Is the dream of homeownership feeling more like a distant fantasy? Ready to cut through the chaos of today’s wild housing market? Tune in to today’s episode as Tori sits down with Redfin’s Chief Economist, Daryl Fairweather, to unlock the secrets of buying smart in 2024.
From the effects of the pandemic on housing prices to the critical role of government policy in addressing affordability, this conversation uncovers it all. Daryl also discusses innovative strategies for first-time buyers, the impact of climate change on homeownership, and the surprising trends in migration that are reshaping cities across the US. Whether you’re actively looking to buy a home or just want to stay informed about the market, this episode is packed with valuable information that you won’t want to miss.
Key takeaways:
- Current state of the housing market: The housing market is described as being in a “deep freeze” due to the lingering effects of the pandemic, the initial stimulus of low interest rates, and the subsequent rise in interest rates combined with inflated home prices. This situation has exacerbated wealth inequality between existing homeowners and aspiring buyers..
- Hedge funds, institutional investors & the government’s role in the housing crisis: The former entities are actively contributing to escalating rents and depleting the availability of affordable housing. Daryl emphasizes the need for government intervention to promote housing affordability, criticizing the lack of strict policies on single-family neighborhoods and the overall shortage of affordable housing.
- Impact of migration trends: The migration of individuals from expensive coastal cities to more affordable regions is driving up housing prices in these previously affordable areas.
- Impact of climate change on housing: The growing risks of wildfires, floods, and storms are impacting insurance rates and property values, prompting buyers to factor in these risks.
- Getting creative with home buying & solutions: More and more people have taken to strategies like teaming up with friends or family to buy property and are taking advantage of down payment assistance programs that help first-time buyers enter the housing market. Not only that, but increasing the housing supply, with a focus on smaller, more affordable units such as accessory dwelling units (ADUs), condos, and townhomes, is a critical solution to the affordability crisis.
Notable quotes
“A lot of the costs of climate change are going to show up as housing costs when insurance rates rise, or property taxes go up, or these other expenses increase.”
“If you see something at the local level on the ballot that’s about housing development, vote for the housing. Think about what is actually beneficial to the people who are going to live in your community long term, and what would be best for society as a whole, instead of just fearmongering about more people being in an area. We want more people, we want more neighbors.”
“There’s fundamentally a lack of supply. There’s a scarcity of housing, which is a real problem considering housing is a basic necessity. It shouldn’t be something that is scarce, that is speculated on, that increases in price every single year, year after year.”
Episode at-a-glance:
≫ 04:18 Guest introduction
≫ 04:54 Current state of the housing market
≫ 06:27 Behavioral economics and housing trends
≫ 08:37 Challenges in the housing market
≫ 19:13 Government’s role in housing affordability
≫ 23:54 Reevaluating homeownership goals
≫ 26:10 First-time home buyer programs
≫ 27:39 Psychological impact of homeownership
≫ 31:25 Creative home buying strategies
≫ 36:57 Climate change and housing
≫ 39:24 Migration trends and housing affordability
≫ 45:21 Policy and housing affordability
Daryl’s Links:
Daryl’s upcoming book: Hate the Game: Economic Cheat Codes for Life, Love, and Work
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Meet Daryl
Daryl Fairweather is the chief economist of Redfin. Her insights have been featured on 60 Minutes, CBS Evening News, as well as in the New York Times and Washington Post. Prior to joining Redfin she was a senior economist at Amazon working on problems related to employee engagement and managing a team of analysts. During the housing crisis, Daryl worked as a researcher at the Boston Fed studying why homeowners entered foreclosure. Daryl received her Bachelor’s of Science from the Massachusetts Institute of Technology and received her Ph.D. and Master’s degrees in economics at the University of
Chicago where she specialized in behavioral economics.
Transcript:
Daryl Fairweather:
… was actually beneficial to the people who are going to live in your community long term, and what would be best for society as a whole instead of just fear-mongering about more people being in an area. We want more people, we want more neighbors, I think is a mentality to have. And if you want to be proactive about it, that could also mean showing up at your city council to say something positive about wanting more housing going in your neighborhood, because there are lots of people showing up to complain about housing being developed.
Tori Dunlap:
Hi, Financial Feminist, welcome to the show, I’m excited to have you. For any new listeners, my name is Tori. I run Her First $100K, which is a money and career platform for women. I believe I was put on this earth to fight for your financial rights. I am an author as well. I have a New York Times bestselling book called Financial Feminist, it’s the same title. And we have a whole bunch of information, both in the backlog of our podcast. We have over 150 episodes that you can go listen to. We talk about everything from Roth IRAs to sex work, to managing an inconsistent income, to the mental load and emotional labor. We talk about it all. So, [inaudible 00:01:07] good, you already knew that. Welcome back. I am in New York right now. I am back in my favorite city in the world. I am seeing friends.
I am going to shows, I am living my best life. I saw Illinois last week, a couple nights ago. For those of you who don’t know, it is based on Sufjan Stevens’ very infamous 2005 album, and it is one of the most moving shows I think I’ve ever seen on Broadway. Oh, what did I say, Sufjan? We can keep it. No, we can keep it. Kristen just told me that, what is it? Sufjan? Oh, I said Sufjan. I was so close. It was a gentle J. Sufjan, Sufjan Stevens. I’m so sorry. And as Call Me By Your Name is my favorite movie, I feel like I’ve committed a Cardinal sin here. Sufjan Stevens, thank you. It is choreographed and directed by Justin Peck, who did the choreography for West Side Story, the new one recently, directed by Steven Spielberg. It is a dance show, which I did not expect going in.
And I’m going to be honest, I was sitting there for the first song or two being like, oh, this is not what I expected. Nobody is singing on stage, even though they have singers and they’re incredible. But I was just like, this is not a real musical, this is not what I expected. And then they brought out a tap dancer and I was like, I’m in. I’m in, you’ve sold me. I was joking with Elias, who is the co-founder of Treasury and a good friend of mine, that this was how I was feeling. And he was like, “Yeah, they were backstage like, ‘Ah, we got a win her over. Call in the tap dancer.’ And somebody else was like, ‘there’s no tap in this show.’ ‘Well, there is now.'”
