The Housing Shortage, Explained
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This is Fresh Air. I'm Tanya Mosley. As we head into 2025, housing is still one of the most important issues on the minds of millions of Americans. The dream of owning or even renting a place is in peril.

People are paying a million dollars for starter homes. New construction is moving at a snail's pace. And the latest data shows that in 2023, home sales were the slowest in three decades. Many homeowners aren't selling or upgrading because the market for getting into another house is just too high.

Renters aren't catching a break either. On average, they're spending 30% of their income on housing. And that stat includes people who live in places that had the reputation of being more affordable, like the Midwest and the South. Changes to our climate are also redrawing real estate maps, impacting where people can live and what they can afford.

President-elect Donald Trump says some of his plans to tackle the crisis include regulations on construction, opening up federal land for housing, and mass deportation. How feasible are these ideas, and why is this such a dire moment in the housing crisis? Well, our guest today to talk about all of this is Ben Keyes. He's the Rowan Family Foundation Professor of Real Estate and Finance at the University of Pennsylvania's Wharton School.

He is also a research associate at the National Bureau of Economic Research. And Ben Keyes, welcome to Fresh Air. Thanks so much for having me. You know, Ben, one of the more frustrating issues right now is that there just isn't enough affordable housing. And from my understanding, like so much of this current housing crisis, this can be traced back to the financial crisis of 2008. It's like a snowball effect.

That's right. I mean, I think we can characterize the current state of the housing market as being deeply unaffordable. That's a very expensive market right now. High home prices and high interest rates making, you know, entering the housing market or moving up the property ladder very challenging. And I think you can trace back

some of these issues back to the financial crisis of 2008, where we saw a collapse in construction. And so we just stopped building houses. We stopped building apartments for a few years there. And an even longer, I would say, structural change in our ability to build and our willingness to build. And so those two factors have really driven a shortage of housing. And now we're seeing estimates of...

as much as 4 million houses that were short, if you think about where we need to be as a growing population and growing household formation.

Can you delve a little bit deeper into that? Because why 17 years later, if demand is high, people are working, they're looking for places to live. What are some of the factors that continue to keep home builders from just building more housing? It is a bit of a puzzle, right? I think we can separate out the factors into three main areas. One,

the high cost of materials and labor. And we've seen an inflationary episode where we have a very high cost of building materials. We are also in a very tight labor market. So there are not a lot of

you know, laborers who are available to build. So that's one category. Another category is related to financing. It is very challenging to finance many of these large building projects. And it's not always as easy as it might seem to obtain financing, especially multifamily financing. So building apartment buildings, the financing there is quite challenging. And then the third is related to zoning and land use restrictions and

and other policies that create a lot of hoops to jump through and make it challenging for developers who would like to build, you know, build at the scale where they would like to build. And so each of those three factors, financing, construction, and zoning, are all putting downward pressure on the ability to create more houses and more housing units where people would like to live.

You know, President-elect Trump, he's been talking about some of the ways he plans to help remedy this crisis. And one of them is proposing tariffs on imports, which include construction materials. How could that impact housing costs as it relates, I guess, to the price of building materials? Yeah, well, I think this ties back to one of

the fundamental misunderstandings of how tariffs work. But basically, if we're going to raise the costs of construction materials, that's going to raise the cost of building a home. Now, a lot of the materials that are used for construction are domestic. So we do have a lot of those in the U.S., but we also import a number of construction materials like lumber and

for things that would be covered under NAFTA from Canada. But the simple math is that if we are going to impose additional tariffs on building materials, it's going to be more expensive to build rather than less expensive to build. So that's going to only make the affordability problem worse. Ben, one of the more controversial ideas that Trump has spoken about is how he plans to deport

11 million or so undocumented immigrants and how that will free up housing. Is there a link between the undocumented and housing affordability besides it being a numbers game? Well, first, I think the impact of a policy like that would have impacts that are so devastating to many communities in the country that the effects on housing affordability feels second order or even third order.

