Daily Dose of English 115
The Housing Market
Daily Dose of English 115
Intermediate
Hey everyone, my name is Ben and you're listening to A Daily Dose of English. This is a short, simple podcast that you can listen to every day to improve your English. You can find the transcripts for all episodes and more on benslanguagelab.com. I'm glad you could make it today. In this episode, we're going to be talking a little bit about the housing market. This isn't the most interesting topic of discussion for a lot of people I know, talking about the economy and things like that, but I find it really, really interesting because it talks about society as a whole, or at least specific societies or parts of the world. And I'm specifically talking about the housing market in English-speaking countries because this is what I know most about. I've seen some things in Mexico here, but I definitely don't know nearly as much as I do about the housing stuff that's going on. And so I want to talk a little bit about the housing market in mostly the United States, but I'll maybe touch on other countries if I have some time, to maybe give you a bit of an idea of what's happening for the average person in the US, especially the average young person. So first, the housing market refers to the entire economy or market of buying and selling houses or homes, as well as apartments, condominiums, things like that. And so it has to do with where people live, really, which is, I think, the biggest root of the problem. These are places that people live, they have their lives in there, but they are bought and sold and traded on a market in a way that a good or a service might be. And that is sort of the root of the problem, is that houses are treated as investments and not places to live. So the US is known for being one of the wealthiest countries on earth, and that is absolutely true, but a reality is that a lot of that money is concentrated into the upper classes. So the richest people have most of the money, and it's also an expensive country to live. And so just because people in the U.S. earn more money, right, a relatively normal income, like for somebody in their 30s, is like $80,000 a year. That's not that crazy. If you go to a lot of other countries, that's a ton of money, comparatively. However, the purchasing power of $80,000 per year is actually not that high, especially if you wanna live in a city like San Francisco or New York. Those cities are really expensive. In order to be kind of comfortable in San Francisco, for example, you're not really thinking about money, but you're also not spending a ton, you have to earn over $100,000 in San Francisco. It's just really, really expensive. Rents are really expensive, especially. And that is the big thing with the housing market. Renting and buying a home in pretty much the entire country is expensive. Many normal houses cost a million dollars. And that's just how it is for the US right now. And in some parts of the country where there's not very many people, a house can cost maybe only $400,000, $500,000. But that's usually in places where people don't want to live, which is sort of too bad. And a lot of this has to do with what we call speculation or essentially investments where people are buying houses to sell again or to go up in value and not necessarily just to live in. But that's not always the problem, right? A lot of people, when they buy a house, they want to get money out of it as it is now, right? So rent, for example, but there isn't enough for everybody to be able to live somewhere. And so there's a lot of demand for houses, especially in those popular cities like San Francisco, New York, things like that. Their demand is really, really high, but the supply of houses is pretty low. And that also makes the rent go way up. So for example, I'll talk about Portland because that's where I'm from and I know a little bit more about that. But a pretty cheap rent for one person, if you can get a studio apartment, a studio apartment means it's all one room, so your kitchen, your bedroom, everything is in one single room. It's basically this one big room with a bathroom. That's called a studio apartment. They might have a second room, like with a kitchen, but like everything else is just one room, right? They're basically one big room. A cheap studio apartment in a part of town that's not that nice will be at least $1,000, at least, per month, that is, $1,000 US per month. But if you want to have a single bedroom, you're looking at at least $1,200 or $1,300 a month. Or you have to have roommates or a tiny, tiny room. So like rather roommates are where you have your own room and then there's a shared space like a kitchen or whatever. And other people live in a house and they have their own small room and they share your kitchen and whatnot. It's pretty common for people to live in with three other people or two other people in a single apartment or a single house and still have to pay five, six, $700 a month for a small room. And that is the big problem. Maybe that's okay for a person in their 20s or 30s that is working full-time, but trying to get a house as a family and have your place to live is immensely expensive. It's so expensive. Mortgage rates are really high. The