So if you’re in New York, if you’re visiting New York, it is a Tony-nominated show. My friend I did theater with growing up actually is a producer on it. It was one of the most beautiful shows I’ve ever seen. The choreography is incredible. The music’s phenomenal. Just go see it. It’s a great, great show. They do rush tickets, so you can see it for less than $50. I highly recommend it, I just thought it was a beautiful show.
As well as I saw Suff’s, which was a really cute show about the suffrage movement, very important show produced by Hillary Clinton and Malala, and yeah, it was great to see that show. And a friend of the show, Emily Tisch Sussman, who’s been on the show before, her sister produces a bunch of works and yeah, she’s the head producer on that show, which is very cool. And then I got a couple more days here, so I’m probably going to see at least one more show, and I’m really excited. So we should do maybe a whole episode on this, but we have a blog post, and we can post it down below, about how I get cheap Broadway seats.
Do not go to TKTS. Like if you’re visiting New York, do not do that. You’re overpaying, and definitely don’t go to the box office and pay whatever they’re asking for unless it’s cabaret, because apparently you can’t get anything to cabaret that isn’t cheap… Or, that isn’t expensive. So no, I’ve seen literally at this point, my mom bought me, I think for Christmas a year ago, one of the big binders where you put all the playbills. I’m done. I’m out of sleeves. I’ve already seen too many shows, and I’ve never paid full price for a ticket. So yeah, rush shows, lottery, enter lotteries. There’s a whole, I’ll give you the whole spiel on how to do it in the blog post.
Today’s episode, Daryl Fairweather: is our guest today. She is the chief economist at Redfin. Her insights have been featured on 60 Minutes, CBS Evening News, as well as in the New York Times and Washington Post. Prior to joining Redfin, she was the senior economist at Amazon, working on problems related to employee engagement and managing a team of analysts. During the housing crisis, Daryl worked as a researcher at the Boston Fed studying why homeowners entered foreclosure.
Daryl received her Bachelor’s of Science at the Massachusetts Institute of Technology, no big deal, and received her PhD and Master’s degrees in economics at the University of Chicago where she specialized in behavioral economics. So today we’re talking about the current state of the housing market and how we got here. And let me tell you, it is not great. And if you’ve ever thought about buying a house, what the future of the housing market looks like. If you’re someone who is actively looking, someone who who’s considering, can I even consider buying a home because they’re so expensive? We’re talking about that. And really fascinating, we’re discussing the factors that go into creating affordable housing, and why building more housing is only the start of that solution. So without further ado, let’s go ahead and get into it. But first a word from our sponsors.
Daryl Fairweather::
I came out here during the pandemic. It was one of those remote work situations, and I never returned.
Tori Dunlap:
Yep. Where’d you move from? California, New York? One of those?
Daryl Fairweather::
Seattle.
Tori Dunlap:
Oh, were you really Seattle?
Daryl Fairweather::
Seattle is where Redfin is headquartered. Yeah.
Tori Dunlap:
That’s where I’m at right now.
Daryl Fairweather::
Oh, okay. Yeah, I was living in West Seattle.
Tori Dunlap:
Yeah, cool. Lived there for a little bit. I did the Airbnb hopping for a while and yeah, I forget Redfin’s located here in Seattle. Of course you were here. Cool. We’re really happy to have you, you got your Bachelor’s of Science from MIT, and your PhD and Master’s degrees in Econ at the University of Chicago. No big deal. What drew you to economics in the first place, and can you also break down what behavioral economics is and what that means?
Daryl Fairweather::
Sure. So I was always interested in math Growing up. I went to MIT thinking I was going to be an engineer, but I also was always interested in people. And then I learned that economics is this combination of math and social science, trying to understand people. When I first heard about economics, I thought it’s about the stock market or it’s about finance, but really it’s about why people make the decisions that they do, what incentives are at play, and it uses prices, whether those are actual sticker prices or shadow prices that are hidden, to explain why people make a certain decision. So I like that frame of thinking, and I started off on it at MIT and then couldn’t get enough, so went and got a PhD too.
Tori Dunlap:
Do you have any interesting anecdotes or examples of economic indicators? I’m thinking like the lipstick indicator.
Daryl Fairweather::
Well, I think one thing to understand about what’s going on in the economy is that everything that we look at is a reflection of something that’s happened in the past. Most indicators are lagging indicators. When we talk about something like the unemployment rate, it’s really about what happened three months ago then about what’s happening right now. So everyone’s always looking for forward-looking indicators.
One of the ones that we use at Redfin is search activity on Redfin. So we can see if somebody is say living in Seattle, but they’re searching for a home in Las Vegas, that’s an early indication that they’re going to buy a home and potentially move from Seattle to Las Vegas, which would have all kinds of economic impacts if that was a larger trend. So I like looking at things like search behavior as a indicator.
Tori Dunlap:
Yeah, it’s really interesting. And I feel like that’s the most intimate I think we ever are is with Google. We’re the most intimate, vulnerable versions of ourselves with our search engines.
Daryl Fairweather::
Yeah, Google has even more information. I just know what homes people are looking at. But yeah, Google has even more.
Tori Dunlap:
Yeah, they have more information about every illness I think I’ve ever had in my entire life.
Daryl Fairweather::
Yeah.
Tori Dunlap:
Can you give us the really quick overview on the current climate of the housing market and how we got here?
Daryl Fairweather::
The housing market is basically, I would say in a deep freeze, and it starts with the pandemic. So during the pandemic there was this short and sharp recession that happened where everybody thought the economy was going to come to a halt. So money was pumped out into the economy and interest rates were set at essentially zero, which made it really cheap to borrow to buy a home. And anybody who could buy a home was buying a home. But the people who could buy a home during a pandemic were people who were already pretty well off. They were buying second homes or investment properties.
