1 00:00:00,680 --> 00:00:04,320 Speaker 1: What's up, everybody. Welcome to another episode of Financial Herrisey, 2 00:00:04,320 --> 00:00:06,240 Speaker 1: where we talk about how money works so that you 3 00:00:06,280 --> 00:00:09,240 Speaker 1: can make more, keep more, and give more. This episode 4 00:00:09,400 --> 00:00:12,800 Speaker 1: is no different. We have a very special episode here. 5 00:00:12,800 --> 00:00:16,079 Speaker 1: I've got my friend Jason Hartman joining us for the 6 00:00:16,160 --> 00:00:21,040 Speaker 1: podcast today. Jason Hartman, He's been involved in thousands of 7 00:00:21,120 --> 00:00:25,360 Speaker 1: real estate transactions. He owns a ton of income producing 8 00:00:25,400 --> 00:00:28,360 Speaker 1: real estate all across the country, and he has helped 9 00:00:28,720 --> 00:00:33,160 Speaker 1: thousands of other investors get invested into real estate through 10 00:00:33,159 --> 00:00:36,479 Speaker 1: his company, Empowered Investor. He does events as well. He's 11 00:00:36,520 --> 00:00:39,040 Speaker 1: got an event coming up in Scottsdale, Arizona, in at 12 00:00:39,040 --> 00:00:42,000 Speaker 1: the end of January, in a month and a half 13 00:00:42,040 --> 00:00:44,960 Speaker 1: from now. I'll be speaking at that event, in addition 14 00:00:45,000 --> 00:00:47,919 Speaker 1: to the other heavy hitters that he's got there, Ken McElroy, 15 00:00:48,040 --> 00:00:51,320 Speaker 1: Tom Wheelwright, George Gammon to name a few, and you 16 00:00:51,320 --> 00:00:54,120 Speaker 1: can find more information about it on his website Jason 17 00:00:54,160 --> 00:00:58,560 Speaker 1: Hartman dot com. So, Jason, thank you so much for 18 00:00:58,720 --> 00:01:00,680 Speaker 1: joining me here today. Very I had to talk to 19 00:01:00,680 --> 00:01:04,600 Speaker 1: you about real estate. We're gonna have some contrarian views. 20 00:01:04,760 --> 00:01:09,240 Speaker 1: Most of the people that I talked to are are 21 00:01:09,400 --> 00:01:12,600 Speaker 1: predicting a crash hoping for a crash and get a 22 00:01:12,640 --> 00:01:14,920 Speaker 1: little bit upset when anybody says that there's not a 23 00:01:14,920 --> 00:01:17,959 Speaker 1: crash coming. So I'm excited to hear about the fundamentals 24 00:01:17,959 --> 00:01:21,080 Speaker 1: from somebody who is deep in the industry. But I 25 00:01:21,080 --> 00:01:23,280 Speaker 1: would like to hear a little bit of your background, 26 00:01:23,600 --> 00:01:25,399 Speaker 1: how you got into real estate and where you're at 27 00:01:25,440 --> 00:01:28,679 Speaker 1: today with your real estate investing. Sure, and Joe, it's 28 00:01:28,680 --> 00:01:31,200 Speaker 1: great to see you again, buddy, But I gotta say, 29 00:01:31,400 --> 00:01:34,360 Speaker 1: you know it is It is just funny how there's 30 00:01:34,400 --> 00:01:39,480 Speaker 1: this huge contingent of people who just want the world 31 00:01:39,560 --> 00:01:43,000 Speaker 1: to end. They want the market to crash, and you know, 32 00:01:43,120 --> 00:01:45,240 Speaker 1: I give it. I mean, you know, they think it's 33 00:01:45,240 --> 00:01:49,200 Speaker 1: an opportunity. Maybe they missed out and they feel like, gosh, 34 00:01:49,240 --> 00:01:52,200 Speaker 1: you know, if if the market crashes, it will finally 35 00:01:52,320 --> 00:01:56,000 Speaker 1: be my opportunity. Um, and you know, we'll get into 36 00:01:56,040 --> 00:01:58,680 Speaker 1: some fundamentals. I've been doing this a long time. I mean, 37 00:01:58,720 --> 00:02:01,040 Speaker 1: I've got three decades of exp arians under my belt, 38 00:02:01,880 --> 00:02:05,240 Speaker 1: as you know, watching my mom investing as I was 39 00:02:05,280 --> 00:02:07,880 Speaker 1: growing up, and really being a very financially a tuned 40 00:02:07,960 --> 00:02:11,040 Speaker 1: kid uh and uh and doing it myself and for 41 00:02:11,280 --> 00:02:13,880 Speaker 1: thousands and thousands of clients I've been involved in almost 42 00:02:13,880 --> 00:02:18,120 Speaker 1: ten thousand real estate deals, so a lot of experience there. 43 00:02:18,600 --> 00:02:21,440 Speaker 1: And um, you know, on my podcast and YouTube channel, 44 00:02:21,480 --> 00:02:23,960 Speaker 1: I get to hear the feedback and read the comments 45 00:02:24,000 --> 00:02:27,800 Speaker 1: just like you do from my audience, and uh, yeah, 46 00:02:27,840 --> 00:02:31,000 Speaker 1: it's it's just it's really kind of amazing how human 47 00:02:31,040 --> 00:02:34,960 Speaker 1: psychology works. And it can be uh an asset to us, 48 00:02:35,040 --> 00:02:38,679 Speaker 1: or it can be a real uh hindrance in our success. 49 00:02:38,720 --> 00:02:40,560 Speaker 1: You know, so we've got to you know, we've got 50 00:02:40,560 --> 00:02:43,360 Speaker 1: to have control over our emotions that are thinking on that. 51 00:02:43,520 --> 00:02:46,800 Speaker 1: And and yeah, if you take a contrarian view, you know, 52 00:02:47,360 --> 00:02:53,320 Speaker 1: you can just feel the hate comments coming in now. Absolutely. 53 00:02:53,840 --> 00:02:56,960 Speaker 1: But yeah, to answer your question, you know my background, Um, 54 00:02:57,160 --> 00:03:00,720 Speaker 1: I got. I grew up poor in Los Angeles, California. 55 00:03:00,760 --> 00:03:03,400 Speaker 1: Didn't like being poor very much. By about ninth grade, 56 00:03:03,400 --> 00:03:06,079 Speaker 1: I realized, you know, money was important. I wanted to 57 00:03:06,160 --> 00:03:08,640 Speaker 1: have new clothes and you know, buy a car. You know, 58 00:03:08,760 --> 00:03:11,080 Speaker 1: when I got into high school, and you know, so 59 00:03:11,360 --> 00:03:13,640 Speaker 1: all the cute girls were hanging out with rich guys, 60 00:03:13,720 --> 00:03:15,640 Speaker 1: and uh, you know, it's like I wanted to be 61 00:03:15,680 --> 00:03:18,639 Speaker 1: in that crowd. And um, when I was sixteen years old, 62 00:03:18,720 --> 00:03:21,120 Speaker 1: I spent infomercial for a real estate guy. I went 63 00:03:21,160 --> 00:03:23,519 Speaker 1: and got his book. I read three chapters, put it down. 64 00:03:23,600 --> 00:03:26,240 Speaker 1: My mom picked it up, read the rest. She started 65 00:03:26,320 --> 00:03:29,440 Speaker 1: reading more books, going to seminars and then invited me 66 00:03:29,480 --> 00:03:32,160 Speaker 1: to one when I was eighteen years old, and uh, 67 00:03:32,240 --> 00:03:35,160 Speaker 1: I went check that out. Got inspired, and I thought, 68 00:03:35,160 --> 00:03:38,560 Speaker 1: you know, I didn't understand what they were talking about 69 00:03:38,600 --> 00:03:40,840 Speaker 1: as an eighteen year old kid, and so I thought 70 00:03:40,880 --> 00:03:43,160 Speaker 1: I'd just get my real estate license to kind of 71 00:03:43,200 --> 00:03:47,080 Speaker 1: like understand the basics and the business. And I enrolled 72 00:03:47,080 --> 00:03:50,200 Speaker 1: in Century twenty one real estate school. For now, if 73 00:03:50,200 --> 00:03:54,040 Speaker 1: you adjust that for inflation, that's probably reasonably expensive nowadays 74 00:03:55,000 --> 00:03:58,200 Speaker 1: or inexpensive, I should you know back then then those 75 00:03:58,240 --> 00:04:02,080 Speaker 1: dollars that year, right, And I got my real estate 76 00:04:02,120 --> 00:04:05,200 Speaker 1: license my first year of college, and I started selling 77 00:04:05,240 --> 00:04:07,800 Speaker 1: real estate part time while I was going to school 78 00:04:07,800 --> 00:04:13,160 Speaker 1: at Long Beach City College. And six months into my career, 79 00:04:13,240 --> 00:04:15,440 Speaker 1: one of my clients, who was an investor, his name 80 00:04:15,480 --> 00:04:18,680 Speaker 1: was Jim wool I had purchased several properties from me 81 00:04:18,800 --> 00:04:21,159 Speaker 1: as I drove him around in my little Volkswagen Jetta 82 00:04:21,240 --> 00:04:23,479 Speaker 1: and showed them houses. And you know, these were huddon 83 00:04:23,520 --> 00:04:26,920 Speaker 1: v a repose really ugly properties with boards on the windows, 84 00:04:26,960 --> 00:04:29,400 Speaker 1: and uh, they were really beat up. Anyway, he bought 85 00:04:29,400 --> 00:04:32,919 Speaker 1: several properties and one he didn't like and he said, hey, Jason, 86 00:04:32,920 --> 00:04:34,760 Speaker 1: why don't you list this one and sell it for 87 00:04:34,800 --> 00:04:37,159 Speaker 1: me and I'll buy something else from you. And I said, Jim, 88 00:04:37,279 --> 00:04:39,080 Speaker 1: I don't want to. I don't want to sell it 89 00:04:39,120 --> 00:04:40,680 Speaker 1: for you. I will want to buy it from you. 90 00:04:41,200 --> 00:04:44,800 Speaker 1: And that was my first investment property at age twenty. 