But I don't think that there is a strong connection between this idea of removing immigrants from our country and making housing more affordable. And there's a couple of reasons for this. One is that immigrants and undocumented immigrants make up a large fraction of the construction workforce. So it's been estimated by Pew that 14% of the construction workforce are undocumented immigrants.

And so it is going to make labor costs more expensive to build, and that's going to drive up the cost of housing. The tradeoff there from a housing market standpoint, we're talking about this in a very narrow sense.

is that there will be fewer people in this sort of numbers game of supply and demand. But if we think about the types of housing that immigrants and undocumented immigrants tend to locate in, they tend to be renters and they tend to locate in low-income neighborhoods. Now, of course, that's not uniformly true, but that's where they are concentrated. And so if we're thinking about the high cost of homeownership,

removing undocumented immigrants from the pool of potential homebuyers is simply not going to move the needle on affordability. As we're thinking about the big picture, this incoming administration has sort of framed tariffs and removing immigrants as a panacea for all of our problems. And neither of those things are going to make a dent into our housing affordability crisis.

One of the other things that President-elect Trump has talked about is opening swaths of federal land for large-scale housing construction. And he's calling these areas freedom cities. The Biden administration...

was doing sort of an impact or research study on this. And Kamala Harris also talked about this as well in generalities. So I just want to get to the bottom of like, is there some value there in looking at federal land as a potential solution? Maybe not in the way of building new cities on federal land, but is there a way to use that land to help offset some of the challenges that we're seeing? Yeah.

So I think there's two pieces where we might see some headway. One is related to federal land that's in urban areas. That's already where the jobs are and where we already have high demand. So one example of this is an assessment that the Biden administration did with the U.S. Postal Service and looking at the location of post offices, whether there's additional space available.

for redeveloping some of those spaces, right? Why have a one-story post office when you could have a five-story post office with four stories of apartment units up above? And so that's been an initiative that's going on. There is federal land in cities. There are a number of federal buildings. And the USPS is one that has quite a large footprint.

When we're thinking about this federal land out West, I'm pretty skeptical that we're going to see, you know, cities spring up out of whole cloth. That just takes an enormous amount of coordination and effort, and it would need a significant amount of private buy-in to locate firms there. You could potentially see those having some uses for energy generation. So solar farms, wind farms, etc.

kinds of things that do require that space and where there may be more desirability out west. And so thinking about ways to encourage our energy transition on that federal land seems promising. But as a solution to our affordability crisis, I just don't see it. Well, that's so interesting about the post office, the post office idea. Yeah, it's a fun one. And I think the nice thing about that is

When you start walking around cities, when you put on your housing hat and you think about where could more people live, you start to see opportunities everywhere. You see buildings that are small for their space. You see areas with big side yards. You see old office buildings that could be converted to residential. And so when you put those glasses on of how do we reach housing abundance,

in these places where the jobs are located, you start to see opportunities everywhere.

I know. I now can't unsee it. As you were talking about the post office, I started going through my neighborhood and thinking about all of the other areas where there could be housing. Yeah, there's a neat example of this. It's not housing necessarily, but in West Philly near Penn's campus, there's a McDonald's on the corner. And they basically tore down the McDonald's.

That was a one-story traditional McDonald's with the usual McDonald's roof and everything. Difficult to put apartments or additional use up above that. Well, they tore that McDonald's down and now there's a building there with McDonald's on the first floor. And so the McDonald's has returned. The retail is still present. But now we're using the space above the McDonald's more efficiently. And those are the kinds of

smart opportunities that we're going to need to see happen at a scale we haven't operated at in decades.

Is there an example elsewhere in the world where they've been successful in building density? It changes really our perception of the American dream to live in high-density areas, you know, that no longer is the big story house with the front yard and the backyard and all of that in the driveway. But it is what you're talking about sounds like something I might see in Japan. Yeah.

