More McMansions can help solve America’s housing crisis

I’m Justin Fox and this is Bloomberg Opinion Today, a six-bedroom compilation of Bloomberg Opinion’s opinions. Sign up here. America needs m [Bloomberg]( I’m Justin Fox and this is Bloomberg Opinion Today, a six-bedroom compilation of Bloomberg Opinion’s opinions. Sign up [here](. Today’s Agenda - America needs more [luxury housing](. - LLaMA [isn’t free](. - AlphaFold’s latest [big leap](. - Why [Apple’s buybacks]( are good. A Luxurious Way to Make Housing More Affordable About 10,000 millennials are turning 40 every day in the US, and a lot of them are doing quite well for themselves (among those turning 40 this year: LeBron James and Mark Zuckerberg). And when people enter their 40s and have money to spare, [writes]( Conor Sen, they “tend to want nicer housing than they did in their 30s.” Meeting these high-end buyers’ needs will be key to making housing more affordable in the coming years. That’s because the real-estate version of trickle-down economics, a process called [filtering](, actually seems to work. Satisfying demand from affluent buyers frees up housing units and reduces rents and purchase prices for those with lower incomes. It reduces them relative to what they would have been in the absence of new construction, not necessarily in absolute terms — although Conor points out that the recent boom in apartment construction in Sun Belt cities does appear to have driven [significant rent declines]( at so-called Class B properties. Are builders gearing up to serve the onslaught of posh millennials that Conor predicts? His column inspired me to check one of my favorite data sources, the US Census Bureau’s [Characteristics of New Housing](, where I learned that the percentage of new US single-family houses with four or more bedrooms — a mark of affluence, if not luxury — hit an all-time high of 48% in 2022 (2023 numbers will be out this summer). How Much Is That LLaMA in the Window? Aforementioned wealthy millennial Mark Zuckerberg, chief executive officer of Facebook and Instagram parent Meta Platforms Inc., has [said]( he’s keeping Meta’s artificial-intelligence platform LLaMA (for Large Language Model Meta AI) free and open-source to prevent power from being concentrated in a single company. Given that Zuckerberg hasn’t exactly been averse to consolidated power in the past, one has to think there are other considerations at stake. Parmy Olson [offers a few](. For now it’s a way to lure talented AI researchers to the company, as well as to undercut competitors that charge for their large-language models. And Zuckerberg surely would not object to at some point using the popularity of open-source LLaMA to steer data and users to other Meta products. “Like any good Silicon Valley tycoon,” Parmy writes, “Zuckerberg has slapped a benevolent label on an effort to extract value for his company.” In other AI-related news, Lisa Jarvis [explains that]( the latest iteration of Alphabet Inc.’s AlphaFold protein structure database represents a giant leap in understanding how the human body works, one that should eventually have big consequences for drug development. And in other tech news, Tyler Cowen [proposes]( that Apple Inc.’s gigantic stock buybacks, and the positive market reaction to the latest one, are indications of a slower but sustainable growth trajectory for the company. “Apple is saying, we cannot take over the world, but what we have in the works will go well,” writes Tyler. “And the market believes it.” Telltale Charts Can you find the US in the chart below? It’s possible if you scroll over it on the web, revealing that the merchant ships produced here in 2022 added up up to just 73,000 gross tons, compared with China’s 25.9 million, South Korea’s 16.3 million and Japan’s 9.6 million. The Biden administration has been reacting to this imbalance by targeting Chinese shipbuilders with investigations and docking fees, but Bloomberg’s editorial board [argues that]( it could probably accomplish more by increasing cooperation with South Korea and Japan. The US shipbuilding sector is frightfully uncompetitive, and shifting production to overseas allies and encouraging them to invest US shipyards are key to changing that. Indiana was hit by 65 tornadoes last year, the second busiest this century, and seven more twisters landed just [this week](. But long-run tornado statistics for the state don’t show any clear trend. Mark Gongloff [explains]( that this is probably because, while global warming increases the potential energy that drives extreme storms, it also reduces the wind shear (change in wind speed and direction at different altitudes) that sets off tornados. Modeling how these forces will interact as temperatures move even higher is tough, but it may be that the trade-off will be fewer tornadoes of greater intensity. Telltale Photo The Zac Posen-designed Gap denim dress worn by Oscar-winner Da’Vine Joy Randolph was far from the flashiest outfit on display at this week’s Met Gala. But it worked, and was evidence that The Gap Inc. may be getting its act together after years of struggles, [writes]( Andrea Felsted. It would have been even more impressive if one could find something resembling the dress in stores, but with Posen having joined the owner of the Gap, Old Navy and Banana Republic just three months ago, that would have been a stretch. Da’Vine looking divine in Gap. Photographer: Cindy Ord/MG24/Getty Images North America Further Reading Skipping stocks is riskier than [owning them](. — John Authers [NATO’s new “lake”]( could be a flash point. — James Stavridis [Poor service]( is in England’s DNA. — Matthew Brooker MTG got what [she deserved](. — Patricia Lopez Panama’s [economic engine]( is sputtering. — Juan Pablo Spinetto BBVA should [walk away]( from Sabadell. — Paul J. Davies BHP should [pay more]( for Anglo American. — Chris Hughes [Norfolk’s Shaw]( survives, barely. — Thomas Black ICYMI Better governance has [paid off for investors]( in Japan. [Jobless claims]( jump, and equities [follow](. [Eighty-eight debt deals]( in 72 hours. Kickers How to hold AI [accountable]( for errors. Minor league mascots are [raunchy](. Palo Alto’s [trillion-dollar]( opportunity. Notes:  Please send extra bedrooms and feedback to Justin Fox at justinfox@bloomberg.net Follow Us Like getting this newsletter? [Subscribe to Bloomberg.com]( for unlimited access to trusted, data-driven journalism and subscriber-only insights. Before it’s here, it’s on the Bloomberg Terminal. Find out more about how the Terminal delivers information and analysis that financial professionals can’t find anywhere else. [Learn more](. Want to sponsor this newsletter? [Get in touch here](. You received this message because you are subscribed to Bloomberg's Opinion Today newsletter. If a friend forwarded you this message, [sign up here]( to get it in your inbox. [Unsubscribe]( [Bloomberg.com]( [Contact Us]( Bloomberg L.P. 731 Lexington Avenue, New York, NY 10022 [Ads Powered By Liveintent]( [Ad Choices](