91 00:04:44,960 --> 00:04:48,680 Speaker 1: And um, it just started from their income properties, the 92 00:04:48,720 --> 00:04:52,880 Speaker 1: most historically proven asset class in the entire world. And um, 93 00:04:52,920 --> 00:04:55,920 Speaker 1: I've helped thousands and thousands of clients invest in income 94 00:04:55,960 --> 00:04:59,680 Speaker 1: properties nationwide since then. Absolutely, So you've been doing this 95 00:04:59,720 --> 00:05:02,120 Speaker 1: of their a long time. You've seen the markets go 96 00:05:02,279 --> 00:05:05,160 Speaker 1: up and down. You've seen all of the different markets 97 00:05:05,160 --> 00:05:08,359 Speaker 1: that are everywhere, and that's uh, that's that's that's something 98 00:05:08,360 --> 00:05:11,160 Speaker 1: that I'd like to hear you talk about because, uh, 99 00:05:11,200 --> 00:05:15,159 Speaker 1: there there's not a real estate market, right there are 100 00:05:15,800 --> 00:05:21,000 Speaker 1: real estate markets. Yeah. Well, uh, you know, I remember 101 00:05:21,040 --> 00:05:23,520 Speaker 1: my first trip to Europe as an adult. I was 102 00:05:23,560 --> 00:05:26,200 Speaker 1: born in Europe, but my first trip to real estate 103 00:05:26,480 --> 00:05:29,040 Speaker 1: to Europe as an adult, I went with a buddy 104 00:05:29,040 --> 00:05:31,360 Speaker 1: of mine. We rented a car and we drove all 105 00:05:31,400 --> 00:05:33,800 Speaker 1: around Europe, like three thousand miles on this trip, right, 106 00:05:34,160 --> 00:05:39,080 Speaker 1: and um, I remember during about lunch, we drove through 107 00:05:39,080 --> 00:05:44,640 Speaker 1: an entire country, Luxembourg. And in that country there is 108 00:05:44,680 --> 00:05:48,359 Speaker 1: a national real estate market. Because it's so small in 109 00:05:48,360 --> 00:05:51,919 Speaker 1: a country is large Versus the United States, there's no 110 00:05:52,160 --> 00:05:55,360 Speaker 1: such thing as a national housing market. Uh. There are 111 00:05:55,800 --> 00:05:58,200 Speaker 1: about four hundred what they call m s as or 112 00:05:58,240 --> 00:06:04,400 Speaker 1: metropolitan areas. There are thirty one hundred over counties in 113 00:06:04,400 --> 00:06:07,720 Speaker 1: the US and over nine thousand cities in the US. 114 00:06:08,440 --> 00:06:11,440 Speaker 1: Uh and according to Obama, there's like fifty seven states. 115 00:06:11,440 --> 00:06:15,240 Speaker 1: So uh, you know, it's a big country and it's 116 00:06:15,400 --> 00:06:18,880 Speaker 1: very diverse, and you know, to your point, we have 117 00:06:19,000 --> 00:06:22,279 Speaker 1: to realize that there's you know, all real estate is local. 118 00:06:22,400 --> 00:06:24,960 Speaker 1: There's no such thing as a national housing market. But 119 00:06:25,040 --> 00:06:29,240 Speaker 1: in order to help analyze things, we can, I believe 120 00:06:29,279 --> 00:06:32,800 Speaker 1: break it down into three types of markets. And the 121 00:06:32,880 --> 00:06:36,080 Speaker 1: first type would be linear markets, the second would be 122 00:06:36,160 --> 00:06:39,560 Speaker 1: cyclical markets, and the third would be hybrid markets. So 123 00:06:39,640 --> 00:06:41,480 Speaker 1: that just is in between the two is the name 124 00:06:41,480 --> 00:06:44,080 Speaker 1: would apply, So linear and cyclical that's the ones we 125 00:06:44,120 --> 00:06:47,080 Speaker 1: really want to talk about. Linear markets are the markets 126 00:06:47,320 --> 00:06:49,960 Speaker 1: I like to invest in for my own portfolio, and 127 00:06:50,040 --> 00:06:52,720 Speaker 1: I like to help clients invest in these markets because 128 00:06:52,760 --> 00:06:56,120 Speaker 1: if you're looking at a chart show of appreciation over time, 129 00:06:56,640 --> 00:06:59,400 Speaker 1: it's a very steady chart. Uh. You know, it has 130 00:06:59,440 --> 00:07:02,720 Speaker 1: little ups and downs, but they're not very pronounced. The 131 00:07:03,640 --> 00:07:07,520 Speaker 1: peaks are, you know, not so pronounced. The troughs are 132 00:07:07,560 --> 00:07:11,040 Speaker 1: not so pronounced either. Uh. The other kind, in contrast, 133 00:07:11,120 --> 00:07:13,080 Speaker 1: is a cyclical market, like where I grew up in 134 00:07:13,080 --> 00:07:16,920 Speaker 1: Los Angeles. That's a cyclical market, and the peaks and 135 00:07:17,000 --> 00:07:20,880 Speaker 1: valleys are are just extreme. It's like a roller coaster 136 00:07:20,920 --> 00:07:23,680 Speaker 1: if you're looking at the chart and um, and so 137 00:07:23,800 --> 00:07:27,160 Speaker 1: those are the differences. How do we know what a 138 00:07:27,680 --> 00:07:31,240 Speaker 1: what a cyclical market is and what a linear market? Well, Uh, 139 00:07:31,320 --> 00:07:34,880 Speaker 1: cyclical markets number one, get all the news media attention. 140 00:07:35,320 --> 00:07:38,920 Speaker 1: And the case Shiller Index, the main index that's probably 141 00:07:38,960 --> 00:07:41,320 Speaker 1: the most quoted index, or at least one of them 142 00:07:41,360 --> 00:07:46,120 Speaker 1: for real estate values. UH only profiles twenty markets. And 143 00:07:46,160 --> 00:07:49,440 Speaker 1: guess what, Fifteen of the twenty markets in the case 144 00:07:49,440 --> 00:07:54,840 Speaker 1: Shiller index are cyclical markets. Right, So seventy of that 145 00:07:55,080 --> 00:07:59,560 Speaker 1: entire index is cyclical. Only is hybrid or linear. So 146 00:07:59,840 --> 00:08:02,920 Speaker 1: you're getting a very skewed view when you listen to 147 00:08:02,960 --> 00:08:06,880 Speaker 1: the mainstream media, like with everything else too, just real state, 148 00:08:08,200 --> 00:08:11,160 Speaker 1: but we won't go there. Uh and and and you 149 00:08:11,160 --> 00:08:13,440 Speaker 1: know you can you can have a lot of blind spots, 150 00:08:14,160 --> 00:08:17,360 Speaker 1: and you can miss opportunities, or you can lose money 151 00:08:17,440 --> 00:08:21,440 Speaker 1: by taking the wrong opportunities. Uh. So that's the first 152 00:08:21,480 --> 00:08:25,280 Speaker 1: thing to understand. UM. Cyclical markets A little more on that. 153 00:08:25,760 --> 00:08:27,840 Speaker 1: These are the markets, the high flying markets that get 154 00:08:27,920 --> 00:08:30,160 Speaker 1: all the attention in the US. Their markets like where 155 00:08:30,160 --> 00:08:32,720 Speaker 1: I live, South Florida. I live in Palm Beach, Florida, 156 00:08:32,760 --> 00:08:35,120 Speaker 1: but Miami just south of me. Uh, you know, that's 157 00:08:35,160 --> 00:08:39,360 Speaker 1: a very cyclical market. The expense of Northeastern markets New York, Washington, 158 00:08:39,440 --> 00:08:43,720 Speaker 1: d C, Boston, Massachusetts, those are a cyclical markets. Um, 159 00:08:43,960 --> 00:08:46,280 Speaker 1: the West coast of the United States, pretty much the 160 00:08:46,480 --> 00:08:50,640 Speaker 1: almost the whole West Coast is cyclical, but everything else 161 00:08:51,160 --> 00:08:54,000 Speaker 1: is linear or hybrid. So the vast majority of the 162 00:08:54,120 --> 00:08:58,120 Speaker 1: land masts is not cyclical. And around the world, the 163 00:08:58,280 --> 00:09:02,280 Speaker 1: cyclical markets are all the troll fee markets Paris, London, Dubai, 164 00:09:02,760 --> 00:09:06,240 Speaker 1: Hong Kong. Right, those kinds of markets. Okay, most of 165 00:09:06,280 --> 00:09:09,480 Speaker 1: the world and most of the country is linear, right, 166 00:09:09,600 --> 00:09:12,439 Speaker 1: but it gets very little attention because it's not newsworthy. 167 00:09:12,640 --> 00:09:15,079 Speaker 1: Look at the news media wants to report on things 168 00:09:15,320 --> 00:09:19,160 Speaker 1: where there's something going on, where there's something extreme, something sensational. 169 00:09:19,559 --> 00:09:22,280 Speaker 1: And this is why these boring linear markets just don't 170 00:09:22,320 --> 00:09:24,400 Speaker 1: get a lot of attention, but they are the best 171 00:09:24,480 --> 00:09:27,679 Speaker 1: markets in which to invest. This is almost like what 172 00:09:27,720 --> 00:09:29,800 Speaker 1: you talk about the dog that doesn't bark a lot. 173 00:09:29,840 --> 00:09:33,400 Speaker 1: It's like, news is something that's happening. That's what news is. 174 00:09:33,480 --> 00:09:36,800 Speaker 1: And if it doesn't do anything, there's no news. If 175 00:09:36,800 --> 00:09:39,480 Speaker 1: it doesn't do anything other than slowly go up, you know, 176 00:09:39,720 --> 00:09:42,240 Speaker 1: then there's no news there to talk about. So it's 177 00:09:42,280 --> 00:09:46,280 Speaker 1: ignored because there's nothing happening other than making people rich. Right, 178 00:09:46,960 --> 00:09:48,960 Speaker 1: you know, I really like the way you said that 179 00:09:48,960 --> 00:09:51,960 Speaker 1: that that's exactly the definition of news. That's a very 180 00:09:51,960 --> 00:09:55,360 Speaker 1: good point that you made. Yeah, excellent point. So another 181 00:09:55,400 --> 00:09:57,560 Speaker 1: way that you break down at real estate or real 182 00:09:57,640 --> 00:10:01,200 Speaker 1: estate is broken down is between single thing family and multifamily. 183 00:10:01,480 --> 00:10:03,920 Speaker 1: These are very different as well in terms of the 184 00:10:03,960 --> 00:10:07,480 Speaker 1: supply demand dynamics, which we all know supply demand drives price. 