So there was all this demand, prices shot up, and now more recently, interest rates have gone up, and prices are still high. So we’re just left in a situation where housing is really unaffordable. And anybody who bought a home already is fine. They don’t need to move, and they wouldn’t be able to afford to move given higher interest rates anyway. So it’s created this really stark inequality between people who already own homes and people who haven’t been able to buy a home yet. And if you heard some noise in the background, that’s my son who just got home from school, I guess.
Tori Dunlap:
Oh, I love it.
Daryl Fairweather::
So let me know if I need to-
Tori Dunlap:
No, we’re so good.
Daryl Fairweather::
… reshare anything.
Tori Dunlap:
You mentioned the search trends on Redfin. Are there any trends you’re noticing with the housing market that Redfin helps you realize?
Daryl Fairweather::
Well, one thing we’ve noticed recently is an increasing share of all cash buyers. It used to be that they represented one in five purchases, and now it’s close to one in three. And that’s again, just showing that inequality in the housing market, that these high interest rates are really a burden for first time home buyers, people who don’t have cash on hand, they can’t afford to borrow. But if you already have cash because you have a huge stock market portfolio or something else like that, then you can still buy a home and not really feel the pain of what everyone else is feeling.
Tori Dunlap:
Right. Well, and to put it in layman terms for listeners, if you’re somebody who’s selling a house, you’re more likely to take the all-cash offer than you are to agree to somebody who’s taking out a mortgage, which is typically your average person. So it makes this massive inequality even in terms of searching for houses or obtaining the house that you want, if somebody swoops in and is able to offer a million dollars all in cash.
Daryl Fairweather::
Yeah, that’s absolutely right. We did a study on how much cash offers matter a couple of years ago, and we found that a cash offer is 50% more likely to be accepted than the same offer, but it’s financed. So it does present a big advantage if you have cash.
Tori Dunlap:
Well, and as someone who used to live in Seattle, and for me, somebody who still lives here, I think there is… I don’t know if it’s an actual thing or there’s just this rumor, that a bunch of people from China or Chinese companies are swooping into Seattle and purchasing properties in all cash. Is that true? Is there a version of that in various cities in the US where these corporations or these people who have tons of money are just swooping in and buying up everything?
Daryl Fairweather::
There’s not great data on it. There’s no database that says what country people are from when they’re buying a home. But I remember here, I’ve been at Redfin for five years, and for a time there was a lot of anecdotes from agents about Chinese buyers being pretty dominant in the housing market, especially in the luxury space. But then that’s died down largely due to the economic situation in China, and how they have clamped down on flows of money leaving the country. So I think that might’ve been more true than it is now.
Tori Dunlap:
Yeah. Well maybe a version of that we can talk about is hedge funds investing in real estate across the country. So they’re coming in, purchasing property and then hiking rents in communities which, displacing low income people, who have by and large been the primary inhabitants of these communities. So what role have you noticed hedge funds and major institutions taking in diminishing the existing affordable housing stock? And is there anything we can do to combat this?
Daryl Fairweather::
Well, so yeah, I have lots of thoughts about that. So I think the biggest difference between a hedge fund investor in real estate and, say like a mom and pop investor in real estate, is that the hedge fund is going to be very on top of current trends and rents, and be better researched about what they could charge.
So when they go and buy a bunch of properties, it’s because they think that they can make a profit on it, and they’re probably accurate about it, and about how much they can increase rent to make the money work. But the problem with mom and pop landlords is that it’s harder to hold them accountable sometimes. Like, if you have a problem with your mom and pop landlord and you think that they’re possibly discriminating against you because of your race, or your gender, there’s not a lot of recourse, because there’s not a pattern if it’s just a one-off situation. So I don’t know if it necessarily, it matters whether your landlord is a mom and pop or a large investor, if that creates a better experience for you as a renter. But I think what’s more concerning is the rising rents.
How are they able to get away with charging so much and rent? And the reason they’re able to get away with charging so much is because there’s fundamentally a lack of supply. There’s a scarcity of housing, which is a real problem considering housing is a basic necessity. It shouldn’t be something that is scarce, that is speculated on, that increases in price every single year, year after year. We should be just building more so that the price can stay low, so that supply can meet demand without having this kind of price hiking.
Tori Dunlap:
Well, and you said before, and I’ve experienced this, and I think we all have, is that medium home prices have skyrocketed, but then of course interest rates have too. So yeah, I mean I remember in the pandemic with Seattle just how quickly the housing prices were increasing, but interest rates were relatively affordable, and now it seems like, okay, we still have really high costs, but also interest rates are 6, 7, potentially even 8%. Is this going to cool down? Can we predict that? I think myself, maybe, and a lot of people are waiting for the dip, but the dip has not come.
Daryl Fairweather::
Right. And Seattle had a bit of a correction when interest rates went up, but then prices came down maybe like 3%, and then just started going right back up again. So any kind of improvement in affordability is short-lived because of that fundamental lack of supply. There are more people who want to live in Seattle than there are homes available in Seattle, and that’s the thing that the city really has to grapple with.
They’ve made some progress in terms of allowing for more housing to be built. So building ADUs on a single family lot, it might be as small as a studio apartment in a backyard, but some of them are pretty big, like being two stories and two bedrooms, pretty comparable to a typical home. So I think the more that kind of development gets built, there may be more affordable entry points for people to get into the housing market.
Because the single family homes in Seattle, you’re not going to find one for under $800,000. And even the $800,000 ones are going to be teeny tiny if they’re close to the city and close to transit and all of that. But the more small home, starter homes that we can build, that gives people the opportunity to get in on the housing ladder and have something to call their own instead of having this massive gap between affording an apartment that’s probably too small, and being able to buy that home that you’ve always dreamed of.
