Benzinga and Yahoo Finance LLC may earn commission or revenue on some items through the links below.
Peter Thiel, the billionaire co-founder of PayPal and one of Facebook’s earliest investors, has built his fortune spotting economic trends before they explode. But his latest warning has nothing to do with tech or startups. Instead, he’s calling out what he sees as a massive problem in real estate—one that’s making it nearly impossible for young Americans to afford a home.
Speaking with The Free Press back in December, Thiel pointed to the ideas of 19th-century economist Henry George to explain why homeownership is becoming a pipe dream for younger generations while older homeowners reap the benefits.
Don’t Miss:
Thiel lays it out simply: When a city’s population grows by 10%, housing prices can spike by 50%. But wages? They don’t rise nearly as fast. So while the economy might be expanding, the real winners are homeowners—especially older generations, specifically boomers—while young and lower-middle-class Americans find themselves locked out of homeownership, struggling to compete in a market that keeps pushing prices higher.
“And it’s a massive hit to the lower middle class and to young people who can never get on the housing ladder,” Thiel said.
And this isn’t just a U.S. problem. Thiel warns that the same “real estate catastrophe” is unfolding in Britain, Canada, and other countries where strict zoning laws make building new homes nearly impossible.
Trending: Many don’t know there are tax benefits when buying a unit as an investment — Here’s how to invest in real estate by mirroring BlackRock’s big move
People love to talk about inflation when egg prices jump a few bucks, but according to Thiel, that’s not the real issue. “The really big cost item is the rent,” he said. Even when grocery prices fluctuate, most people—especially the lower middle class—aren’t seeing those costs eat up the bulk of their paycheck. Housing, on the other hand, is a different story.
Thiel argues that rent inflation has been ignored for too long. While some blame rising costs on immigration, he points to zoning laws and excessive regulations that make building new homes nearly impossible. If demand keeps growing and supply can’t keep up, prices surge—leading to what he calls an “incredible wealth transfer” from young renters to older landlords and upper-middle-class homeowners.