185 00:10:07,920 --> 00:10:11,319 Speaker 1: Can you talk about that? Yeah, absolutely, And that's that's 186 00:10:11,320 --> 00:10:14,320 Speaker 1: a good question because um, you know, of course there's 187 00:10:14,400 --> 00:10:17,840 Speaker 1: many types of markets. We talked about the geography of 188 00:10:17,880 --> 00:10:21,679 Speaker 1: real estate, but you can segment by price by condos 189 00:10:21,760 --> 00:10:25,120 Speaker 1: or single family or multi family. Uh, and all you 190 00:10:25,160 --> 00:10:28,280 Speaker 1: can peel this on, you know, a whole bunch of weights, okay, 191 00:10:28,600 --> 00:10:32,800 Speaker 1: But single family and multifamily they act pretty differently. Uh. 192 00:10:32,840 --> 00:10:35,679 Speaker 1: And what's happening in multifamily now is that there has 193 00:10:35,720 --> 00:10:38,560 Speaker 1: been so much funding and it's so easy to build 194 00:10:38,640 --> 00:10:41,600 Speaker 1: multifamily because you can build an apartment complex with four 195 00:10:41,640 --> 00:10:45,680 Speaker 1: hundred units, uh pretty quick. Building four single family homes 196 00:10:45,760 --> 00:10:48,240 Speaker 1: is not going to happen that fast. Okay, So the 197 00:10:48,360 --> 00:10:52,040 Speaker 1: multifamily housing, and you know, everybody knows this because if 198 00:10:52,040 --> 00:10:55,360 Speaker 1: they just drove through any American city recently, they saw 199 00:10:55,480 --> 00:10:58,360 Speaker 1: a whole bunch of four and five story apartment complexes 200 00:10:58,440 --> 00:11:01,400 Speaker 1: being built right over the last several years. So those 201 00:11:01,400 --> 00:11:05,440 Speaker 1: are oversupplied. And if you're an apartment investor right now, 202 00:11:05,640 --> 00:11:09,360 Speaker 1: if you're a multifamily person, be careful. That has had 203 00:11:09,400 --> 00:11:14,760 Speaker 1: a great run, but it is definitely oversupplied. And Uh. 204 00:11:14,800 --> 00:11:17,960 Speaker 1: The interesting part about that is that when they talk 205 00:11:18,000 --> 00:11:20,680 Speaker 1: about rents, okay, see, one side of the equation that 206 00:11:20,720 --> 00:11:23,760 Speaker 1: most people focus on is, you know where the price 207 00:11:23,880 --> 00:11:27,800 Speaker 1: is going, right, But that's not really what investors. True 208 00:11:27,880 --> 00:11:31,840 Speaker 1: investors focus on. Uh. Speculators focus on that because you know, 209 00:11:32,000 --> 00:11:36,520 Speaker 1: bylow cell high that's the whole game. But um, real 210 00:11:36,559 --> 00:11:40,400 Speaker 1: investors focus on yield. They focus on income. If it's 211 00:11:40,400 --> 00:11:43,400 Speaker 1: in the stock market, they focus on dividends. Right, So 212 00:11:43,480 --> 00:11:47,240 Speaker 1: this is investing, not speculating, right, that's what we recommend. 213 00:11:47,880 --> 00:11:50,640 Speaker 1: And uh so when you look at rental statistics and 214 00:11:50,720 --> 00:11:53,160 Speaker 1: you hear, well, you know, rents are going up like 215 00:11:53,320 --> 00:11:55,839 Speaker 1: crazy like they have been, or you know, rents are 216 00:11:56,000 --> 00:11:59,880 Speaker 1: softening and now the rental market is soft because it's oversupplied, 217 00:12:00,200 --> 00:12:03,280 Speaker 1: you know, or whatever you're hearing in the news. Right, Um, 218 00:12:03,280 --> 00:12:08,000 Speaker 1: what you have to understand is that the vast majority, 219 00:12:08,240 --> 00:12:10,760 Speaker 1: like and you know, I don't know the number. I 220 00:12:10,760 --> 00:12:15,760 Speaker 1: don't know that anybody really does, but maybe of those 221 00:12:15,840 --> 00:12:21,520 Speaker 1: rental statistics are weighted to multifamily housing. How do we 222 00:12:21,559 --> 00:12:24,400 Speaker 1: know this? Well, here's how we know, folks. I mean, 223 00:12:24,480 --> 00:12:28,200 Speaker 1: any of you listening to this who own single family 224 00:12:28,200 --> 00:12:31,840 Speaker 1: rental properties at any time in your life all bad. 225 00:12:32,120 --> 00:12:34,800 Speaker 1: I mean listen, if someone call me on this, bet 226 00:12:35,760 --> 00:12:38,760 Speaker 1: give me a twenty box. Okay if I'm wrong on this, Okay, 227 00:12:38,880 --> 00:12:40,600 Speaker 1: I don't want to say a hundred because too many 228 00:12:40,720 --> 00:12:42,520 Speaker 1: for the first ten people that call me out or 229 00:12:42,600 --> 00:12:46,240 Speaker 1: I'm gonna limit this too, right, because you've never knowne. 230 00:12:46,440 --> 00:12:49,760 Speaker 1: But look, no one ever called you, I bet to 231 00:12:50,040 --> 00:12:53,240 Speaker 1: survey on how you're single. Look at I've had over 232 00:12:53,280 --> 00:12:56,880 Speaker 1: six hundred units in my life, okay that I've owned directly, right, 233 00:12:57,320 --> 00:13:00,319 Speaker 1: and nobody ever called me on the single family homes 234 00:13:00,360 --> 00:13:03,559 Speaker 1: to say, hey, Jason, you know, how are your rents doing? 235 00:13:04,160 --> 00:13:06,040 Speaker 1: Did you raise the rent this year when you renew 236 00:13:06,120 --> 00:13:09,800 Speaker 1: the leases? Or is the rental market really strong or 237 00:13:09,840 --> 00:13:12,679 Speaker 1: is it really soft? Are you having to give incentives 238 00:13:12,720 --> 00:13:14,960 Speaker 1: to rent your properties or you just you know, is 239 00:13:14,960 --> 00:13:17,280 Speaker 1: it is a landlords market where you can command whatever 240 00:13:17,360 --> 00:13:20,200 Speaker 1: you want, you have pricing power. No one ever asked 241 00:13:20,200 --> 00:13:23,240 Speaker 1: me that question because they don't serve a single family, 242 00:13:23,280 --> 00:13:26,679 Speaker 1: mom and pop landlords. There are companies that do a 243 00:13:26,760 --> 00:13:30,640 Speaker 1: very good job of serving all the big institutional apartment complexes, 244 00:13:31,040 --> 00:13:34,160 Speaker 1: and they ask them what's going on with your portfolio, 245 00:13:34,320 --> 00:13:35,920 Speaker 1: what's going on with your rents, and then they share 246 00:13:35,920 --> 00:13:39,360 Speaker 1: all this data into the marketplace. So that's another blind 247 00:13:39,400 --> 00:13:42,440 Speaker 1: spot right there. Yeah, yeah, I mean from a from 248 00:13:42,520 --> 00:13:45,840 Speaker 1: a data aggregation standpoint, you're going to get more bang 249 00:13:45,960 --> 00:13:49,680 Speaker 1: for your buck if you survey one company that has 250 00:13:50,280 --> 00:13:54,160 Speaker 1: thousands of units versus you know, you have to, you know, 251 00:13:54,200 --> 00:13:57,640 Speaker 1: go to single family mom and pop landlords one at 252 00:13:57,640 --> 00:13:59,480 Speaker 1: a time, just to get one more piece of data. 253 00:13:59,600 --> 00:14:02,640 Speaker 1: So that absolutely you can you can call you can 254 00:14:02,679 --> 00:14:06,920 Speaker 1: call Equity Residential, right, Sam's L's company and talk to 255 00:14:06,960 --> 00:14:09,360 Speaker 1: their people and they'll just tell you what's going on 256 00:14:09,400 --> 00:14:12,640 Speaker 1: with their entire portfolio. And you can call the Irvine Company, 257 00:14:12,640 --> 00:14:16,320 Speaker 1: Donald Brenn's company and so cal and you know, you 258 00:14:16,360 --> 00:14:18,880 Speaker 1: can get your answer really easily. You don't have to 259 00:14:19,480 --> 00:14:22,680 Speaker 1: a giant survey, you know, yeah, absolutely, And this is 260 00:14:22,720 --> 00:14:26,840 Speaker 1: significant because single family is undersupplied right now, right, And 261 00:14:26,880 --> 00:14:30,080 Speaker 1: that's something most people don't understand. Single family is undersupplied, 262 00:14:30,960 --> 00:14:36,880 Speaker 1: well sort of that. So here's where that gets a 263 00:14:36,920 --> 00:14:42,840 Speaker 1: little more complicated. Generally speaking, you're right because of I 264 00:14:42,920 --> 00:14:44,840 Speaker 1: know where you're coming from when you say that. But 265 00:14:44,880 --> 00:14:47,360 Speaker 1: if I didn't know where you're coming from, you might 266 00:14:47,480 --> 00:14:50,880 Speaker 1: be right or wrong. And here's why. Number One, you've 267 00:14:50,880 --> 00:14:54,520 Speaker 1: got to differentiate between new and resale properties. And this 268 00:14:54,600 --> 00:14:57,840 Speaker 1: may be the first time really in history at least 269 00:14:57,880 --> 00:15:00,880 Speaker 1: that I can think of the This has been an issue, 270 00:15:00,920 --> 00:15:02,880 Speaker 1: and we'll get to that in a moment. But number two, 271 00:15:02,920 --> 00:15:04,600 Speaker 1: of course, and this is much simpler. You've got a 272 00:15:04,720 --> 00:15:09,400 Speaker 1: segment between price ranges. Okay. So what you're talking about 273 00:15:09,400 --> 00:15:11,920 Speaker 1: when you say it's undersupplied, and what I'm talking about 274 00:15:11,960 --> 00:15:14,000 Speaker 1: because I live it every day and you know you 275 00:15:14,040 --> 00:15:16,360 Speaker 1: pay attention to this market too, And this is what 276 00:15:16,520 --> 00:15:19,360 Speaker 1: investors pay attention to is the entry level housing market. 