Tori Dunlap:
Yeah. What do you say to people, and I’m really asking for myself here, who are waiting for that dip? I don’t think we can predict it, right? It’s probably like the stock market, trying to time the stock market is really difficult. Is there a correction coming?
Daryl Fairweather::
I would not bet on a correction in the sense that the home that is currently selling for $800,000, I don’t think it’s going to sell for less than that in the future. I think what maybe is more realistic to hope for is that more housing gets built that is condos and townhomes, and provides a more affordable entry point that would allow somebody to get into the housing market and start to build equity to level up. But yeah, I don’t think that single family homes in Seattle are going to become more affordable, not in the next five years. If you go farther out, then who knows what’s going to happen, but I just wouldn’t bet on in the next five years.
Tori Dunlap:
Is that relevant for other US cities as well? Are we seeing that similar trend of, if it’s a $500,000 home, it’s probably going to be $500,000+ for the foreseeable future?
Daryl Fairweather::
Well, the only place that seeing a decline in prices was Sarasota, Florida, and that was after many years of price increases. There was also a very modest decline in San Antonio, but the Sarasota was the only one that stood out. Where like, oh, this is a substantial price decline. I think it was around 4% from last year, but that was after many years of price increases. So if you were thinking about buying a home in Sarasota in 2022, it’s still more expensive now than it was in 2022. It’s just slightly cheaper than it was in 2023.
So that’s what I mean. Holding out is not going to be a winning strategy because if you hold out for one year and prices go up 5%, and you hold out for another year, prices go up another 5%, and then the third year prices go down, let’s say 4%, you’re still would’ve been better off buying earlier. But at the same time, a lot of people just can’t afford that home given how high mortgage rates are.
Tori Dunlap:
Totally.
Daryl Fairweather::
I think for most people it’s not really a matter of timing the housing market, it’s more about being-
Tori Dunlap:
Accessibility.
Daryl Fairweather::
Yeah. Being realistic about what you can afford, and finding the best solution given the current options.
Tori Dunlap:
I will say you were talking directly at me because I was doing the like, “You know what? The prices will come down.” I was talking that shit about four years ago, and they have not come down. So I think at least I needed to hear that. But yes, I mean, we can’t go through this episode and not acknowledge, and we talk about on this show a lot that homeownership is not a given now, it is a privilege. It is something that most people cannot afford, and with rising housing costs, for many people it’s actually cheaper to rent, even as rents are skyrocketing. We know this, the change needs to come from the policy level, it’s not so much individual people’s choices, it’s just things are getting more expensive. I don’t know your thoughts on that. Anything to add there?
Daryl Fairweather::
Yeah. Well, I think that there’s a huge role for government to play, because the government has been dropping the ball for the last 15 years or so, and not promoting housing affordability. They’ve been paying lip service to it by doing things like down payment assistance, which is great if you qualify for it, but it doesn’t really do anything to solve the long-term supply shortage.
So I think the government needs to be more strict with the single-family neighborhoods that have been so resistant to building housing, blocking things like affordable housing units or apartment buildings because it changes the character of the single-family neighborhood. But we need to remember that a place like Seattle or any major metropolitan area, we should be allowing as many people as possible to live in those areas so they have access to the jobs and the services and everything that those cities have to offer. So it really doesn’t make sense to have exclusively single-family neighborhoods. Those can go in the suburbs. The city needs to densify so that people have access to transit and medical services, jobs, all the things that cities can offer, instead of it being something that you have to pay so much money to buy into to have access to.
Tori Dunlap:
I mean, New York has a housing shortage, very infamously, but when you think about just the way the city is planned in New York, no one’s got a single-family standalone house with a yard in New York City, and there’s got to be a reason for that. So yeah, I think that’s a great example.
You’ve mentioned a couple times, and we found a Forbes article where you were quoted saying, “We can make housing affordable and eradicate bad actors by increasing the supply of homes.” So what does this look like in that hyper-local sense, but also in grander policy? You were mentioning, of course, the government needs to do more to support. Does it start with city planning? Does it start with, again, we have a land shortage in many places too. So where do we have to start to even think about getting more housing?
Daryl Fairweather::
Well, if you see something at the local level on the ballot that’s about housing development, vote for the housing. I think that there’s a lot of naysayers saying things like, “There’s going to be not enough parking, going to increase traffic, there’s going to be too many kids in the schools.” Doing all this fearmongering around housing to convince people to not vote for those housing units. And then without the housing going in, anybody who’s an existing homeowner gets the benefit that their housing is still rare and goes up in value.
So I think be skeptical of those arguments. Think about what is actually beneficial to the people who are going to live in your community long term, and what would be best for society as a whole, instead of just fearmongering about more people being in an area. We want more people, we want more neighbors, I think is a mentality to have. And if you want to be proactive about it, that could also mean showing up at your city council to say something positive about wanting more housing going in your neighborhood, because there are lots of people showing up to complain about housing being developed.
Tori Dunlap:
Yeah, I mean I feel like that links to a lot of the sense of individualism in America too, of this is the land that I bought and I worked hard for it, and I want my peace and quiet. And I think, yeah, it’s a larger conversation about the psychology of all of that too, and the socialization of Americans.
Daryl Fairweather::
Right, and I think resistance to progress, because I don’t know why people buy into a neighborhood thinking it’s never going to change. Change is the only constant. If you try to resist, it’s just going to lead to even more problems. But I can go on a whole rant about that.
Tori Dunlap:
I mean, we have the time if you’d like to, but we’ll also keep moving. That’s half of what I do on the show, is rant. You’ve had some articles talking about, how do we think about home buying in this new era? So if somebody does want to buy in the next few years, how do we get them in a place where they can even think about that? But also, what are the steps that they need to take to actually make that happen?
Daryl Fairweather::
I mean, I think the first step is to do some financial planning in a broader sense, and think about what is important to you when it comes to homeownership. Even if you are at a place where you’re not earning enough money to own a home in your dream neighborhood, if owning a home is something that’s important to you, you might want to consider just more geographic areas. There are places in the country still where you can get a cheap home. So I think expanding your mind in terms of the geography can be a way to get into the housing market sooner.
