Tom Bilyeu's Impact Theory
Housing Crisis and Toxic Inequality: Why the American Dream Is Stalled for Millennials | Morgan Housel On Impact Theory w/ Tom Bilyeu
29 Jan 2026
Chapter 1: What are the main social problems linked to housing affordability?
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Chapter 2: How does housing impact marriage and mental health among millennials?
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Chapter 3: What historical cycles of inequality are discussed in the episode?
A young person, a young couple in particular, cannot afford to buy a house. They are statistically less likely to get married, less likely to have kids, have higher rates of alcohol abuse, have lower rates of mental health, and go down the list of those problems. A level of the population is going to become homeless.
Looking at history, you will see over and over there's just a cycle where the inequality gets to the point where people get so resentful they start killing.
A third society wakes up and says, screw this. What benefited one generation 50 years ago has by and large been stalled out today.
Morgan Housel, welcome back. Good to see you again.
Chapter 4: Why is the current housing shortage a choice made by policymakers?
Thanks for having me back. Always a pleasure. You and I are sharing a pain point right now that I think is incredibly consequential. So I want to start with a very simple question. Why do you think that housing is the single most important social problem that we could solve right now?
The first I would say is there are so many social problems that don't seem connected to housing. But if you actually dig into it, they are downstream of housing.
And so at the high level, most of the evidence will show that if a young person, a young couple in particular, cannot afford to buy a house, they are statistically less likely to get married, less likely to have kids, have higher rates of alcohol abuse, have lower rates of mental health, and go down the list of those problems. Buying a house...
For better or worse, socially is a very important box to check of I am stepping into adulthood.
Chapter 5: How do NIMBYism and YIMBYism affect housing development?
And if you don't, if you're unable to do that, you feel kind of like you are just suppressed into a lower level of not yet adulthood. And it can kind of stem from there. But you could take this in several different directions. Almost unavoidably, If housing gets very expensive and some people can't afford it to buy a house, you're just pushing people on the conveyor belt of you can't afford it.
A level of the population is going to become homeless. It's unavoidable if there's not enough homes. Of course, that's how it works. What do so many homeless people do for a little bit of pleasure and comfort when they find themselves homeless? heroin.
And so you can draw a straight line, a straight line from housing affordability to drug crises, to fertility crises, to decline in marriage, to all of these things from there. And I think what can be so aggravating about this problem, most problems in economics are very complicated.
Chapter 6: What are the popular policies that fail to address the housing crisis?
And so if we're talking about how do we extract more oil from the ground, like it's a hard problem. So there's a lot of variables in there and there's technological challenges that make things much more difficult. How to bring down housing affordability is the simplest thing in the world. It's we don't build enough homes and we need to build more.
And we're probably short in America something like three to five million homes that we should have right now that we could build. We have enough money to do it. We have the supplies, the lumber, the windows to do it. We could get this done and we don't.
Chapter 7: How does inflation relate to the current economic divide?
And so it's one of these problems that like if you really get down to it, it's a choice. that politicians and regulators and communities at large have made that we don't wanna build more homes. Why not? I think if it comes down to it, there is the battle between NIMBYs and YIMBYs. Yes in my backyard, no in my backyard.
And I think it's not too simplistic to say that the group of current homeowners, particularly if you've owned a home for a long time, like it when the value of those homes go up, makes you feel wealthier. I'll get into a second why they're not actually wealthier. And if you build more homes, the price will go down. That's basic supply and demand.
And then if the value, if your parents, your grandparents own a house and the value's gone up a lot and you build a lot of new homes and the price declines, they don't like it.
Chapter 8: What solutions might help reverse toxic inequality in housing?
And some of them, if they bought recently, might find themselves underwater and potentially owe more on the mortgage than the house is worth. and people don't wanna go down that route. Now I said, people feel wealthy when the value of the house goes up, but they're not actually wealthier. And now I'll show you what I mean.
Let's say you buy a house for 300 grand, and 10 years later it's worth 600 grand. A lot of people in that situation would say, I just made $300,000. I've never seen that much money in my life, this is amazing. But you didn't actually make anything. Because if you sell that house for 600 grand, you have to go buy another house.
And the price of that other house also doubled in value over the last 10 years. That other house, if it's an equivalent house, also costs 600 grand. You didn't make anything. And so it's this illusion of getting wealthier, for existing homeowners getting wealthier. But if you actually dig into it, it's just kind of a psychological trick. They're not actually getting wealthier.
The only exceptions to that is if you sell and you relocate to a cheaper area or you downsize. Then you can make money. But most people do neither nor. They're not actually doing that.
And so I think if you tie that all together, we are inflating the values of homes almost intentionally to keep current homeowners happy in a way that gives them the impression of getting wealthier even if they're not. And we're doing that at the cost of younger generations who, because home prices have risen, can't afford to take their first step into it.
Yeah, to me, this is the nightmare of all nightmares for all of the reasons that you just said. But I think it also plays into another thing that I become increasingly obsessed with, which is inflation is manmade and inflation is simply an unbalanced budget where the government says, oh, we have a shortfall. And so we're going to print money.
I won't get into the mechanisms right now, but certainly my audience is used to hearing me talk about that. We're gonna print money and that causes the value of each dollar to go down, which creates the illusion of asset prices going up. Now some asset prices really do become, or some assets really do become more productive and therefore actually are worth more.
But I would say on balance that you're really tracking inflation. And so you put people into this position where the K-shaped economy is born out of people don't understand assets. They don't understand asset ownership, full stop. Most people couldn't even tell you what assets are.
And so they are in a position now where there is a way to save yourself from that unbalanced budget, from that inflation to get into owning the stock market or whatever. But as of right now, 10% of people on 93% of the assets. So just the math tells you that the vast majority of people don't put any meaningful amount into their 401k or whatever.
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