277 00:15:20,040 --> 00:15:23,680 Speaker 1: These are the properties that makes sense for rental, long 278 00:15:23,800 --> 00:15:27,280 Speaker 1: term buy and hold rental property investment. Okay, the entry 279 00:15:27,360 --> 00:15:31,680 Speaker 1: level starter home that you know, nowadays, maybe that's going 280 00:15:31,720 --> 00:15:34,880 Speaker 1: to be a three and fifty tho dollar house. Uh, 281 00:15:35,160 --> 00:15:37,000 Speaker 1: you know, it's not as cheap as it used to be. 282 00:15:37,840 --> 00:15:40,800 Speaker 1: But adjust for inflation and the numbers a little different too, 283 00:15:40,960 --> 00:15:45,440 Speaker 1: but whatever. Um. So, the entry level housing that is 284 00:15:45,440 --> 00:15:48,480 Speaker 1: the sensible property where the rent of value ratio is 285 00:15:48,480 --> 00:15:50,840 Speaker 1: going to be good and favorable to the landlord to 286 00:15:50,880 --> 00:15:56,120 Speaker 1: the investor. Um that is very undersupplied. And why well, 287 00:15:56,160 --> 00:16:00,640 Speaker 1: because for the last fourteen years, coming out of the recession, 288 00:16:01,360 --> 00:16:04,960 Speaker 1: nobody has been building it. Okay. And when I say nobody, 289 00:16:04,960 --> 00:16:07,440 Speaker 1: it's a figure of speech. Folks, do not write a 290 00:16:07,480 --> 00:16:10,320 Speaker 1: bunch of stupid comments. Please about this, okay, and do not, 291 00:16:10,760 --> 00:16:12,480 Speaker 1: you know, send me a bunch of hate mail. I 292 00:16:12,520 --> 00:16:15,720 Speaker 1: know some builders build like entry level housing, but like 293 00:16:15,800 --> 00:16:18,200 Speaker 1: it's a drop in the bucket, it's nothing in the 294 00:16:18,280 --> 00:16:22,640 Speaker 1: overall scheme of things. It's very undersupplied. Just like Joe said, Um, 295 00:16:22,680 --> 00:16:26,160 Speaker 1: now in the mid and higher tier properties, that's a 296 00:16:26,200 --> 00:16:30,760 Speaker 1: whole different ballgame. And the reason you have this is, Look, 297 00:16:31,160 --> 00:16:34,480 Speaker 1: it's just simply not profitable for a builder to build 298 00:16:35,280 --> 00:16:38,280 Speaker 1: a two hundred and fifty thousand dollar house anymore. You know, 299 00:16:38,800 --> 00:16:40,960 Speaker 1: they can't make money doing it, so they're not going 300 00:16:41,000 --> 00:16:43,680 Speaker 1: to build it. And why can't they make money? Well, 301 00:16:43,960 --> 00:16:46,120 Speaker 1: you know, one thing that would help is if the 302 00:16:46,120 --> 00:16:48,640 Speaker 1: stupid government got out of the way, because they make 303 00:16:48,720 --> 00:16:52,840 Speaker 1: they've just piled on so many regulations and they it's 304 00:16:52,920 --> 00:16:56,080 Speaker 1: so expensive for these builders to build every anything because 305 00:16:56,080 --> 00:16:59,200 Speaker 1: they've got to, you know, comply with just a million 306 00:16:59,240 --> 00:17:03,880 Speaker 1: new Code Ray regulations. And this is what's just exacerbating 307 00:17:03,920 --> 00:17:08,119 Speaker 1: the homelessness and the affordability problem. So I want to 308 00:17:08,200 --> 00:17:11,960 Speaker 1: I want to clarify something there. So you're saying that hypothetically, 309 00:17:12,040 --> 00:17:15,320 Speaker 1: if somebody was ignoring the law, they just went out 310 00:17:15,359 --> 00:17:18,919 Speaker 1: to a lot and just built a property, will go 311 00:17:18,920 --> 00:17:20,800 Speaker 1: to jail cheap Well they number one, they would go 312 00:17:20,840 --> 00:17:22,800 Speaker 1: to jail. So this is hypothetical, but it would be 313 00:17:22,800 --> 00:17:27,240 Speaker 1: pretty cheap and you could do that and do it profitably. 314 00:17:27,880 --> 00:17:30,520 Speaker 1: But because of the local regulations and zoning laws and 315 00:17:30,560 --> 00:17:34,200 Speaker 1: things like that, and monetary policy, the manipulation of money, 316 00:17:34,440 --> 00:17:37,240 Speaker 1: we've gotten to a place where it's not profitable for 317 00:17:37,320 --> 00:17:40,040 Speaker 1: companies to build cheap homes anymore, and so the only 318 00:17:40,080 --> 00:17:42,240 Speaker 1: homes that are getting built are the ones that only 319 00:17:42,280 --> 00:17:45,120 Speaker 1: the rich people can afford. Well not even rich. But 320 00:17:45,280 --> 00:17:47,639 Speaker 1: you know, it's profitable for a builder to build a 321 00:17:47,680 --> 00:17:50,720 Speaker 1: six hundred thousand dollar house. Okay, you can build a 322 00:17:50,760 --> 00:17:53,320 Speaker 1: six hundred thousand dollar house and make money as a builder. 323 00:17:53,640 --> 00:17:56,040 Speaker 1: You can certainly build a million or a two million 324 00:17:56,080 --> 00:17:58,600 Speaker 1: dollar house and make money as a builder, But you 325 00:17:58,680 --> 00:18:01,520 Speaker 1: can't build a two two thousand dollar house, I mean 326 00:18:02,320 --> 00:18:05,439 Speaker 1: to any scale. Okay, some they're you know, there are 327 00:18:05,440 --> 00:18:08,560 Speaker 1: a couple builders that are building these things around the margins, 328 00:18:09,400 --> 00:18:12,040 Speaker 1: but you're not likely to find those in areas with 329 00:18:12,240 --> 00:18:17,199 Speaker 1: high regulation issues. So areas that are natural disaster prone 330 00:18:17,520 --> 00:18:20,560 Speaker 1: are much more expensive to build in, and areas with 331 00:18:20,760 --> 00:18:23,320 Speaker 1: left wing politics are much more expensive to build in. 332 00:18:23,560 --> 00:18:26,480 Speaker 1: So the socialist Republic of California, my former home state 333 00:18:26,560 --> 00:18:29,359 Speaker 1: for most of my life. Uh, you know, it is 334 00:18:29,560 --> 00:18:34,440 Speaker 1: just twenty nine environmental impact reports and you know, fight 335 00:18:34,520 --> 00:18:36,720 Speaker 1: with all the neighbors that don't want you to build anything, 336 00:18:37,240 --> 00:18:39,280 Speaker 1: and you know, a bunch of litigation before you even 337 00:18:39,320 --> 00:18:43,280 Speaker 1: get to the starting line. It's it's just beyond ridiculous, right, 338 00:18:43,760 --> 00:18:48,080 Speaker 1: and and these protectionist zoning laws like you alluded to. 339 00:18:48,160 --> 00:18:51,520 Speaker 1: You know, years ago, I had the great uh he's 340 00:18:51,560 --> 00:18:53,920 Speaker 1: retired now, but the great Thomas soul on my show. 341 00:18:54,240 --> 00:18:56,239 Speaker 1: And you know he's he's a brilliant guy. Used to 342 00:18:56,320 --> 00:18:58,560 Speaker 1: be right for Forbes. He's written a bunch of great books, 343 00:18:59,040 --> 00:19:02,399 Speaker 1: are real into the actual. And during that interview, I 344 00:19:02,440 --> 00:19:05,520 Speaker 1: actually coined a phrase in talking to him. I called 345 00:19:05,560 --> 00:19:09,639 Speaker 1: it environmental racism. And I noticed this because when I 346 00:19:09,720 --> 00:19:14,280 Speaker 1: lived in in Newport Beach, California. Uh, the neighbors, like 347 00:19:14,440 --> 00:19:17,639 Speaker 1: people wanted to develop an area called Crystal Cove, Okay, 348 00:19:17,680 --> 00:19:20,600 Speaker 1: which you may be familiar with, and the neighbors were 349 00:19:20,640 --> 00:19:24,679 Speaker 1: just outraged. It's like, oh my god, we can't have development. 350 00:19:24,800 --> 00:19:28,280 Speaker 1: We've got to preserve the open space, right, and what 351 00:19:28,400 --> 00:19:31,639 Speaker 1: that really is is we've already got our homes. We 352 00:19:31,680 --> 00:19:35,440 Speaker 1: don't want to let anybody else get at home here, right, 353 00:19:35,480 --> 00:19:38,880 Speaker 1: And that's exactly what it's the Nimby syndrome, the not 354 00:19:38,960 --> 00:19:42,440 Speaker 1: in my backyard syndrome. Right. And so that just pushes 355 00:19:42,480 --> 00:19:46,520 Speaker 1: the values of their houses because they limit and constrict supply. 356 00:19:46,840 --> 00:19:49,680 Speaker 1: And this is very unfair. You'd think if people were 357 00:19:49,720 --> 00:19:52,159 Speaker 1: so liberal, they would want to open the opportunity up 358 00:19:52,359 --> 00:19:56,359 Speaker 1: for more people. But that's absolutely not true. I just 359 00:19:56,440 --> 00:20:00,480 Speaker 1: check with the people on Martha's Vineyard exactly. I was 360 00:20:00,520 --> 00:20:04,800 Speaker 1: gonna mention that, yeah, okay, yeah, So so that for uh, 361 00:20:04,800 --> 00:20:08,840 Speaker 1: for single family entry level homes, because of the scarcity, 362 00:20:09,119 --> 00:20:12,320 Speaker 1: it's an attractive place to be as an investor. Now, 363 00:20:12,640 --> 00:20:18,919 Speaker 1: what about this situation for the average household with you know, 364 00:20:18,920 --> 00:20:21,120 Speaker 1: two and a half kids and a dog, and they're 365 00:20:21,160 --> 00:20:23,560 Speaker 1: living in a house right now. They bought it within 366 00:20:23,600 --> 00:20:26,399 Speaker 1: the last couple of years, because you know, most people 367 00:20:26,440 --> 00:20:28,879 Speaker 1: tried to buy a home when interest rates dropped, and 368 00:20:28,880 --> 00:20:31,080 Speaker 1: now they're looking and they're hearing the media talk about 369 00:20:31,080 --> 00:20:33,000 Speaker 1: a real estate crash and they're getting scared and they're 370 00:20:33,040 --> 00:20:37,320 Speaker 1: thinking of trying to sell um as interest rates are skyrocketing. 