Yeah, you hit the nail on the head. Certainly, we've seen this kind of development in a place like Tokyo, which has kept housing relatively affordable by building intensively in the city. And that has required a forcefulness that we are not comfortable with.

In the U.S., in many cases, when it comes to having community oversight over what gets built, a zoning code that requires a lot of hoops to jump through. And so there are a number of ways in which a city like Tokyo has cut the red tape.

and recognize that some historic buildings can coexist next to large apartment towers. And so I think that's maybe an extreme example where the pendulum has swung in the direction of development, but we just need to loosen the gears. And so looking to a city like Tokyo as an example is potentially a promising one. I want to talk a little bit more about some of the things that President-elect Trump has said today

he will do to help offset some of the challenges we're seeing in the housing markets. And one of the things he says he will do is to bring down mortgage rates to make home buying more affordable. We know the president doesn't set mortgage rates or interest rates, but we do know that his policies can affect the rates. And I'm just wondering from you, what do you think he could do to influence mortgage rates?

Well, we know that the president can't affect mortgage rates, but I'm not sure that he knows that the president can't affect mortgage rates. This is something that is very challenging for the executive office to influence. Mortgage rates are set usually off of the 10-year treasury rate, and the 10-year treasury rate is determined by the bond market. It's determined by the willingness of

long-term bondholders to demand a certain return in exchange for the bond. So part of the reason that we're seeing high mortgage rates is a high 10-year treasury rate.

And that's because those bond investors are anticipating inflation. They're anticipating that this new administration is going to keep the Tax Cuts and Jobs Act in place. That's going to continue to worsen our federal deficit, that there's probably more and bigger tax cuts on the horizon.

And that the tariff policies that have been proposed would likely be inflationary. And so, you know, it's largely inflation expectations over a longer time horizon that are driving that 10-year treasury rate and ultimately driving the mortgage rate. And so because mortgages are these very long duration products...

The president has very little scope for directly influencing mortgage rates. And when we think about the policies that they could implement, keeping inflation down and having a very disciplined fiscal policy is probably the main thing that they could do directly.

I'm just curious because I know that you study the impacts of climate change, how climate change is attributing to the rise in costs for homeowners. I think there's a very direct line to be drawn between rising climate risks and the costs of homeownership in the form of property insurance. And property insurance to me is the most direct way where we're seeing the effects of climate change on homeowners.

Americans' pocketbooks. And in just the last three years, 2020 to 2023, my research with Phil Mulder has shown that property insurance has gone up by over 33% on average in the U.S. and over 50% in the areas of the country most exposed to climate risk. And so property insurance, over 50% in the riskiest zip codes in

And that's, you know, the places that might come to mind are places like Florida and the Gulf Coast, wildfire zones in California, but also some surprises like parts of Oklahoma where they're hit with a lot of hailstorms and tornadoes. And there we've seen big run-ups in property insurance costs. And so what this has done is it's made the sort of predictability of homeownership a little bit less predictable. Right.

And usually when you think of buying a house, you say, well, I'm kind of locking in my costs. I'm taking on a fixed rate mortgage and I have a predictable path of my expenses. And what's happening in property insurance markets is unraveling that. And we're seeing these big increases. And I worry a lot for homeowners who had bought on a fixed income or were sort of constrained in how much they could afford. And now they're seeing

Their insurance costs rise sharply. And so this is a reflection of climate change and our changing climate, which is inducing more frequent and more severe disasters. But it's also a function of mobility patterns and where we've moved in this country over the last really 50 years. We've been moving into the danger zones. We've been moving into harm's way. The population of

Florida has quadrupled since 1970. And when you look at the reports of the insurers and then the reinsurers, which is the industry that insures the insurance companies, they point especially to the larger concentration of residents in risky areas as being the main contributor to rising insurance premiums.