mortgages is basically when you go to the bank and you say, I wanna buy this house, but I don't have a million dollars. If I give you, let's say, $50,000 now, will you buy the house and then I'll slowly buy it from you over the next 30 years? Or 50 years, but usually it's 30 years. And the bank usually says yes, if you can afford it, right? Because this is a very common thing. And so that's called a mortgage. If we go back to 2008, there was the huge real estate crash in the US. There's a pretty good movie, a really good movie actually, called The Big Short, which goes over this. But it's basically where banks were giving bad loans to people who weren't going to be able to afford it to buy really expensive houses. And then they were, instead of just keeping that and saying, okay, we'll take on this risk, they were selling it to other people and saying, oh, it's super safe, it's a house, right? What are they not gonna pay? It's super duper safe. And then people started not to pay, hundreds of thousands of them, millions of them, which essentially caused the economy to crash in a big way. There's a lot more to it, I'm way oversimplifying, but that's what happened there. And something's not similar is happening, but it's in a similar vein, a similar thing where houses are getting really expensive, mortgages are getting expensive as well, and it's getting really difficult to buy a house. And so there's a lot of, because there's not enough supply, it's really difficult to build new ones and find a place to live. and that sort of thing, because it's all becoming this essentially other market of trading goods, instead of treating it like a thing that somebody needs, right? You need a place to live, right? Um, there's way more problems, but I'm sort of approaching my 10 minutes and I feel like I'm getting into the weeds too much. Um, but I want to touch on something that's really important for the U S and other countries that are a little different. So we just talked about a mortgage and what's most common in the U S is a 30 year fixed rate mortgage. Fixed rate means that you. you pay the same amount for the entire 30 years. So if you enter into a mortgage, you start a mortgage, your rate's not gonna change. You're not suddenly gonna have to pay a bunch more money because the economy changed, because the number that you pay is basically based on when you bought the house. So if you bought a house in 2018, your rate is fixed in 2018 numbers. And in before, what interest rates, this basically number, was much lower. But now they've gone up because of all the COVID spending and tons of money going to come into the economy, like new money, like printed money. And so the rates have gone way up. And so people nowadays don't want to sell their homes and buy a new one. And people also don't want to buy a home now because interest rates are really, really high. And so they're going to end up spending a lot more money that they probably shouldn't be because interest rates are really high. And so that's a reason why the US is sort of, it's really difficult, because interest rates are high, so people don't want to sell and get a new interest rate for their new house, because it'd be way more expensive, and new people can't buy. But in a lot of other countries, like Australia, the UK, and Canada, they don't have fixed rate mortgages, which means that people that entered into a mortgage in, let's say, 2018, are suddenly going to have to change their mortgage rates to the suddenly bigger number. So there are millions of people in those countries who bought a home a couple of years ago, let's say five-ish, and they were paying a certain percentage of the whole amount for various interest levels or whatever. Let's say they were paying $1,000 a month, right? But then they're about to hit this huge interest rate change and suddenly have to pay $1,500 a month or a bunch more money every single month because of this non-fixed rate. And so there are thousands or millions of people that are trying to buy a home that suddenly are going to have their amount they have to pay go up a lot every single month, and they're not earning enough. And so these are causing a bunch of problems pretty deep into the economies of a lot of pretty wealthy English-speaking countries. Which might sound fine, right? Whatever, it's a rich country, right? But a lot of the individual people are barely making enough to pay their rent now and it's about to go up. Which is pretty difficult and has a lot of different effects on the economy. add in a bunch of other things of inflation, shrinkflation, just the growing cost of food and living, like everything is going up. And so sometime, like maybe the next time that you hear or see something like this, think about like the regular person who is just like, Shit, I can't buy enough food and pay the rent and pay off my student loans and all this, even though I'm making $70,000 a year. But anyways, I think I've gotten pretty deep into this. Hopefully you understood a little bit and learned a couple of new words, but I thank you for sticking with me through this episode and I'll see you again in another episode of A Daily Dose of English. See you then, buh-bye.
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