371 00:20:37,720 --> 00:20:39,840 Speaker 1: What does it look like is happening for this single 372 00:20:39,920 --> 00:20:45,439 Speaker 1: family homeowner right now on average as a seller, a 373 00:20:45,440 --> 00:20:49,320 Speaker 1: potential seller, potential potential seller. Yeah, okay, I thought you 374 00:20:49,320 --> 00:20:51,359 Speaker 1: were gonna say buyer, and I was gonna have a 375 00:20:51,359 --> 00:20:55,359 Speaker 1: really smart AURC answer for you that relates to let that. 376 00:20:56,240 --> 00:20:59,600 Speaker 1: How about a buyer? Yeah, the the buyer example, I 377 00:20:59,640 --> 00:21:03,880 Speaker 1: was going to say, you'll own nothing and you'll be happy. Okay, 378 00:21:04,080 --> 00:21:06,119 Speaker 1: So they're going to stay in the renter pool and 379 00:21:06,119 --> 00:21:08,280 Speaker 1: that's gonna putsh rents up for the buyers, but for 380 00:21:08,320 --> 00:21:11,240 Speaker 1: the sellers. That that brings me back to the point 381 00:21:11,280 --> 00:21:14,000 Speaker 1: we were talking about earlier, because we didn't yet distinguish 382 00:21:14,119 --> 00:21:20,040 Speaker 1: between new home construction and resale existing inventory. And people 383 00:21:20,119 --> 00:21:23,280 Speaker 1: need to be careful when they listen to and read 384 00:21:23,400 --> 00:21:28,040 Speaker 1: statistics and surveys in the media, because you know, are 385 00:21:28,080 --> 00:21:32,240 Speaker 1: they talking about all houses or they talking about new 386 00:21:32,359 --> 00:21:36,199 Speaker 1: houses or resale houses? Right, it's very different. And the 387 00:21:36,200 --> 00:21:39,360 Speaker 1: new homes and resale I mean, for the first time 388 00:21:39,400 --> 00:21:41,800 Speaker 1: probably in history at least that I know of, there 389 00:21:41,880 --> 00:21:44,600 Speaker 1: is going to be this giant diachotomy between the two. 390 00:21:44,640 --> 00:21:49,680 Speaker 1: Now here's why, um, virtually everybody in the country. There's 391 00:21:49,720 --> 00:21:52,240 Speaker 1: about a hundred and forty million units in the housing 392 00:21:52,280 --> 00:21:57,400 Speaker 1: stock of the country. Okay, and virtually everyone refinance their 393 00:21:57,400 --> 00:22:03,359 Speaker 1: house when we have these artificially low COVID fake interest rates. Okay, 394 00:22:03,520 --> 00:22:08,440 Speaker 1: and uh, twenty of the country has a mortgage for 395 00:22:08,680 --> 00:22:15,320 Speaker 1: three decades below three. Those people are going to bag, 396 00:22:15,560 --> 00:22:18,560 Speaker 1: borrow and steel to never sell that house, because the 397 00:22:18,560 --> 00:22:21,159 Speaker 1: minute they sell that house, they're gonna lose one of 398 00:22:21,200 --> 00:22:26,040 Speaker 1: its biggest assets, the mortgage. Okay. And so they're they're 399 00:22:26,080 --> 00:22:29,920 Speaker 1: gonna do whatever they can to hang onto those houses. 400 00:22:30,240 --> 00:22:33,160 Speaker 1: They're going to turn them into rental properties if they 401 00:22:33,240 --> 00:22:36,359 Speaker 1: if they get into bad times, which they're kind of 402 00:22:36,440 --> 00:22:39,919 Speaker 1: unlikely to do because their mortgage is such a low burden. 403 00:22:40,119 --> 00:22:42,840 Speaker 1: I mean, yes, of course, they might have student loan debt, 404 00:22:42,840 --> 00:22:45,240 Speaker 1: they might have other problems in their life, medical bills, 405 00:22:45,280 --> 00:22:49,600 Speaker 1: who knows, right, everybody's got stuff going on. But their mortgage, 406 00:22:49,640 --> 00:22:52,479 Speaker 1: which is usually the most expensive thing people have, right 407 00:22:53,200 --> 00:22:57,000 Speaker 1: is super cheap, and it's got twenty eight to nine 408 00:22:57,040 --> 00:23:00,840 Speaker 1: years left on it. Right. So that's the poison pill 409 00:23:01,240 --> 00:23:06,480 Speaker 1: that Jerome Powell put into the housing market. He created 410 00:23:06,880 --> 00:23:10,720 Speaker 1: a poison pill that is going to constrict housing inventory 411 00:23:10,800 --> 00:23:14,520 Speaker 1: for decades to come, and and these people are just 412 00:23:14,560 --> 00:23:16,520 Speaker 1: not gonna want to loosen up on their houses because 413 00:23:16,520 --> 00:23:21,840 Speaker 1: of their debt stack. Right, it's just left. However, the 414 00:23:21,920 --> 00:23:26,000 Speaker 1: complete contrast is new home builders complete opposite because they 415 00:23:26,000 --> 00:23:28,960 Speaker 1: don't have that long term debt. Now, some of those 416 00:23:28,960 --> 00:23:32,440 Speaker 1: home builders will and already have lined up long term 417 00:23:32,520 --> 00:23:35,840 Speaker 1: debt and they're converting their properties to rental properties or 418 00:23:35,880 --> 00:23:39,440 Speaker 1: they're selling them to the big institutional landlords like JP 419 00:23:39,560 --> 00:23:41,600 Speaker 1: Morgan just did a thing where they raised over a 420 00:23:41,600 --> 00:23:44,439 Speaker 1: billion dollars to buy someon cool family homes. And so 421 00:23:44,480 --> 00:23:49,320 Speaker 1: these big institutional investors, you know, Black Rock, invitation homes, 422 00:23:49,320 --> 00:23:51,600 Speaker 1: American homes for rent, YadA, YadA. There's a whole bunch 423 00:23:51,600 --> 00:23:55,879 Speaker 1: of them, uh you know, own just tens of thousands 424 00:23:55,880 --> 00:23:58,240 Speaker 1: of single family homes, which is a new thing coming 425 00:23:58,240 --> 00:24:00,879 Speaker 1: out of the Great Recession that wasn't ever really a 426 00:24:00,960 --> 00:24:04,399 Speaker 1: thing before, and entire housing tracks that they will go 427 00:24:04,440 --> 00:24:07,840 Speaker 1: buy from builders like some of say D. R. Horton's inventory. 428 00:24:07,880 --> 00:24:11,520 Speaker 1: It never even comes on the market. They just you know, uh, 429 00:24:11,600 --> 00:24:13,840 Speaker 1: invitation Homes just calls them up and says, hey, you know, 430 00:24:13,840 --> 00:24:16,000 Speaker 1: can you build three houses for us? We'll just buy 431 00:24:16,040 --> 00:24:17,880 Speaker 1: them you don't need to hire a salesperson, you don't 432 00:24:17,920 --> 00:24:20,320 Speaker 1: need to open a model complex or do any marketing. 433 00:24:20,320 --> 00:24:23,240 Speaker 1: Will just buy them from you, right and so, uh, 434 00:24:23,600 --> 00:24:25,800 Speaker 1: some of these do just turn into long term rentals. 435 00:24:25,840 --> 00:24:27,720 Speaker 1: It's one way or another. But most of the time 436 00:24:28,160 --> 00:24:31,640 Speaker 1: they've got to sell that inventory. So the builders are 437 00:24:31,720 --> 00:24:34,960 Speaker 1: cutting deals, and I think the deals might even get 438 00:24:34,960 --> 00:24:37,400 Speaker 1: a little better. We'll see. Okay, we don't know for sure, 439 00:24:37,840 --> 00:24:41,960 Speaker 1: but Joe, I'm on like every list because we help 440 00:24:42,000 --> 00:24:44,680 Speaker 1: people buy properties all over the country and I get 441 00:24:44,720 --> 00:24:47,520 Speaker 1: all these emails and Soda is our investment counseling team 442 00:24:47,600 --> 00:24:51,199 Speaker 1: every day. Uh today we got um, you know a 443 00:24:51,280 --> 00:24:53,639 Speaker 1: thing that says, go visit all these new homes and 444 00:24:53,640 --> 00:24:55,639 Speaker 1: we'll give you a cookie, a different kind of cookie 445 00:24:55,680 --> 00:24:58,720 Speaker 1: at each property. Uh. You know, two weeks ago they 446 00:24:58,760 --> 00:25:03,479 Speaker 1: had pumpkin pie in Prosecco was their promotion. And you know, 447 00:25:03,800 --> 00:25:08,200 Speaker 1: fifteen thousand dollars and incentives will buy down your mortgage 448 00:25:08,280 --> 00:25:11,160 Speaker 1: free upgrades. The builders are making deals and that's where 449 00:25:11,160 --> 00:25:14,399 Speaker 1: the opportunities are now, the resale homes. There's like no 450 00:25:14,520 --> 00:25:18,520 Speaker 1: supply who's going to sell those properties. I mean, like 451 00:25:19,160 --> 00:25:23,120 Speaker 1: you know, everybody, the media, they deceive people in so 452 00:25:23,160 --> 00:25:26,240 Speaker 1: many ways because, uh, you know, if you've seen some 453 00:25:26,280 --> 00:25:29,879 Speaker 1: of these articles on foreclosures, they'll say, well, the foreclosure 454 00:25:29,960 --> 00:25:35,080 Speaker 1: rate has gone up by oh, went from like it 455 00:25:35,119 --> 00:25:37,520 Speaker 1: went from like ten people in the country being foreclosed 456 00:25:37,520 --> 00:25:42,280 Speaker 1: onto fourteen. I'm joking, of course, but it's so low 457 00:25:42,400 --> 00:25:45,760 Speaker 1: it's like not even worth talking about. Yeah, and it's 458 00:25:45,840 --> 00:25:49,840 Speaker 1: probably never going to get very high with those cheap mortgages, right, Yeah, 459 00:25:49,880 --> 00:25:51,800 Speaker 1: when in doubt, zoom out. And when you look at 460 00:25:51,840 --> 00:25:54,639 Speaker 1: those long term charts of a lot of the stuff 461 00:25:54,640 --> 00:25:57,680 Speaker 1: that we've been talking about, you noticed that, yes, there 462 00:25:57,720 --> 00:26:01,480 Speaker 1: has been a spike over the last year, let's say, 463 00:26:01,520 --> 00:26:03,480 Speaker 1: But then when you look at in the context of 464 00:26:03,520 --> 00:26:06,840 Speaker 1: ten years or twenty years or even longer, it's it's nothing. 465 00:26:06,880 --> 00:26:10,000 Speaker 1: It's absolutely nothing. It's not even yet back to normal, 466 00:26:10,119 --> 00:26:16,359 Speaker 1: let alone getting getting worse. The dead burden of of 467 00:26:16,359 --> 00:26:19,960 Speaker 1: the country of homeowners is insanely low. And I'll just 468 00:26:20,040 --> 00:26:23,840 Speaker 1: share one more thing on that we talked about with 469 00:26:23,840 --> 00:26:28,720 Speaker 1: mortgages below, but the next tier, the next cut is 470 00:26:28,800 --> 00:26:33,680 Speaker 1: sixty of the country it has mortgages below four. Wow. 471 00:26:34,680 --> 00:26:37,880 Speaker 1: And and and guess what else? Of all the homes 472 00:26:37,880 --> 00:26:39,879 Speaker 1: in the country are free and clear, they have no 473 00:26:39,920 --> 00:26:43,560 Speaker 1: mortgage at all. So where is the distress going to 474 00:26:43,680 --> 00:26:47,240 Speaker 1: come from? Right in the situation right now where you 475 00:26:47,240 --> 00:26:50,439 Speaker 1: have so many people with either very low mortgages or 476 00:26:50,520 --> 00:26:55,080 Speaker 1: no mortgages, the situation where you'd have everybody just deciding 477 00:26:55,320 --> 00:26:59,000 Speaker 1: I need a panic sell right now. Um, there's no 478 00:26:59,119 --> 00:27:01,840 Speaker 1: there's no mechanism and by which that would take place, 479 00:27:03,040 --> 00:27:06,680 Speaker 1: because if they do that, then what they're buying will 480 00:27:06,960 --> 00:27:11,040 Speaker 1: be way more expensive than what they currently have. Right, 481 00:27:11,480 --> 00:27:14,000 Speaker 1: So that's going to create a stagnant market. And you 482 00:27:14,000 --> 00:27:16,840 Speaker 1: know who that's bad for. That hurts the economy because 483 00:27:16,840 --> 00:27:20,760 Speaker 1: it's bad for realtors. It's bad for lenders, like who's 484 00:27:20,760 --> 00:27:23,760 Speaker 1: gonna refly out of a three percent mortgage? Okay, you 485 00:27:23,800 --> 00:27:28,200 Speaker 1: know right? Uh so it's bad for title companies. Now 486 00:27:28,520 --> 00:27:35,440 Speaker 1: who it's actually good for is remodelers, appliance manufacturers and 487 00:27:35,760 --> 00:27:38,239 Speaker 1: uh you know people that do home improvement at home 488 00:27:38,280 --> 00:27:40,840 Speaker 1: depot and lows. And by the way, I called that 489 00:27:41,119 --> 00:27:43,920 Speaker 1: during the plandemic. You know that that the home improvement 490 00:27:44,040 --> 00:27:47,080 Speaker 1: business which is boom and it's gonna continue to boom. 491 00:27:47,200 --> 00:27:49,560 Speaker 1: So people are gonna stay in the same house, They're 492 00:27:49,560 --> 00:27:51,360 Speaker 1: gonna fix it up they're going to add a room. 493 00:27:51,400 --> 00:27:53,639 Speaker 1: They're gonna, you know, build a second story and a 494 00:27:53,720 --> 00:27:56,199 Speaker 1: nice master bedroom up there. They're going to remodel the 495 00:27:56,240 --> 00:27:59,240 Speaker 1: kitchen and bathrooms. You know, they're gonna do home improvements, 496 00:27:59,280 --> 00:28:01,439 Speaker 1: but they're gonna stay in that same house because the 497 00:28:01,480 --> 00:28:04,439 Speaker 1: mortgage can't be moved with the house. That that's a 498 00:28:04,480 --> 00:28:08,000 Speaker 1: fantastic insight there. That's like the story of the man 499 00:28:08,080 --> 00:28:10,600 Speaker 1: that got rich during the gold Rushian California by selling 500 00:28:10,640 --> 00:28:15,600 Speaker 1: picks and shovels. It's like, yeah, exactly, so, um, it's 501 00:28:15,640 --> 00:28:18,439 Speaker 1: similar to that where looking at okay, where is this 502 00:28:18,520 --> 00:28:21,479 Speaker 1: going to lead? Well, if people are stuck in their homes, 503 00:28:21,720 --> 00:28:24,760 Speaker 1: homes are not things that naturally get better over time. 504 00:28:24,840 --> 00:28:27,359 Speaker 1: Homes are things that naturally break over time. So the 505 00:28:27,480 --> 00:28:30,159 Speaker 1: very least you've got maintenance and fixing, and if you 506 00:28:30,400 --> 00:28:32,439 Speaker 1: need to upgrade, you're not gonna be able to move, 507 00:28:32,720 --> 00:28:35,520 Speaker 1: so you're you're gonna have to do some major renovations. 508 00:28:35,560 --> 00:28:39,600 Speaker 1: That's a good insight there. Um. Now, I would like 509 00:28:39,680 --> 00:28:44,040 Speaker 1: to hear you break down your uh, the case Shiller 510 00:28:44,080 --> 00:28:47,040 Speaker 1: index versus the Heartman comparison index, because I know you 511 00:28:47,040 --> 00:28:49,480 Speaker 1: have this real estate index. We've talked about the flaw 512 00:28:49,520 --> 00:28:52,600 Speaker 1: with the case Shiller index. Um, what does the Heartman 513 00:28:52,640 --> 00:28:58,280 Speaker 1: Comparison Index specifically look at? So, you know, I always 514 00:28:58,800 --> 00:29:00,560 Speaker 1: talk about a couple of things on my show. You've 515 00:29:00,600 --> 00:29:02,720 Speaker 1: alluded to one. You know, you can't hear the dogs 516 00:29:02,720 --> 00:29:05,560 Speaker 1: that don't bark, which is an important concept in life 517 00:29:05,600 --> 00:29:08,560 Speaker 1: that you know, the profound impact of things that don't 518 00:29:08,600 --> 00:29:12,480 Speaker 1: happen right. That's important. But nobody ever thinks about that 519 00:29:12,560 --> 00:29:15,080 Speaker 1: what didn't happen? They always think about what did happen? Right? 520 00:29:15,520 --> 00:29:18,920 Speaker 1: And so so that's an important concept. And a related 521 00:29:19,000 --> 00:29:21,440 Speaker 1: concept to that that I talked about a lot is 522 00:29:22,280 --> 00:29:25,960 Speaker 1: just asking oneself the question all the time, which I 523 00:29:26,000 --> 00:29:29,600 Speaker 1: think we just do internally constantly every day, a thousand 524 00:29:29,600 --> 00:29:33,560 Speaker 1: times a day. We ask ourselves compared to what, compared 525 00:29:33,600 --> 00:29:37,200 Speaker 1: to what? And I thought, you know, why is it 526 00:29:37,280 --> 00:29:42,120 Speaker 1: with real estate all of these indexes, Uh, they seem 527 00:29:42,200 --> 00:29:44,680 Speaker 1: to have all these flaws? And so I I created 528 00:29:44,680 --> 00:29:46,720 Speaker 1: a new index called the h c I or the 529 00:29:46,720 --> 00:29:51,240 Speaker 1: Heartman Comparison Index to compare real estate to a whole 530 00:29:51,280 --> 00:29:55,480 Speaker 1: bunch of other items, because most people are just comparing 531 00:29:55,720 --> 00:29:58,720 Speaker 1: the price of real estate to one thing, the US dollar. 532 00:29:59,320 --> 00:30:04,840 Speaker 1: And as you teach your audience. That's a moving target. Okay, 533 00:30:04,400 --> 00:30:07,080 Speaker 1: So we can't just use the dollar. That's like a 534 00:30:07,120 --> 00:30:11,200 Speaker 1: totally bad measuring stick. Right. It's it's one main string stick, 535 00:30:11,240 --> 00:30:14,480 Speaker 1: and that's fair, but it's only one of what should 536 00:30:14,480 --> 00:30:16,960 Speaker 1: be many. And in the Hartman Comparison Index, we now 537 00:30:17,040 --> 00:30:21,240 Speaker 1: have like forty I think forty two items, okay, And 538 00:30:21,520 --> 00:30:25,520 Speaker 1: so we compare the the typical price of a single 539 00:30:25,560 --> 00:30:32,280 Speaker 1: family home to gold, to bitcoin, to rice, orange juice, 540 00:30:32,760 --> 00:30:38,520 Speaker 1: haircuts okay, uh yeah, um, to the s and P 541 00:30:38,760 --> 00:30:44,080 Speaker 1: five hundred to oil, to a whole bunch of items. Right, 542 00:30:44,120 --> 00:30:48,280 Speaker 1: Because what we're always doing when we have money that 543 00:30:48,320 --> 00:30:52,120 Speaker 1: we're trying to decide how to deploy or spend, um, 544 00:30:52,360 --> 00:30:55,120 Speaker 1: we're asking what is the highest and best use we 545 00:30:55,160 --> 00:30:57,320 Speaker 1: can get out of this money? Right, So if we 546 00:30:57,400 --> 00:30:59,360 Speaker 1: deploy it as an investment where we're gonna get the 547 00:30:59,360 --> 00:31:01,640 Speaker 1: best return obviously, you know, if we deploy it as 548 00:31:01,840 --> 00:31:04,200 Speaker 1: a consumer item where we're gonna get the best return 549 00:31:04,280 --> 00:31:07,760 Speaker 1: on you know, hedonism or happiness out of the item. Right, 550 00:31:08,280 --> 00:31:12,800 Speaker 1: And so that the index attempts to answer that question. 551 00:31:13,400 --> 00:31:18,760 Speaker 1: And surprisingly, uh, real estate is much less expensive than 552 00:31:18,840 --> 00:31:22,360 Speaker 1: most people think. Now you can, uh, you know if 553 00:31:22,400 --> 00:31:25,800 Speaker 1: you compare it to gold, for example, okay, and of course, 554 00:31:25,880 --> 00:31:28,600 Speaker 1: in nineteen seventy one Nixton took off a gold standard. 555 00:31:29,360 --> 00:31:32,640 Speaker 1: But back in nineteen seventy, gold was thirty five dollars 556 00:31:32,720 --> 00:31:35,840 Speaker 1: an ounce. At the end of the decade, later in 557 00:31:35,920 --> 00:31:39,800 Speaker 1: night was six and fifty three dollars announced and the 558 00:31:39,920 --> 00:31:43,400 Speaker 1: single family home in nineteen seventy was about twenty three 559 00:31:43,480 --> 00:31:47,920 Speaker 1: thousand dollars, and by ten years later it almost tripled 560 00:31:47,920 --> 00:31:52,880 Speaker 1: to just over sixty three dollars. But priced in dollars, 561 00:31:52,920 --> 00:31:56,600 Speaker 1: everybody thought it was expensive, but priced in gold, it 562 00:31:56,760 --> 00:32:00,080 Speaker 1: told a totally different story. Because in nineteen seventy you 563 00:32:00,120 --> 00:32:02,640 Speaker 1: wanted to buy the medium single family home, it took 564 00:32:02,640 --> 00:32:06,320 Speaker 1: six hundred and fifty four ounces of gold, but only 565 00:32:06,320 --> 00:32:10,800 Speaker 1: took ninety seven ounces of gold, and today it takes 566 00:32:10,840 --> 00:32:14,160 Speaker 1: about two hundred and twenty seven ounces of gold to 567 00:32:14,240 --> 00:32:20,480 Speaker 1: buy the median priced home. So compared to what more recently, well, 568 00:32:20,520 --> 00:32:23,760 Speaker 1: in two thousand ten, when houses were really cheap, okay, 569 00:32:24,040 --> 00:32:26,400 Speaker 1: it took a hundred and fifty eight ounces of gold 570 00:32:26,440 --> 00:32:28,960 Speaker 1: to buy the median price house. So the median price 571 00:32:29,040 --> 00:32:31,480 Speaker 1: house in two thousand and twelve years ago was a 572 00:32:31,560 --> 00:32:35,080 Speaker 1: hundred and seventy one thousand dollars gold was a thousand, 573 00:32:35,160 --> 00:32:38,200 Speaker 1: seventy nine dollars hundred and fifty eight ounces would buy 574 00:32:38,200 --> 00:32:41,080 Speaker 1: the house. So think about it this way. If you 575 00:32:41,120 --> 00:32:44,040 Speaker 1: were saving money to buy a house, every time you 576 00:32:44,120 --> 00:32:45,920 Speaker 1: got your paycheck, you could either just put it in 577 00:32:46,000 --> 00:32:49,160 Speaker 1: a savings account and let inflation and taxes attack it, 578 00:32:49,840 --> 00:32:53,160 Speaker 1: or you could buy gold, or you could invest in oil, 579 00:32:53,520 --> 00:32:57,120 Speaker 1: or you could invest in rice. Uh, you know, which 580 00:32:57,160 --> 00:32:59,080 Speaker 1: is two thirds of the food stock of the world 581 00:32:59,200 --> 00:33:01,800 Speaker 1: for you, two thirds of people on earth. Uh. You 582 00:33:01,800 --> 00:33:04,040 Speaker 1: you have a choice. You can put it in the SMP. Right. 