What could municipalities and states do to offset that? I mean, I'm just thinking about zoning issues and things like that that could help stave off that increase in people moving into places that are these danger zones. Yeah, I think this is one of the challenges where the incentives are especially misaligned. Local governments generally want to have more resources.

of a tax base. They want to see more properties in the, in their municipality. And that means that they're willing to allow development on, you know, swamp swamps and marshes and, and other sorts of risky areas. You see the development into the, into the wildfire risky areas. So, you know, I think that there's some misaligned incentives at a municipal level. What you then have at the state level is potentially more room for,

some discipline there to impose tighter rules and restrictions. But at the end of the day, we're operating in a world of a housing shortage. And so anything that we do to raise housing costs

is going to be unpopular and restricting the areas where people can build and increasing the material quality that they're going to use is going to raise those costs even further. And so that's the tension that we're facing right now in the context of the housing shortage makes all these issues quite tricky. There's one bright spot on making these climate-related adaptations possible.

that I think is going to be a model for a lot of places. And this is Alabama's efforts to fortify the roofs in hurricane-exposed parts of the state. There's been a large program in Alabama to...

provide grants at the state level and a recognition that, you know, doing this ex ante is far cheaper than replacing all of these roofs ex post. And so providing grants to help homeowners afford upgrading the quality of their roofs, it's been supported by the insurance industry and

They offer discounts on the insurance premiums thereafter if you've gone through this fortification process. And so I think there's a number of these pilot programs which are still, for the most part, quite small but are quite successful. And I think we're going to see more of these

play out across the country. You know, insurance markets are regulated at the state level. And so that sort of creates those 50 different laboratories that we hear so much about for different states to be able to try out new and different things.

Our guest today is housing expert Ben Keyes. We'll continue our conversation after a short break. I'm Tanya Mosley, and this is Fresh Air. This message comes from Carvana. Carvana makes car selling easy. Enter your license plate or VIN, answer some questions, and Carvana will give you a real offer in seconds. Whether you're looking to sell your car right now or whenever feels right, go to Carvana.com to sell your car the convenient way.

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I want to talk a little bit more about some of the challenges with housing. I think that we all have either heard the stories or seen firsthand the increase in homelessness.

One of the interesting things we saw in November is that several states voted on housing affordability measures, and many of them passed. For instance, Los Angeles and Denver passed an increase in sales tax to cover affordable housing and to help reduce homelessness. I mean, homelessness in general, it feels like such an intractable issue even before the housing crisis. And so I'm wondering from you, are these types of measures effective?

Of course, they feel like a step in the right direction. But what are your thoughts about them having true impact? I think some of these will have true impact. I think they are big enough potentially to

create enough units to make housing first be a major element of a reduction in homelessness. And certainly, you know, the Biden administration has tried to align efforts at a number of different levels. One of the challenges with homelessness is that it is ultimately a very local problem because people are mobile. And so, you know, they're going to move around to locations where they're going to find housing.

better quality of life, you know, and what form that takes for those on the streets might be quite different. But, you know, this is one of the challenges why you need sort of state and federal coordination. You can't simply have programs that are a one-off program in one city. And so seeing things that are more broad-based is an important element of this. I think it fits into a broader network of support that needs to be provided, whether that's

drug treatment, whether that's mental illness help, whether that's just related to food insecurity and job training and other needs. But in terms of what we've seen in the homelessness space, housing comes first. And solving that problem first seems to be the way in which better solutions follow.

You've mentioned how Minneapolis is a place that has reduced zoning and building barriers and prices have kind of like slowed there. It hasn't risen as fast as other places. And I actually looked it up and found that the vacancy rate there is about 4%, which is the lowest of any major U.S. city. What are they getting right?

Yeah, Minneapolis reacted responsibly to a local housing crisis. They were seeing this lack of affordability and a lack of units, and they took meaningful steps to make it easier to build in the city of Minneapolis. And I think this is something that is going to be used as a model soon.