But also another way to get into the housing market, I think, to think about it more big picture, is to think about, well, how much money would you need to earn to be able to afford that house that you want? Even accounting for how that home might go up in value. And then well, what do you need to accomplish in your career to get to the point where you’re making that much money? And then being actually realistic. Well, if you were making that much money, would you even still want that home? Or is that the point where you decide, I don’t need to live in the city anymore, I can actually move somewhere much more affordable, because I’m at this point in my career.
So I think people can get really down on themselves because they can’t afford a home, the home that they wanted at this very moment in their life. But I think if people start to expand their mind in terms of where they would want to live, or at what point homeownership would make sense for them, or what’s more important to them, living somewhere where they could earn a really high wage, versus living somewhere where they could have a really affordable home. Thinking about that more big picture, it might help people feel more certain with what they’re deciding.
Tori Dunlap:
Yeah, I’ve done many, many episodes on this show of like, I’m infamously a multimillionaire who rents. And I’ve talked about that homeownership is not just about the financial choice or if it makes sense financially, it’s also about does that align with where you’re at in your life and what you actually want?
Yeah, I think, again, I keep picking on Seattle, but the only home I could afford for a long time was in Tacoma or was in Auburn, which is an hour outside of Seattle. And when I was in my 20s, that was not the vibe I wanted. I didn’t want to visit my parents every weekend. And so yeah, it’s not just about your financial choices, it’s also about, how is this going to affect your friendships, and your social life, and where you want to be? And I don’t think I would’ve started my business had I not lived in the city where there was networking events, and where there was other people doing similar things to inspire me. And so there’s just a lot more that goes into the home buying process and determining whether you or not you want to be a homeowner than, does the math make sense, or can I make the math work?
Daryl Fairweather::
Yeah, absolutely. I agree with that. One of the biggest things is just like, do you actually expect to be in the same place for the next five years? If you want to be open to a new job in a new city, or I don’t know, moving in with a partner in a new city, or whatever it may be, you probably aren’t ready to buy a home. Because usually the math only works out for it to be financially beneficial if you are going to stay in the same place for five years. So I think that’s the first question is just, do you even want to lay down roots in that way at this moment?
Tori Dunlap:
If you’re a first time home buyer, can you walk us through some of those programs that someone could take advantage of?
Daryl Fairweather::
It’s very localized. So the first thing I would do is look up whatever city you’re in, down payment assistance, or whatever state you’re in down payment assistance. Biden has a plan to increase down payment assistance, so if you’re deciding whether you should vote for him, you might want to look at his plan, that would be more at the federal level. There are also programs that banks have, so whatever lender you’re going with, ask them if they know of any credits that you can apply to. But it’s definitely a mosaic, so there’s not a one thing I can point people to for looking into that assistance.
Tori Dunlap:
But I think the answer for any listener is it’s like, there is assistance, it’s just going to depend on your… Yeah, dependent on where you live. And I think that that is a way for you to get in if you’ve thought, “Oh, this is hopeless and it’ll never happen for me.” I think there are potentially some programs out there, and it’s just about learning what’s available to you, and getting that education, I think. I have a friend who was a veteran, and there’s a military or veterans program that can make homeownership way more affordable. So there’s a lot of different things out there.
Daryl Fairweather::
Another one is FHA, the Fair Housing Authority, they have a program for first time home buyers. I have a friend who used it to buy a fixer upper, and then they were able to even get money to put into the house. If you get creative and you can do some legwork on what you qualify for, there could be a lot of money on the table that could assist you.
Tori Dunlap:
You mentioned something that we encounter a lot in our community, and I think is actually the number one thing financially that holds people back, is this attachment of like, if I haven’t met X goal by a certain age, I feel like I failed. We very much associate our net worth with our self-worth, and if we are not as financially well off as we think we should be, it’s very easy to feel like a failure. And I think especially with homeownership, and especially in America, there is just this idea of like, you’re not an adult unless you own a house, or you haven’t made it unless you’re a homeowner. But for most people right now, that’s completely out of reach. So can we maybe talk about a bit of the psychology or a bit of the emotional stuff that’s going on when you are trying to purchase a home, but you’re thinking to yourself, “Gosh, I don’t think I can afford this. Have I failed? I’m such a failure.”
Daryl Fairweather::
I mean, that’s a very deep thing to unpack. I think what is at the heart of what you’re getting at, is people expecting to meet these external markers of what success is, and I would encourage people to look internally, and think more about what they actually value, and whether they’re hitting the things that are important for them.
I think the dream of homeownership is a very American dream, and something that most likely is coming from societal pressure or family pressure. So I think kind of dividing that pressure or acknowledging it and then thinking about, well, are you hitting the other goals in your life that you set for you? And if you really had to choose between say, I don’t know, being a homeowner or accomplishing whatever other thing that you are prioritizing in your life, which one is more important to you?
And I think usually people will find that the reason they haven’t bought a home yet, is because it’s actually not that important to them yet. Or at least it’s not important enough to spend as much money as it costs, which is the reality. It’s not like you live in the world that your parents lived in where homes were lower priced. I mean, they had different challenges, obviously, but home prices have gotten really expensive in major metropolitan areas, which is a real barrier if you’re trying to advance your career in one of those major metropolitan areas, you don’t really have much of a choice of where to live.
Tori Dunlap:
And things have gotten so competitive too. I just feel like you have to make a decision really quickly, and you’re going over asking to get the house that you want, and it’s just kind of that nightmare. I mean, I’m asking an economist a very psychological question, but I also want to-
Daryl Fairweather::
I’m a behavioral economist, so that’s what I specialize in.