583 00:33:04,680 --> 00:33:07,720 Speaker 1: So that's what we have to think about, is how 584 00:33:07,880 --> 00:33:11,480 Speaker 1: we store our wealth as we get it, and then 585 00:33:11,880 --> 00:33:13,600 Speaker 1: when we want to make that purchase, we're going to 586 00:33:13,680 --> 00:33:17,080 Speaker 1: convert it back to dollars right where you know, it's 587 00:33:17,120 --> 00:33:18,600 Speaker 1: like the crypto people are going to take it off 588 00:33:18,600 --> 00:33:21,440 Speaker 1: the exchange, sell the bitcoin converted to dollars, and then 589 00:33:21,480 --> 00:33:23,680 Speaker 1: buy stuff because you can't really use bitcoin to buy 590 00:33:23,720 --> 00:33:27,200 Speaker 1: stuff in any real way. So that's what the index does. 591 00:33:27,240 --> 00:33:29,920 Speaker 1: And I'm happy to dive into some other examples if 592 00:33:29,920 --> 00:33:32,920 Speaker 1: you like. Well, that's that that that's really key to 593 00:33:33,040 --> 00:33:37,800 Speaker 1: know that it's not. UM, it's not as expensive as 594 00:33:37,840 --> 00:33:40,000 Speaker 1: it's ever been when compared to a lot of these 595 00:33:40,040 --> 00:33:43,360 Speaker 1: things that have had pretty stable values for a long time. UM, 596 00:33:43,400 --> 00:33:45,600 Speaker 1: and it's not as cheap as it's ever been. So 597 00:33:46,120 --> 00:33:50,480 Speaker 1: when you talk about when you talk about a bubble, UM, 598 00:33:50,560 --> 00:33:55,640 Speaker 1: just because prices are high doesn't necessarily mean there's a bubble. 599 00:33:55,680 --> 00:33:57,280 Speaker 1: Like you said, you always have to ask the question 600 00:33:57,360 --> 00:34:01,160 Speaker 1: compared to what UM and the example. I have to 601 00:34:01,200 --> 00:34:03,800 Speaker 1: provide some context for the haircut example, which is genius 602 00:34:03,840 --> 00:34:07,240 Speaker 1: because when you have when you have something that doesn't 603 00:34:07,240 --> 00:34:12,600 Speaker 1: get cheaper from technology over time, the price as priced 604 00:34:12,680 --> 00:34:16,000 Speaker 1: in labor and man hours stays the same. So a 605 00:34:16,080 --> 00:34:19,480 Speaker 1: haircut today is cost the same amount of labor as 606 00:34:19,480 --> 00:34:23,120 Speaker 1: a haircut did ten thousand years ago. It's great examplebody 607 00:34:23,160 --> 00:34:25,359 Speaker 1: with the blade to stand behind you and cut your 608 00:34:25,400 --> 00:34:28,280 Speaker 1: cut your hair exactly. So let's go over that example. 609 00:34:28,320 --> 00:34:30,200 Speaker 1: I got it right here on my screen. Okay, so 610 00:34:30,400 --> 00:34:35,600 Speaker 1: invent the median price house. Uh, if you were a 611 00:34:35,640 --> 00:34:39,279 Speaker 1: hair stylist or a barber, you would have to do 612 00:34:40,280 --> 00:34:44,600 Speaker 1: two hundred and thirty four haircuts to buy a house. Okay, 613 00:34:44,640 --> 00:34:47,799 Speaker 1: if you wanted to not buy the house, you could 614 00:34:47,800 --> 00:34:52,279 Speaker 1: get ninety two and thirty four haircuts. Okay, today, as 615 00:34:52,320 --> 00:34:56,720 Speaker 1: of August of this year, it took tend two hundred 616 00:34:56,719 --> 00:35:01,120 Speaker 1: and sixty four haircuts. Wow. Okay, Now let's go back 617 00:35:01,160 --> 00:35:03,000 Speaker 1: to two thousand ten because the house we're cheap then 618 00:35:03,840 --> 00:35:08,120 Speaker 1: six thousand, eighties seven haircuts. So we look we looked 619 00:35:08,120 --> 00:35:10,480 Speaker 1: at the price of a haircut over time, and we 620 00:35:10,520 --> 00:35:12,279 Speaker 1: looked at the price of a house over time. And 621 00:35:12,320 --> 00:35:15,720 Speaker 1: we just did the math, right. And you know, another 622 00:35:15,880 --> 00:35:19,759 Speaker 1: comparison in the index is inflation, right, Like you have 623 00:35:19,840 --> 00:35:22,239 Speaker 1: to compare it to inflation. What's the real value of 624 00:35:22,239 --> 00:35:26,160 Speaker 1: the dollar. And we do that two ways. We basically 625 00:35:26,200 --> 00:35:30,920 Speaker 1: take the CPI, which I call the cp lie okay 626 00:35:30,960 --> 00:35:34,200 Speaker 1: because it is just such a giant lie. And uh. 627 00:35:34,400 --> 00:35:37,319 Speaker 1: And then we also, uh do it the old way. 628 00:35:37,360 --> 00:35:40,600 Speaker 1: We use shadow stats dot com. And John Williams, the founder, 629 00:35:40,640 --> 00:35:43,280 Speaker 1: has been on my show and uh, and he doesn't 630 00:35:43,360 --> 00:35:45,040 Speaker 1: he's not doing it his way. He's just doing it 631 00:35:45,040 --> 00:35:47,440 Speaker 1: the way the government used to do it before. Right, 632 00:35:47,480 --> 00:35:50,439 Speaker 1: that's all he does. So what's interesting to look at 633 00:35:50,480 --> 00:35:52,640 Speaker 1: here is the mortgage payment, not the price of the house, 634 00:35:52,680 --> 00:35:54,960 Speaker 1: because that's the other thing we didn't say yet. Who 635 00:35:54,960 --> 00:35:57,160 Speaker 1: cares about the price of the house. Most people don't 636 00:35:57,160 --> 00:35:59,160 Speaker 1: pay the price as the house. They pay the monthly 637 00:35:59,440 --> 00:36:04,759 Speaker 1: price of a mortgage. And uh, the interesting thing here 638 00:36:04,960 --> 00:36:07,719 Speaker 1: is if you adjust the mortgage payments over the last 639 00:36:07,840 --> 00:36:10,000 Speaker 1: fifty two years, because we can go back to nineteen 640 00:36:10,040 --> 00:36:14,040 Speaker 1: seventy on everything, okay um, the median price house. In 641 00:36:14,120 --> 00:36:16,719 Speaker 1: nineteen seventy, the mortgage was a hundred and twenty seven 642 00:36:16,719 --> 00:36:19,839 Speaker 1: dollars a month. Today it's two hundred and thirty eight 643 00:36:19,840 --> 00:36:22,960 Speaker 1: dollars a month adjusted for the c P I M H. 644 00:36:24,160 --> 00:36:26,800 Speaker 1: And by the way, the non adjusted number in nominal 645 00:36:26,840 --> 00:36:32,719 Speaker 1: dollars is eighteen ten dollars compared to okay um. And 646 00:36:32,920 --> 00:36:35,320 Speaker 1: I know it may be hard to follow these without visuals, okay, 647 00:36:35,320 --> 00:36:38,480 Speaker 1: but but anyway, if you take the way the government 648 00:36:38,640 --> 00:36:42,480 Speaker 1: used to calculate inflation, the mortgage payment on the median 649 00:36:42,560 --> 00:36:46,000 Speaker 1: price house seventy still a hundred and twenty seven dollars. 650 00:36:46,480 --> 00:36:50,880 Speaker 1: Let inflation occur, and fifty two years later the price 651 00:36:50,960 --> 00:36:55,839 Speaker 1: today is seventy bucks. Okay, So let's let's let me 652 00:36:56,080 --> 00:36:58,480 Speaker 1: let me make sure that that that we that I 653 00:36:58,760 --> 00:37:02,040 Speaker 1: that I get that. So if you follow the official 654 00:37:02,080 --> 00:37:08,640 Speaker 1: inflation numbers, which are almost certainly understated. Then the costs 655 00:37:08,719 --> 00:37:13,560 Speaker 1: higher dollars looks a little bit higher. Inflation was less 656 00:37:13,600 --> 00:37:17,240 Speaker 1: than it really is, exactly right. And so in regular 657 00:37:17,280 --> 00:37:20,719 Speaker 1: dollars it's gone up a lot from a hundred. But 658 00:37:21,040 --> 00:37:23,360 Speaker 1: when you adjust it for inflation, if we were using 659 00:37:23,960 --> 00:37:27,719 Speaker 1: the old dollars at the way they calculate inflation, it 660 00:37:27,760 --> 00:37:35,040 Speaker 1: would be two fifty dollars. But when you calculate inflation 661 00:37:35,520 --> 00:37:41,000 Speaker 1: correctly or most likely more correctly, it's actually gotten cheaper. Yeah, 662 00:37:41,239 --> 00:37:45,040 Speaker 1: it has, and you and I know that amazes everybody 663 00:37:45,080 --> 00:37:48,600 Speaker 1: because everybody, now the riots started. Okay, the tomatoes are 664 00:37:48,640 --> 00:37:53,279 Speaker 1: being thrown at me because because nobody believes that. Okay, 665 00:37:53,320 --> 00:37:57,120 Speaker 1: like it's it's just. But here's the thing, folks, the 666 00:37:57,160 --> 00:37:59,680 Speaker 1: house of today is a lot better than the house 667 00:37:59,680 --> 00:38:02,640 Speaker 1: of fifth two years ago. It's a it's a different house, okay. 668 00:38:02,840 --> 00:38:05,000 Speaker 1: And you know what, we don't even have to try 669 00:38:05,040 --> 00:38:09,480 Speaker 1: and uh figure that out qualitatively. We can just figure 670 00:38:09,480 --> 00:38:12,640 Speaker 1: it out on a super square foot basis. Okay. So 671 00:38:13,080 --> 00:38:18,320 Speaker 1: in nineteen seventy the median house was square feet. Today 672 00:38:18,320 --> 00:38:22,960 Speaker 1: it's square feet. So the size of the house increased 673 00:38:22,960 --> 00:38:28,200 Speaker 1: by one fifty seven percent, okay. So or I start 674 00:38:28,239 --> 00:38:31,839 Speaker 1: it's a hundred fifty seven percent of the other