Around the country, we're hearing from a number of cities that they're looking into this in much more detail. Again, this isn't about building skyscrapers on every corner. It's about sensible densification, especially around transit, where we can reduce dependence on cars. And so this is relaxing single-family zoning and lot sizes, so allowing for things like

duplexes or four-unit, very small multifamily developments. This is related to parking requirements and some of the other things that might be required in an apartment building that take up a lot of additional space where units would otherwise be useful. So there's a number of things along those lines that I think when combined with transit-oriented development, so developing near where public transit is available,

can greatly relax some of these affordability constraints. And we've seen this play out in Minneapolis already. And it's an early stage because building takes time. Acquiring land, acquiring financing, and actually getting the buildings built is very time consuming. And so I think we're still in the very early days of measuring the consequences in a city like Minneapolis. But thus far, we've seen prices grow more slowly in Minneapolis than in many other cities. And I think that that is

something that we should keep a close eye on and potentially think of those steps as a model for other local governments who say, we want to do something about this that isn't necessarily drastic. It's not going to change the fabric of our city or the culture of our city, but it's going to allow more development to happen, bring more people into our cities and allow them to afford living there so that they're not simply fleeing to less expensive markets. Right.

How much does nimbyism, you know, not in my backyard, factor into the potential changes of zoning in these communities that could build density in this way? It's huge. It's huge. I think we see a lot of people who move into a neighborhood and then refuse to think about how their house was built. Right.

So at some point, your home was built in that neighborhood. And it's sort of this idea that, well, the current number of houses in our community is the exact right number, even as our nation's population grows and grows. And so I think there's a tension there.

Now, some of the concerns and complaints are quite valid when we think about traffic, when we think about congestion, when we think about scarce numbers of seats in the local public school. Those are all reasonable concerns, but they're solvable problems. You know, when you look at the nimbyism movement—

You know, one of the challenges is related to who has voice in our communities. And when you look at the zoning meetings where these proposals are discussed, they're often held early in the evening on a weeknight when people with young families can't necessarily attend.

And when the only attendees are those who currently live in the community, not those who would benefit by moving into the community. And so, you know, there's a real tension there. And I think we've seen over the last few years a softening of those positions, a recognition that,

It's not just about my house, but about my children's houses and my grandchildren's houses and where they're going to live. We're seeing these initiatives in a number of different cities and even states passing that are seeking to override some of the strongest, nimbiest urges. And you can see where they're coming from. But in the long run, that type of position just isn't tenable as a nation if we are going to address the affordability crisis.

You mentioned Alabama and Minneapolis as a city that are bright spots. Are there other examples of community housing experiments or new approaches that have worked? Well, we have to be excited about what's happening in New York City, which just recently happened.

is dedicating itself to adding 500,000 units over the next 10 years. It's an incredibly ambitious goal. New York hasn't built like that since the 1960s, but in many ways, that's what we need. We need a return to a period where people are comfortable with the messiness of construction happening around them as we find ways to accommodate so many missing housing units. So

So I'm excited about that plan. I want to see it move forward into some more specifics, but I think there is a renewed support for development. And this is growing out of a movement, a recognition that is a long time coming. And so I think where we see some bright spots is the fact that, you know, city governments that are in many cases the critical choke point for development, looking for ways to cut red tape,

to improve their zoning code, to make life simpler for developers, and ultimately get units built. And so I'm excited to see what happens in New York. And that will be a test case going forward if they can hit that ambitious target. Our guest today is housing expert Ben Keyes. We'll continue our conversation after a short break. I'm Tanya Mosley, and this is Fresh Air.

