11/17/2025
What to do about the housing shortage. Scott Galloway and crew give their opinion.
What Happens When Three-Quarters of Households Can’t Afford a Home
Somehow, the U.S. housing crisis is getting worse. New data revealed that the median first-time homebuyer is now 40 years old, the oldest on record, and first-time buyers accounted for just 21% of purchases last year — roughly half the historical average.
In 1985, the median home cost roughly 3.5x the median income. Today, the median home costs more than 5x household income.
Nearly 75% of U.S. households cannot afford to buy a home in 2025. That’s up from 56% in 2002.
The Trump administration is pitching a 50-year mortgage as the solution, claiming it would make ownership more affordable for younger buyers.
But that wouldn’t fix the underlying supply problem. The U.S. is short between 1.5 million and 5.5 million homes, roughly 3.7% of the current housing supply.
Congress has proposed some solutions. The “ROAD (Renewing Opportunity in the American Dream) to Housing Act,” a bipartisan bill that just passed the Senate, offers grants to communities that build more affordable housing, removes regulatory barriers to construction, and modernizes financing programs such as the Low-Income Housing Tax Credit.
The bill is now being considered in the House of Representatives before it is passed on to the president.
The private markets are working on solutions of their own. Modular construction involves building components of homes off-site and assembling them at their final destination.
This process reduces building costs by 20% to 30% and can speed up construction timelines by up to 50%.
Modular construction made up 5% of total U.S. construction and 9% of apartment starts last year.
The Trump administration’s 50-year-mortgage proposal makes no sense.
Take a $450,000 mortgage. For a 30-year mortgage at a 6.25% interest rate, your monthly payment would be around $2,800. Over the lifetime of the loan, you’d pay about $547,000 in interest.
Now, take a 50-year loan at the same rate. Your monthly payment would fall to around $2,450, so you’d be saving about $350 a month. Sounds great, right? Not really. In total, you’d pay about $1 million in total interest — roughly 87% more than the 30-year loan.
What we really need to do is make it easier to build. This is mostly a regulatory problem that we seem to be fixing. Most of this year’s New York City ballot measures were related to affordable housing, and they passed.
Mamdani also won the mayoralty, and he ran on the affordability crisis. But his solution of “rent freezing” doesn’t work. It disincentivizes construction, sending rents everywhere else up.
A good example of this policy not working is Argentina. One of President Javier Milei’s best moves was scrapping all the rent controls in Buenos Aires. Since he did that, supply has nearly tripled and rents have fallen by about 40%.
Sweden has demonstrated how modular construction can actually work. Nearly half of new homes are built in factories, and its housing shortages are now milder than in many peer countries.
Lindbӓcks, a leading Swedish modular home manufacturer, uses assembly lines to produce more than 25,000 square feet of housing per week (that’s the equivalent of 28 average-sized New York City apartments).
Regulatory process is also key to the Swedes’ success. The Swedish government lets builders figure out what materials should be used and how, and regulators check their work.
In the U.S., building codes mandate specific materials and methods. The Swedish performance-based system makes building more cost-effective and expedient, compared with our prescriptive approach.