Tori Dunlap:
Sure. Okay. Sorry. Thank you. No, yeah. But I think that any reassurance that we can offer people that it is financially difficult to buy a house, it is just hard. And so I don’t feel like it is, it’s not that you’re not doing enough, it’s not that you haven’t made the right choices. This is why the policy has to come into support just because things are so expensive, it’s very inaccessible right now for the average person.
Daryl Fairweather::
Yeah, that’s absolutely true. And I think if you look at the stats, depending on where you live, it’s outrageously expensive to own a home. If you’re in Seattle or the Bay Area or Los Angeles or DC or Boston, New York, normal people won’t be able to afford a home. You have to be really exceptional, come from wealth, be a super high earner in your 30s or 20s or however old these people are to expect to own a home.
And then I think if you’re older, then you probably have a bit, I think more perspective about, there are other options out there for you besides those, owning a home. You know what I mean?
Tori Dunlap:
Yeah.
Daryl Fairweather::
But I think that kind of wisdom might come with age in realizing that you don’t need to own a home to necessarily be financially successful. When you’re in your 20s and 30s, it feels like this goal post that you have to hit, amongst a lot of other goal posts.
Tori Dunlap:
Yeah. You mentioned in a Forbes article you wrote about some ways to buy a first home. And one of the ones that I loved was this teaming up strategy, which is like, okay, team up with somebody else who also has an income, and buy the home together. So can we talk a little bit about that creative option?
Daryl Fairweather::
Yeah, I think that that is a great option, especially because zoning laws are changing. It could end up being a very savvy option, so you could team up with anybody to buy a home. You don’t necessarily need to be married, you just need to both sign on the mortgage or sign on the deed. If you’re going to do that, I would recommend treating it like a landlord-renter relationship where you both are landlords, and you both are renters.
So dictating the terms of how long it’s going to last, and what do you do if somebody wants to break the lease or move out and how that is resolved, definitely have that all laid out. But I think it could present a lot of opportunities because in a place like Seattle, for example, you can build an ADU on your property. Same in California. So you might buy a single-family home that’s only one unit right now, but then split it and then build another house in the same property, and be part of the solution for building more housing. I think that could really be an exciting avenue for people.
Tori Dunlap:
And I will offer another version of this. I’ve had multiple friends who are two couples, and they will buy a house together, and one couple will live in the top floor, or it’s a duplex and one couple will live in the side. I have multiple friends in Seattle who have done that.
Daryl Fairweather::
Yeah, that’s awesome.
Tori Dunlap:
Who like, one lives on the top floor, one lives on the bottom floor, and it’s split four ways. It’s not even two ways, it’s four ways that way, because you have two couples. So yeah, I’ve seen that work really, really well for my friends. I want to echo what you said though. Get your contracts in place. Do not do this as just like, “It’s a vibe.” No, it’s a legal, binding agreement. You need a plan if somebody wants to get out, you need a plan if somebody doesn’t pay their share, it’s just like having roommates in any other scenario. So yeah, make sure that you have a legally binding contract if you’re going to do that.
Daryl Fairweather::
Absolutely.
Tori Dunlap:
I want to get into the, “not in my backyard” debate. It’s obvious that we need housing stock. How can we guarantee that certain segments of this housing stock are affordable, and how do we overcome this, “not in my backyard” subculture that aims to prevent it?
Daryl Fairweather::
I mean, that’s a very big question again, because I think the “not in my backyard” mentality, it comes from this scarcity mindset of, “If I have something then somebody else gets it, then somehow what I have is less valuable,” which is just a bad mindset to operate from.
It also puts the self above the community or above the future community, which again, is just bad. I feel like solving the NIMBYism problem is akin to solving a lot of our other political problems. If we could all get together and get on the same page about building more housing, then we’d probably be able to do it for reducing our reliance on fossil fuels, and all these other big problems that really just require us working in our own best interests instead of against our collective best interests. Sorry, that’s a very philosophical answer. I can get more precise if you want me to.
Tori Dunlap:
No, but that’s what we keep coming back to on this show too, is it’s, let’s just talk about personal finance. When it comes to personal finance, there’s 20% that you can control, and there’s 80% of the things that are racism, and sexism, and ableism, and homophobia, and the trillion dollar student debt crisis, and stagnating minimum wages, and everything else.
So yeah, homeownership and all of this of like, yeah, “This is my house, and my land, and my property, and I don’t want my communities to change” is yeah, there’s a lot of issues at play here that have actually very little to do with how much, yeah, can an individual person make an impact. But I think to echo your point is it’s like this collective mindset is something that we’re typically not told as Americans or taught as Americans, this focus on community, and I think it can be a really, really great answer to all of that.
Daryl Fairweather::
Absolutely.
Tori Dunlap:
So even for me as someone who doesn’t own property, I think I still have done a pretty good job of building wealth, and I think again, for the average person, they might be thinking to themselves, either I can’t afford that home, or I just don’t want to be a homeowner. Like you were saying, it doesn’t appeal to people, I think in the same way. What other ways are there to build wealth, to feel financially stable where your net worth doesn’t revolve around property or purchasing a home?
Daryl Fairweather::
So I don’t believe that owning a home is the only way to build wealth. There are many other good ways. So what I would advise people to do is to, as you rent, set aside additional portion of your income, whatever you feel comfortable with, say 10% or something like that, and put it into an investment account. Like index funds are diversified, which is good because that makes them less risky, they just track the entire stock market.
If you’re more ethically conscious about what you invest in, there are these ESG funds that stand for environment, social and governance that are also index funds and well diversified, so that could be something else to look into. But the basic idea is putting your money into something that’s going to grow, and the stock market tends to grow in value faster than housing. There’s no maintenance. You don’t have to take care of your property the way you do with the house, so you just let it grow, but you just have to be disciplined about investing on a regular basis, and not getting caught up in the stock of the day, just being really safe about it.
Tori Dunlap:
The speculative investments, the crypto and everything else is not the strategy we’re supporting here. You also wrote an article about how climate is affecting home buying, which I find really fascinating. Can we talk about that as well as the things, the additional expenses people have to consider if they’re moving to an area where their climate is rapidly changing?