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You know, there's been lots of reporting lately about what's being called the silver tsunami, that those 55 and older with no children and have these houses with like extra bedrooms could eventually flood the housing market with their homes and help make homes more affordable. What does the data say, though, on that scenario?

making a meaningful impact over the coming years, especially in some of the more expensive markets. Yeah, the silver tsunami sort of sounds like a low-budget Marvel superhero. I think the

Generally in the housing market, things move quite slowly. And so what we're talking about is a generation essentially turning over its housing to the next generation. And that's unlikely to cause a flood of housing or some dramatic glut of housing. I think ultimately it comes back to the question of are the houses safe?

near where the jobs are. And if the houses are near where the jobs are, then that can be very desirable and would be something that would relax some of the pressure on these high cost markets. But when you look into the data, and Zillow had a nice report on this recently, a lot of those mismatch houses where you have older homeowners with a lot of extra bedrooms, a lot of those are located in some of the Rust Belt cities, your Detroit's and your Buffalo's

and cities like that. And so that's not necessarily where the jobs are being created. And so what you need to find is that kind of alignment. I think there's also sort of a taste alignment that, you know, we'll see how that plays out if younger generations are interested in the same McMansions in the suburbs and the exurbs, or if, you know, now that they've spent more time living in

in denser environments because they can't afford to move into the suburbs, whether they're now looking for those townhome, row home experiences. And so I think there may be a question there about tastes as well. So I think it is going to be a very gradual process. I don't expect anything like a tsunami. I think it's going to be a much more gradual process.

process where homes will be passed down over time. The other thing that happens when homeowners age in places is they tend to cut back on the upgrades and the repairs to the house. Usually much older homeowners are not the ones who are upgrading the kitchens and renovating the spaces. And so there's often some large fixed costs that are necessary to bring those properties up to the level of the neighborhood.

And so I think that's one more way in which this isn't going to be an immediate solution. That said, there are a lot of people who will ultimately move into those homes. And so, you know, there's going to be a process where we'll see that generation turn over their home ownership stake to a younger generation. And that is going to create opportunities.

I'm really interested in something you mentioned about the Rust Belt and the situation there. In Detroit in particular, we know like 10, 15, 20 years ago, I can't believe it's been that long, but there were all those stories about, oh, you can buy a home for $10,000, $15,000, $20,000. Even families saying, we'll pass down our homes to you. But as you said, if there aren't jobs there that will bring people to those areas, that's

That may not have as big of an impact. There were also those stories that like rumors that Chinese investors were coming in and buying blocks and blocks of homes because they were $10,000, $15,000. I'm wondering what's the reality of a place like that today that Detroit has...

has now seen a resurgence. There's growth there. The cost of housing is now rising and almost at pace with some other areas. What are you seeing in a place like Detroit? I think you've captured it well. Detroit's a city that was declining for basically 50 years, a really prolonged period of

of losing population. And that's very challenging for the built environment. You have a street grid, you have houses built that are not able to be moved. And so as the population of

a community shrinks, you are then faced with all of the challenges of urban decline, where you're trying to right-size the city, right-size the services that are provided, which schools should stay open, all these kinds of challenges. And in that case, the housing market adjusts

at the speed of depreciation. It adjusted the speed at which these properties ultimately lose their value and reach that kind of floor of, you know, please take this property off of our hands. At this point,

We are seeing some of these upticks, as you're describing, in rent growth. We're seeing a resurgence in a number of different ways. We're seeing jobs returning to Detroit in certain ways. At the same time, the land bank in Detroit, so the city government, owns about 20% of all of the parcels in the city of Detroit. And so what that means is, you know, they're taking these parcels off the market and

And at some point, there will be opportunities to redeploy those parcels for sale and for development. You alluded to the sort of investor strategy in a place like Detroit. That would have been a very poor strategy for a very long time as you had to wait, you know, decades in many cases for some of these neighborhoods to turn around. And some neighborhoods still have not turned around or are now much depopulated relative to

To where they were before. And so as an investment strategy, you know, you're really looking for that type of upswing where you're buying low and selling high. And I think, you know, then that there are going to be those targets of opportunity where you have neighborhoods that sort of meet that profile where there's potentially some job growth there.

