Is there really a housing shortage — or do we just have a lot of wealthy people buying up all the good stuff?
That’s the question kicking off this episode.
Joe and I also help a woman simplify a $1.5 million portfolio she’s managing on her own for the first time.
And we help a 26-year-old figure out whether paying off his mortgage or investing the difference gets him to financial independence faster.
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Listener Questions
Karen asks: My brother is a wealthy patent attorney who owns three vacation homes and might buy a fourth. Is the U.S. actually short on housing, or do we just have income inequality pushing wealthier people to buy up more of the available supply?
Sarah asks: After a mini retirement, I let go of my financial planner and I’m now managing $1.5 million myself, split across a rollover IRA, Roth IRA, and taxable account — all invested in the same 13 funds. How do I simplify this down to three or four funds and make my asset allocation more efficient?
Michael asks: I’m 26, single, and about to buy a $350,000 house. When I run the numbers, paying off the mortgage versus investing the difference gets me to financial independence in about the same amount of time, but paying it off gives me a lower withdrawal rate. Am I thinking about this the right way?
Key Takeaways
- Housing Shortage Estimates Vary Wildly by Methodology: Estimates range from 1.2 million to 10 million units depending on the data source and whether uncounted “household formation” is included, but every major estimate agrees a real shortage exists — with a rough consensus around four to five million units nationwide.
- National Housing Stats Hide Local Reality: The shortage is concentrated in entry-level homes in coastal metros like New York and LA, not the luxury vacation markets wealthy buyers shop in — while some Midwest and Sun Belt metros are close to balanced supply.
- Asset Location Beats Fund Count: Cutting down the number of funds you own doesn’t automatically make a portfolio better. What matters more is asset location — putting your fastest-growing assets in tax-exempt accounts and matching each account’s tax treatment to the right holdings, instead of copying the same allocation into every account.
- Know Why You Own What You Own: Understanding the actual reason behind each position — not just chasing an efficient frontier or a model portfolio — makes it far less likely you’ll panic and blow up your strategy when market conditions change.
- A 30-Year Mortgage Can Buy You Optionality: Taking the lower monthly payment of a 30-year mortgage, even at a slightly higher rate, preserves flexibility during major life changes — which can matter more than a small “expected return” edge on paper, especially in your 20s and 30s or when transitioning to less predictable income.
Resources
Free cheat sheet: which investments belong in which account: https://affordanything.com/assetlocation
7 Expensive Rental Property Mistakes to Avoid (free guide): https://affordanything.com/rent
Practical Investing and the Efficient Frontier, with Joe Saul-Sehy: https://www.youtube.com/watch?v=Tz59b5H5puw
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Chapters
Note: Timestamps are approximate and may vary across listening platforms due to dynamically inserted ads.
(01:41) Is America’s housing shortage actually real?
(06:29) The real numbers behind the housing shortage
(14:29) A stunning stat on building permits vs. new jobs
(24:32) A simple way to add housing and earn more
(28:23) A caller’s plan to retire in 15 years
(33:01) Which accounts should hold which investments
(40:22) Why more funds can beat fewer funds
(52:19) A costly bias that skews money decisions
(58:46) Should a 26-year-old rush to pay off his mortgage?
(1:09:04) A gut-check for choosing between two paths
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