4.5 million homes as of 2022.

    To get on the housing ladder, potential buyers can take advantage of lower interest rates by shopping around for mortgage quotes from multiple lenders. Tools like the Mortgage Research Center can help make this process easier. Alternatively, crowdfunding platforms like Arrived allow average Americans to invest in rental properties without a hefty down payment or property management responsibilities.