Potentially you're in, you know, near a good school district or near public transportation that's going to get you where you want to go. So I think that's where those opportunities come up. And that's usually a sign of a community where there's at least the potential for some upswing. You know, I thought it was really interesting when my producer, Monique, asked you for bright spots. One of the things you said was,

The market is very bright for boomers who bought a long time ago and have built tremendous wealth through the market. I mean, that doesn't feel very bright for millennials or really anyone else. No, it doesn't. But if we take a step back and we think about the state of the housing market, in a sense, we've traded stability for a lack of affordability.

And so what we've done in the housing market by under building housing, we've kept supply scarce and that's increased housing values. We've also, during the recent COVID period, kept people in their homes. We avoided having the foreclosure crisis that we went through during the global financial crisis. And in doing so, what we've done is we've allowed a great deal of home equity to build up.

for the baby boomer generation, for older homeowners who own their homes. Many of them own their homes outright with no mortgage attached. And just looking at the numbers, there's an enormous amount of housing wealth that we've built up in the U.S. We have about $35 trillion in home equity in the United States.

And that is disproportionately held by older homeowners who have owned the homes a much longer period of time. And so for those groups, the house represents in many cases their largest asset. And that is a great success story for those generations. And it's provided a great deal of economic stability for older families. But it comes at a price. And it comes at the price of affordability and access for the younger generations. Yeah.

What advice would you give for those who are debating whether they should buy a home right now or just wait and see? So first, do your homework and figure out the cost of housing in the market that you're looking in, both for owning and for renting. I think it makes a lot of sense to continue to rent in markets where prices are high and interest rates are high. In many cases right now, you'd be better off putting your

into something that's delivering a safe, predictable return that might be more safe and predictable than returns on housing. So from an investment standpoint, investing elsewhere is very sensible. And then I think as you're approaching the decision to buy a house, think about

Think long term, because there are large fixed costs to buying a house in terms of transaction taxes, in terms of broker fees, title insurance and other costs that need to be rolled into that cost when you're doing an apples to apples comparison. The right comparison isn't just comparing the mortgage payment.

And then on top of that, there's a challenge with rising insurance costs and property taxes. And so you need to take a view on, can I afford the property insurance, flood insurance, wind insurance, other supplemental insurance policies in a few years when those may be more expensive than they are today? So I think it takes a lot of time.

more careful budgeting approach than we've seen in the past. And in many of those cases, my sense is that that's going to come out on the rental side of the ledger rather than owning, given our current affordability crisis. Ben Keyes, thank you so much for this conversation. Well, thanks so much for having me. Ben Keyes is a professor of real estate and finance at the University of Pennsylvania's Wharton School.

Coming up, film critic Justin Chang reviews The Seed of the Sacred Fig, the latest drama from Iranian filmmaker Mohamed Rasoulof, which premiered this year at the Cannes Film Festival, where it won the Special Jury Prize. This is Fresh Air.

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Earlier this year, Iranian descendant filmmaker Mohammad Rasouloff fled his country to escape an eight-year prison sentence. He made it to the Cannes Film Festival just in time for the premiere of his latest drama, The Seed of the Sacred Fig, which was filmed secretly in Iran. The movie won a special jury prize at the festival and was submitted for the Oscar for Best International Feature by Germany, where Rasouloff now resides.

Our film critic Justin Chang has this review. In the nearly 20 years that I've been attending the Cannes Film Festival, I've rarely witnessed anything as emotional as I did last May, when the Iranian director Mohammad Razoulof arrived for the world premiere screening of his new movie, The Seat of the Sacred Fig. As he walked up the red-carpeted steps and entered the theater to thunderous applause, Razoulof didn't look like a man who had been on the run just two weeks earlier.

He fled his country after receiving an eight-year prison sentence, hardly the first time he's run afoul of the government, which since 2010 has frequently arrested him, jailed him, and banned him from filmmaking. Like some of his other movies, The Seat of the Sacred Fig was shot entirely in secret. That can't have been easy to pull off, though in some ways it makes a certain sense for a drama that's all about the corrosive nature of secrets and lies.