Daryl Fairweather::
Yeah, so one thing to consider if you’re ever going to buy a home is, how the climate around that home is going to change. We’re seeing increasing wildfire risk in the west, increasing flood risks in places that are on the coast or near rivers, and increasing storm risk. And all of that poses physical risk to the home and the people who live in there. It also means rising insurance costs, potentially rising property taxes, maintenance costs. So it’s all just something that I think homeowners are going to have to deal with and pay for.
A lot of the costs of climate change are going to show up as housing costs when insurance rates rise, or property taxes go up, or these other expenses increase. We’re already seeing that people in California are being denied from insurance, and insurers are leaving that state because they can’t make a profit. And then Florida, rising insurance costs because of increased storm risk, among other factors. So it’s already showing up, the cost of climate change, and I think it’s just going to become more obvious.
We did some research at Redfin when we launched flood risk on the website. So if you go on Redfin and you look at any home, you can see climate risk factors provided by First Street. They have storm risk, flood risk, as well as some other climate risks. And when we launched flood, we found that the people who were shown flood risk in this randomized experiment went on to buy homes with half as much risk. So if they’re looking at a severely risky home, they ended up buying a home with only moderate risk. So I think it’s encouraging at least that when people have this information, they do act on it and try to make more informed decisions. But in general, people are leaving places with low risk like the Midwest or some of these expensive cities on the coast, and moving to places with higher risk, like in Florida, in Texas. So that is concerning for the sustainability of housing.
Tori Dunlap:
I mean, my brain as a business owner immediately goes, well, they’re moving because of tax breaks, or they’re moving because the cost of living-
Daryl Fairweather::
Or the weather.
Tori Dunlap:
Right, that’s the other thing. Yep. I am thinking about this phenomenon that largely happened in the pandemic, and again, because I live in Seattle, I’ll pick on Seattle. A lot of people left Seattle during the pandemic and moved to Boise, they moved to Montana. And then everybody in Boise got really mad because they’re like, “You’re driving up our home costs, you’re driving up the rent, you’re driving up the cost of everything.” So I do think there is this trend. New York had the same thing. People were getting out of New York, people were leaving LA, people were leaving Miami, and moving to these more affordable neighboring cities, but then it was driving up the cost of those neighboring cities. So have we seen that trend backed up in the data other than just me, anecdotally? And then what other examples are we seeing of, “Okay, it’s too expensive here, so we’re going over here, but this place is more expensive now.”
Daryl Fairweather::
Your anecdotes are spot on. That’s exactly what we saw in our data, that people were leaving Seattle, Los Angeles, San Francisco, New York, Boston, and going to more affordable places like Boise, Austin, Florida, Arizona, the Sunbelt in general, Las Vegas. Places that had the most stark increase in people moving in like Boise and Austin, prices got out-of-control expensive. There were stories of 20 people bidding on the same home, paying hundreds of thousands of dollars over asking price, and coming out of pocket with cash to make it work, because the banks wouldn’t even cover the loan, how much they were paying.
But that stopped, I mean, that stopped when prices got so high there was a price correction, and then when interest rates went up, it really started to cool down. But that means that Austin and Boise aren’t the hot migration destinations anymore because they’re too expensive to be that, and it means Spokane is more popular, or Dallas or San Antonio becomes the next place that people move. So it really does just cascade down to the next most affordable place, which is how the housing problems of, say California end up spreading everywhere. Because the reason that Seattle got so expensive was because people thought San Francisco got too expensive and they left San Francisco for Seattle, and then it keeps going. So yeah, this is how affordability works geographically.
Tori Dunlap:
So you might not know the answer to this question, we can cut it. But is the answer more cities? Is the answer… Obviously we know the answer is more housing, right, we’ve determined that. But I just feel like you get to a point where it either is a monster eating itself, where we’re back to Seattle eventually, or we just run out of cities to hop people to.
Daryl Fairweather::
I don’t think it’s more cities in the sense that we need to be inventing cities from the ground up. I know there are some Silicon Valley billionaires working on something like that, but-
Tori Dunlap:
Literally I remember hearing about that.
Daryl Fairweather::
Yeah. But in general, it’s more cost-effective to do infill housing. So if there are vacant lots in a city, fill those in with housing. If there’s abandoned strip malls, change those to housing. There’s been… Office-to-housing conversions are a bit difficult, but wherever you can fit in the housing, do that first, and then the next step is to improve transit. So for a city like Seattle, that might mean making the transit between Seattle and Tacoma more regular, more-
Tori Dunlap:
They’re trying.
Daryl Fairweather::
… reliable, all of that, so that people can move in Tacoma, but still access all Seattle has to offer. And I think that’s true of most cities. Increasing transit and infill housing is the way out, as opposed to brand new cities.
Tori Dunlap:
And again, this all comes down to policy, because what we’re seeing in Seattle is, yeah, they’re building a light rail, but it’s taking 15 years, and it’s way over budget, and they should have been doing it decades ago.
Daryl Fairweather::
That’s a whole nother issue is why things are so expensive to build nowadays. It’s ridiculous.
Tori Dunlap:
Any fun facts about the current market, or interesting stats? Has there have been a surprising city with this huge influx of new buyers? Any other interesting things that the average person would not know? Like your fact about like Sarasota being the only city where the price has dropped, anything like that?
Daryl Fairweather::
Yes, so San Diego for the first time became more expensive than Los Angeles to buy a home in. I think that was because of the pandemic and the way it’s changed people’s preferences. I used to live in San Diego, it does have better beaches and less traffic than LA, and I think people recognize that, and that’s why San Diego is now more expensive than LA.