house, okay, 675 00:38:31,880 --> 00:38:35,919 Speaker 1: fifty seven percent larger. Okay. So um, you know when 676 00:38:35,960 --> 00:38:38,840 Speaker 1: when you look at it that way, it really it 677 00:38:38,920 --> 00:38:42,120 Speaker 1: real estate is not nearly as expensive. It's what happened 678 00:38:42,560 --> 00:38:46,280 Speaker 1: is we've all come to expect so much. I mean, look, folks, 679 00:38:46,480 --> 00:38:48,680 Speaker 1: if you were alive in nineteen seventy and you weren't 680 00:38:48,760 --> 00:38:53,000 Speaker 1: you know, a toddler, okay, and you remember how life was. 681 00:38:53,600 --> 00:38:56,520 Speaker 1: I mean just remember how dinky your house was and 682 00:38:56,560 --> 00:38:59,200 Speaker 1: how the quality was really bad compared to the house 683 00:38:59,200 --> 00:39:02,080 Speaker 1: you live in now, okay, and you know it didn't 684 00:39:02,080 --> 00:39:05,520 Speaker 1: have high ceilings, and it didn't have double pane windows, 685 00:39:05,560 --> 00:39:08,880 Speaker 1: and it didn't have uh you know, forced air h 686 00:39:08,960 --> 00:39:11,680 Speaker 1: v A C and error conditioning and all that stuff, right, 687 00:39:11,880 --> 00:39:14,800 Speaker 1: you know, like it's just a wayne nicer house. Okay, 688 00:39:15,080 --> 00:39:18,239 Speaker 1: it's just not you know, you could ad just for 689 00:39:18,360 --> 00:39:20,960 Speaker 1: hedonic indexing, right, but we've done that. In our mind. 690 00:39:21,239 --> 00:39:23,760 Speaker 1: We just expect so much more than we ever got. 691 00:39:24,320 --> 00:39:26,960 Speaker 1: Uh you know, we we just keep raising our expectations, 692 00:39:26,960 --> 00:39:29,760 Speaker 1: which is fine. That's what creates progress, and that's good 693 00:39:30,000 --> 00:39:35,600 Speaker 1: to an extent, but that's what happens. Yeah, yeah, absolutely 694 00:39:36,080 --> 00:39:40,279 Speaker 1: so in summer here, when you look at the mechanics 695 00:39:40,280 --> 00:39:44,799 Speaker 1: the fundamentals driving the industry from an investor standpoint, there 696 00:39:44,800 --> 00:39:47,080 Speaker 1: are certain areas that you need to be careful of. 697 00:39:47,480 --> 00:39:50,680 Speaker 1: There are certain areas that are oversupplied, certain deals that 698 00:39:50,760 --> 00:39:53,480 Speaker 1: might be coming up because there are you know, potentially 699 00:39:53,560 --> 00:39:56,840 Speaker 1: builders that are forcing to sell at at better and 700 00:39:56,880 --> 00:40:00,960 Speaker 1: better deals for the buyers. UM. Looking at entry level 701 00:40:01,400 --> 00:40:04,520 Speaker 1: supply is very tight. UM. Looking at the people who 702 00:40:04,520 --> 00:40:09,000 Speaker 1: are waiting to buy and are renting right now, uh, 703 00:40:09,160 --> 00:40:12,560 Speaker 1: they might be locked out of housing um and and 704 00:40:12,920 --> 00:40:15,440 Speaker 1: become a renter forever. The people who are looking at 705 00:40:15,840 --> 00:40:19,719 Speaker 1: selling right now are forced to look at houses or 706 00:40:19,719 --> 00:40:22,640 Speaker 1: mortgage payments that are way more than what they're currently paying, 707 00:40:22,719 --> 00:40:24,760 Speaker 1: so that it's gonna be hard for them to actually 708 00:40:24,800 --> 00:40:27,920 Speaker 1: sell if they want to. Um And So it's important 709 00:40:27,960 --> 00:40:30,560 Speaker 1: to keep in mind all of the things that we 710 00:40:30,880 --> 00:40:33,839 Speaker 1: uh that we buy, spend our money on, invest in 711 00:40:33,840 --> 00:40:37,560 Speaker 1: in life, and say compared to what, because if we 712 00:40:37,640 --> 00:40:39,759 Speaker 1: just look at what the mainstream media is telling us, 713 00:40:39,760 --> 00:40:43,080 Speaker 1: we might get scared into making a decision that's actually 714 00:40:43,120 --> 00:40:48,280 Speaker 1: not financially wise. So I might share one thing with yours, 715 00:40:48,360 --> 00:40:51,080 Speaker 1: just real quickly before we wrap it up, and that 716 00:40:51,280 --> 00:40:56,040 Speaker 1: is um what's called the Mortgage Sensitivity Index. We we 717 00:40:56,080 --> 00:41:00,520 Speaker 1: published this as part of the Hartman Comparison Index because, uh, 718 00:41:00,560 --> 00:41:03,480 Speaker 1: you know, when mortgage rates go up, how many people 719 00:41:03,520 --> 00:41:06,080 Speaker 1: can no longer afford to buy a house, that's a question. 720 00:41:06,520 --> 00:41:10,440 Speaker 1: And and those people are now forced to stay in 721 00:41:10,480 --> 00:41:13,520 Speaker 1: the renter pool. And if they stay in the renter pool, 722 00:41:13,560 --> 00:41:16,960 Speaker 1: that obviously puts upward pressure on rents right now. I 723 00:41:16,960 --> 00:41:19,799 Speaker 1: know everybody thinks rent is really high now, and you 724 00:41:19,800 --> 00:41:22,279 Speaker 1: know it has sort of it's taking a little bit 725 00:41:22,280 --> 00:41:25,640 Speaker 1: of a breather at the moment, but look, the long 726 00:41:25,760 --> 00:41:28,520 Speaker 1: term megatrend is rents are going way up, folks. You 727 00:41:28,520 --> 00:41:31,160 Speaker 1: ain't seen nothing yet as far as rents. I'm not 728 00:41:31,200 --> 00:41:34,360 Speaker 1: saying it's happening to tomorrow. You know, the market is 729 00:41:34,400 --> 00:41:38,040 Speaker 1: definitely readjusting right now in many ways. And there's kind 730 00:41:38,080 --> 00:41:41,080 Speaker 1: of this standoff between buyers and sellers at the moment. 731 00:41:41,360 --> 00:41:44,120 Speaker 1: But let me tell you something that won't last. Money 732 00:41:44,280 --> 00:41:46,640 Speaker 1: always comes off the sidelines, that always has to find 733 00:41:46,640 --> 00:41:49,560 Speaker 1: a place to go. Everybody lives by Tina t I 734 00:41:49,719 --> 00:41:52,120 Speaker 1: n A. There is no alternative. They just look for 735 00:41:52,160 --> 00:41:54,440 Speaker 1: the best alternative. It's not as good as it used 736 00:41:54,440 --> 00:41:56,879 Speaker 1: to be. I get it. But the money comes off 737 00:41:56,880 --> 00:42:00,200 Speaker 1: the sidelines and it deploys. Okay, and the people will 738 00:42:00,200 --> 00:42:05,000 Speaker 1: start buying um but renters. Okay. Literally, at the end 739 00:42:05,000 --> 00:42:08,440 Speaker 1: of the January of this year, fifty two million people 740 00:42:08,680 --> 00:42:12,280 Speaker 1: could qualify for a mortgage on the median price house 741 00:42:13,000 --> 00:42:18,480 Speaker 1: and seventy six million people could not. Okay, okay today, 742 00:42:18,560 --> 00:42:22,759 Speaker 1: well not okay at seven percent? Okay, So mortgages, you know, 743 00:42:23,080 --> 00:42:24,840 Speaker 1: give it to I mean, I could say six or 744 00:42:24,880 --> 00:42:27,719 Speaker 1: seven percent, whatever you want, okay, um, but let's go 745 00:42:27,800 --> 00:42:32,160 Speaker 1: seven percent. It's seven percent mortgage rates. Thirty four million 746 00:42:32,200 --> 00:42:34,960 Speaker 1: people can afford to buy a house instead of fifty 747 00:42:34,960 --> 00:42:40,360 Speaker 1: two million. M h okay, and nine two million instead 748 00:42:40,360 --> 00:42:43,280 Speaker 1: of seventy six million cannot afford to buy a house. 749 00:42:44,600 --> 00:42:51,160 Speaker 1: So that leaves us with fourteen million new renters. Right, yeah, 750 00:42:51,800 --> 00:42:58,520 Speaker 1: what's that going to do with the rental market? Absolutely? Yeah, yeah, yeah, absolutely, 751 00:42:58,600 --> 00:43:02,279 Speaker 1: that's a that's a fantastic statistic to what end with, 752 00:43:02,480 --> 00:43:05,520 Speaker 1: and that number will only get worse as the Federal 753 00:43:05,560 --> 00:43:10,080 Speaker 1: Reserve continues its fight. It's uh, it's soft fight against inflation, 754 00:43:10,400 --> 00:43:14,319 Speaker 1: raising raising interest rates, So definitely something to watch out for. 755 00:43:15,080 --> 00:43:19,200 Speaker 1: UM as people listen to this and want more, Jason, 756 00:43:19,480 --> 00:43:21,759 Speaker 1: what is the best place for them to find more? 757 00:43:22,160 --> 00:43:26,080 Speaker 1: Um uh Jason Hartman dot com is my main website. 758 00:43:26,200 --> 00:43:28,160 Speaker 1: And by the way, if I may mention it, we've 759 00:43:28,160 --> 00:43:30,239 Speaker 1: got an event coming up in Scottsdale at the end 760 00:43:30,280 --> 00:43:33,680 Speaker 1: of January. Uh right in your hometown there, Joe. We'd 761 00:43:33,719 --> 00:43:36,600 Speaker 1: love to see it. And um uh. So that's in 762 00:43:36,640 --> 00:43:38,520 Speaker 1: scott Staler Zone at the end of January, and you 763 00:43:38,560 --> 00:43:41,879 Speaker 1: can find out more at Jason Hartman dot com. I'm 764 00:43:41,880 --> 00:43:45,400 Speaker 1: on YouTube or any podcast platform. Just type Jason Hartman 765 00:43:45,440 --> 00:43:48,719 Speaker 1: and you'll find me Jason Hartman on YouTube podcasts and 766 00:43:48,880 --> 00:43:52,520 Speaker 1: Jason Hartman dot com. And I highly recommend that that 767 00:43:52,600 --> 00:43:54,319 Speaker 1: event in scotts at the end of January, So go 768 00:43:54,360 --> 00:43:57,200 Speaker 1: to Jason Hartman dot com to find more about that. 769 00:43:57,520 --> 00:44:00,239 Speaker 1: Thank you so much for sharing your whis him in 770 00:44:00,239 --> 00:44:02,880 Speaker 1: your financial insights with us today, Jason. It was a blast. 771 00:44:03,360 --> 00:44:06,200 Speaker 1: It's good talking to Joe. Happy investing, all right. Thanks