Misog Zare'e plays a lawyer named Iman, who's just been promoted to investigating judge, a job so dangerous that he's been issued a gun for his protection. His wife, Najmeh, played by Sohelaw Golestani, is excited about the news. With Iman's higher salary, they can at last afford a bigger home.

But they warn their two daughters, 21-year-old Rezvan and teenage Sanaa, that they must be irreproachable in their behavior so as not to harm their father's reputation. That means wearing the hijab in public, keeping a low profile on social media, and not hanging out with the wrong people. But Rezvan and Sanaa are both smart, observant, and increasingly critical of their parents' traditionalism, especially in light of the news.

The story takes place in 2022, during the early days of the Woman Life Freedom Movement. Those protests erupted after a 22-year-old Kurdish-Iranian woman died in the custody of the Morality Police, which had arrested her for allegedly wearing a hijab improperly. Razulov includes real-life footage of the protests and ensuing acts of police violence, giving the movie a jolt of documentary immediacy.

but he also shows us how Iran's social unrest impacts the family directly. When one of her friends is injured at a rally, Rezvan becomes increasingly supportive of the movement, to her parents' chagrin. But even Iman has his doubts about the government he serves. He's demoralized by his new job, which forces him to interrogate and likely imprison hundreds of protesters. Razulov has never been shy about calling out Iran's authoritarian regime.

as he did in earlier movies like Manuscripts Don't Burn and There Is No Evil. What makes The Seed of the Sacred Fig so gripping, over its nearly three-hour running time, is how assuredly it blends domestic drama and topical thriller, the personal and the political. The family home becomes a psychological war zone where secrets fester behind closed doors, and every character has something to hide. The actors are uniformly superb,

I especially liked the nuanced sibling dynamic between Masa Rostami as the sensitive, thoughtful older sister, and Setare Maliki as the slyer, more mischievous younger one. Razulov's sympathies are clearly with them and the woman-life freedom protesters. But he also extends compassion to the parents, especially Iman, who, as Rezvan courageously points out, is too entrenched in the system to see that the system is wrong.

Just as the family's home is starting to feel unbearably claustrophobic, the movie shifts gears. There's a sudden change in scenery, and after the slow-simmering suspense of the first half, Razulov pushes the drama into full-blown action movie territory. There's a high-speed car chase, an on-camera interrogation, and finally a tense climax that suggests a showdown out of a classic western.

It's a bold stroke, and while not everyone will make the leap, I appreciate Razulov's willingness to flex his genre muscles in service of a larger point. The family in this story isn't just a family. It's a kind of microcosm of middle-class Iranian society, with deep rifts between people across genders and generations. Meaningful change may be possible, Razulov seems to be saying.

but it will be inevitably painful and violent. It's a bleak conclusion, but it's also suffused with a deep sense of mourning. Mohammad Razulov may have left Iran, but not once during this stunning movie is his love for his country ever in doubt. Justin Chang is a film critic for The New Yorker. He reviewed The Seed of the Sacred Fig.

Tomorrow on Fresh Air, Stephen Colbert and Evie McGee Colbert. They're partners in marriage and in their production company, and she makes regular appearances on his late-night show. They've written a new cookbook together called Does This Taste Funny? They'll talk about food, coming close to death mid-show, meeting the Pope, and more. I hope you'll join us. To keep up with what's on the show and get highlights of our interviews, follow us on Instagram at NPRFreshAir.

Fresh Air's executive producer is Danny Miller. Our technical director and engineer is Audrey Bentham. Our interviews and reviews are produced and edited by Phyllis Myers, Anne-Marie Baldonado, Sam Brigger, Lauren Krenzel, Teresa Madden, Monique Nazareth, Faya Chaloner, Susan Nakundi, and Anna Bauman. Our digital media producer is Molly C.V. Nesbert. Roberta Shorrock directs the show. With Terry Gross, I'm Tanya Mosley.

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