So yeah, another one is that Nashville became more expensive than Austin, which I think is pretty surprising because Austin was this huge migration destination during the pandemic, it had this huge boom. But a ton of housing got built in Austin because of this housing boom, and because of all the new housing coming online, prices corrected and came back down, which kind of proves the point of, the way to solve housing affordability is to actually build more housing. Nashville, it had some housing being built, but not as much as Austin, which is why prices are now higher in Nashville than in Austin.
Tori Dunlap:
Kristen, our podcast producer is listening and is from Nashville, and she literally just put in the chat, she goes, “Cries in Nashville.” And it’s so funny. I feel like, yeah, even that’s a perfect example where of, what was the hot city? And it’s typically where the tech companies start. And to your point of, okay, San Francisco became too expensive, then it was like Seattle, and maybe Portland, and then it was Austin, and now it’s Nashville, and so it’s… What city’s coming next? It is like people end up popping around, it’s like the trends differ because of where the jobs are and how expensive it is. And yeah, it’s just so interesting to me how all of this works.
Daryl Fairweather::
Me too. Never… There’s always stuff to study in the housing market.
Tori Dunlap:
Unpack, yeah. As we wrap up. Anything else we need to know about the housing market now or in the future that we didn’t cover, or that you think somebody should know?
Daryl Fairweather::
One interesting thing that we’re following is how housing affordability is impacting the election. We did a survey of homeowners and renters, and half of people said that housing affordability is impacting who they plan to vote for in the election.
It’s interesting because Biden’s been president for the last four years, I think he hasn’t really done a ton on housing thus far, so people might end up blaming him in part for the lack of affordable housing, and also just the state of the economy in general. And the economy is doing pretty well except for housing. So I think housing is the thing that people are feeling he has fallen short on.
He’s come out with a plan to address the housing affordability crisis, so at least he’s being proactive about it, so maybe that’ll work towards his advantage. I looked at what Trump has said about housing, and it’s mainly just critiquing Biden for bringing apartment buildings into the suburbs, and a lot of just naysaying on housing development in general. It just doesn’t seem like he has a lot to say. So it’ll be interesting to see how people interpret Biden’s housing position, if they see it as a shortcoming, or as an opportunity for him.
Tori Dunlap:
Yeah. Well, and it’s hard, we’ve talked with other guests on the show, and I’ve done so much research around this, where the economy on paper is actually not that bad, but the sentiment around the economy is terrible. And I feel like that is very unique, especially with this election, because most people who are incumbents get to go, “Hey, look at the last four years of what I’ve done, you should vote for me again.” And on paper, at least with the economy, the stats are all right, but the sentiment isn’t great, and I think that it’s going to be very, very interesting as we move into the election cycle about how that affects everything.
Daryl Fairweather::
Yeah, I think that does come back to what we were talking about, how it’s hard for people to feel like they are a financial success if they aren’t a homeowner, because of the American dream and what homeownership means in this country. Which I think is why there’s this disconnect that, “The economy is so great, except I can’t afford a home, therefore the economy is not great,” which I think is valid.
Tori Dunlap:
Yep, totally. This was so fascinating. Thank you for your time. Where can people find out more about you, more about your work? Plug away.
Daryl Fairweather::
I mean, I’m on all the social media, @FairweatherPhD is my handle. I also have a book coming out, Hate the Game. So you can look up Hate the Game book and go to my website there, and yeah, I’m out there. Just look me up.
Tori Dunlap:
Cool. I’m about to go on Redfin and look at all the houses that I would love to afford, but can’t. That’s going to be my fun little activity for the day.
Daryl Fairweather::
Everyone’s favorite pastime.
Tori Dunlap:
Thank you so much.
Daryl Fairweather::
Thanks.
Tori Dunlap:
Thank you so much to Daryl for joining us. You can follow her on Instagram @FairweatherPhD, and you can also check out her book, Hate The Game, Economic Cheat Codes for Life, Love and Work, which comes out in April 2025 at HateTheGameBook.com.
As always, Financial Feminists, thank you for being here, thank you for listening to the show. You can subscribe if you want more episodes and never want to miss one. You can also leave us a review, especially if you really like the show. If you don’t like the show, stop listening. If you like the show, leave us a review. And we have a voicemail box down below where you can call in and get advice, guidance from me on our Ask Tori episodes. So thanks for being here, thanks for being Financial Feminists, and have a kick ass week.
Thank you for listening to Financial Feminist, a Her First $100K Podcast. Financial Feminist is hosted by me, Tori Dunlap. Produced by Kristen Fields, Associate producer, Tamisha Grant. Research by Ariel Johnson. Audio and video engineering by Alyssa Midcalf. Marketing and operations by Karina Patel, Amanda Leffew, Elizabeth McCumber, Masha Bakhmetyeva, Taylor Chou, Kailyn Sprinkle, Sasha Bonar, Claire Kurronen, Darrell Ann Ingman, and Jenell Riesner. Promotional graphics by Mary Stratten. Photography by Sarah Wolfe. Theme music by Jonah Cohen Sound. A huge thanks to the entire Her First $100K team and community for supporting this show. For more information about Financial Feminist, Her First $100K, our guests and episode show notes, visit financialfeministpodcast.com.
Tori Dunlap
Tori Dunlap is an internationally-recognized money and career expert. After saving $100,000 at age 25, Tori quit her corporate job in marketing and founded Her First $100K to fight financial inequality by giving women actionable resources to better their money. She has helped over one million women negotiate salary, pay off debt, build savings, and invest.
Tori’s work has been featured on Good Morning America, the New York Times, BBC, TIME, PEOPLE, CNN, New York Magazine, Forbes, CNBC, BuzzFeed, and more.
With a dedicated following of almost 250,000 on Instagram and more than 1.6 million on TikTok —and multiple instances of her story going viral—Tori’s unique take on financial advice has made her the go-to voice for ambitious millennial women. CNBC called Tori “the voice of financial confidence for women.”
An honors graduate of the University of Portland, Tori currently lives in Seattle, where she enjoys eating fried chicken, going to barre classes, and attempting to naturally work John Mulaney bits into conversation.
