WEBVTT - Using Pricing Data To Predict Real Estate Prices | Jason Hartman 0:00:13.680 --> 0:00:17.120 When you look at prices, are things expensive or are 0:00:17.120 --> 0:00:20.840 they cheap? And are they expensive or cheap compared to 0:00:21.000 --> 0:00:23.160 what relative to what? Now a lot of people think 0:00:23.160 --> 0:00:27.240 that real estate is way too expensive. It's at record highs, 0:00:27.560 --> 0:00:31.720 but expensive compared to what compared to U. S. Dollars 0:00:31.800 --> 0:00:35.680 or compared to gold or oil, or rice or orange juice. 0:00:35.840 --> 0:00:38.320 And you need to understand there's a difference of price 0:00:38.400 --> 0:00:41.800 than U. S dollars and purchasing power, the purchasing power 0:00:41.880 --> 0:00:44.360 of those units. When you understand from this perspective, you 0:00:44.479 --> 0:00:47.199 get a whole new way to look at things. And 0:00:47.240 --> 0:00:50.080 so today I am joined by my good friend Jason Hartman. 0:00:50.120 --> 0:00:52.479 He's a real estate expert, a market analyst, and he 0:00:52.680 --> 0:00:54.520 is going to show us a new way to look 0:00:54.560 --> 0:00:57.400 at things and reframe things so that you can have 0:00:57.480 --> 0:01:00.680 more success. Um. He's got the facts, the data. Uh Um. 0:01:00.720 --> 0:01:02.880 I took a ton of notes. This is something that 0:01:03.000 --> 0:01:04.920 really good and it's going to give a different perspective 0:01:04.959 --> 0:01:06.880 on where we're at in the market. We're at the 0:01:06.880 --> 0:01:09.080 market sect and we also dig into some tough topics 0:01:09.280 --> 0:01:12.600 including um where I where he thinks we're going in 0:01:12.600 --> 0:01:14.399 the future, how you should look at the market. If 0:01:14.400 --> 0:01:17.640 you're a real estate investor or a homeowner. UM, what 0:01:17.800 --> 0:01:21.759 factors like Wells Fargo shutting off lending does? What factors 0:01:21.800 --> 0:01:24.399 like black Rock and Wall Street jumping into buy um 0:01:24.440 --> 0:01:27.280 all the residential real estate what those do? Um? And 0:01:27.400 --> 0:01:29.840 even guessing what the FED might do with housing? So 0:01:29.880 --> 0:01:32.399 many good topics that we jumped in with Jason. Um. 0:01:32.480 --> 0:01:34.160 It really gives you a whole new perspective that I 0:01:34.200 --> 0:01:37.760 think is powerful. So let's go ahead, just jump right in. Everyone. 0:01:37.800 --> 0:01:40.280 Welcome to another episode of the Market Disruptors Show. And 0:01:40.319 --> 0:01:43.280 today I am joined again by my good friend Jason Hartman, 0:01:43.400 --> 0:01:46.200 who is a market analyst and a real estate expert, 0:01:46.240 --> 0:01:48.480 and he has come up with some amazing ways to 0:01:48.600 --> 0:01:51.760 look at the data in the markets and maybe even 0:01:51.840 --> 0:01:54.560 tell us where things are going. So Jason, thank you 0:01:54.600 --> 0:01:57.040 so much for coming back and joining us again. Market's 0:01:57.080 --> 0:01:59.640 great to be here. And yes, uh, you know for 0:02:00.040 --> 0:02:02.320 so many years or decades that I've been in the 0:02:02.320 --> 0:02:05.640 real estate business uh and and real estate investing. I 0:02:05.960 --> 0:02:09.280 bought my first rental property when I was twenty years old. Uh. 0:02:09.320 --> 0:02:14.000 You know, Uh, the magic question that is always what's 0:02:14.000 --> 0:02:17.120 going to happen next? Right? How do we predict the 0:02:17.160 --> 0:02:19.960 market cycles and you teach people that all the time 0:02:20.000 --> 0:02:23.520 on your show. And Um, so I've I've developed an 0:02:23.560 --> 0:02:28.040 index uh and it basically is a measuring stick comparing 0:02:28.240 --> 0:02:32.680 real estate prices to many other things in the world. Uh. 0:02:32.720 --> 0:02:35.160 And I believe they can tell us where we've been, 0:02:35.400 --> 0:02:37.680 where we are now, and where we're going in the future. 0:02:38.720 --> 0:02:40.840 That's interesting on so many levels for me. Um. I've 0:02:40.840 --> 0:02:43.200 been working on this big thesis on cycles, which I 0:02:43.200 --> 0:02:45.280 know I've shared with you and and and the reason 0:02:45.360 --> 0:02:48.000 why I like historian cycles is for the same reason 0:02:48.160 --> 0:02:50.280 it tells. It helps us know how we got here, 0:02:50.800 --> 0:02:52.359 what's going on, and where we're going in the future. 0:02:52.400 --> 0:02:56.120 So it's cool that you said that. Um. Now, the 0:02:56.160 --> 0:02:58.560 other thing that also catches my interest is, Um, you're 0:02:58.560 --> 0:03:01.119 talking about looking at the price of real estate relative 0:03:01.160 --> 0:03:03.600 to other things. I think that you're talking about, and 0:03:03.639 --> 0:03:05.600 that's nothing I kind of pound. The table on is 0:03:05.600 --> 0:03:08.239 is to look at things in terms of purchasing power 0:03:08.680 --> 0:03:12.160 and not just us dollar term, right that what you're 0:03:12.160 --> 0:03:16.040 talking about, Yes, definitely to an extent, because you know, 0:03:16.080 --> 0:03:19.480 if you think about it, Mark, Um, people think housing 0:03:19.600 --> 0:03:24.280 is really expensive now because they measure it only in 0:03:24.480 --> 0:03:29.520 one thing, US dollars and no. But you know, for example, 0:03:29.600 --> 0:03:32.920 take this example someone saving for a house, right or 0:03:33.120 --> 0:03:36.080 you know, uh, and say they've been saving ten years 0:03:36.120 --> 0:03:38.720 to buy a house and they're just a home buy 0:03:38.800 --> 0:03:40.520 or not an investor. Right, but they could be an 0:03:40.520 --> 0:03:44.200 investor either, right, Um, so they've been saving, Well, no 0:03:44.240 --> 0:03:50.040 one forced them to save their money denominated in US dollars, right, 0:03:50.200 --> 0:03:53.720 they could have easily converted as soon as they earned 0:03:53.760 --> 0:03:59.240 their dollars, they could have converted them to gold, rice, bitcoin, oil, 0:03:59.680 --> 0:04:03.400 any one of a number of other things. And had 0:04:03.440 --> 0:04:07.240 they done that, they would feel the price of real 0:04:07.360 --> 0:04:11.480 estate is dramatically different than what they think of it 0:04:11.520 --> 0:04:16.640 as based in dollars. So it's really very interesting, and 0:04:17.760 --> 0:04:22.080 we're developing this whole new index around this whole concept 0:04:22.600 --> 0:04:25.720 of the question that I think is really life's most 0:04:25.760 --> 0:04:28.839 important question. I ask it all the time on my 0:04:28.960 --> 0:04:33.000 podcast and YouTube channel, and that question is compared to 0:04:33.040 --> 0:04:36.480 what that is life's most important question in my opinion. 0:04:37.720 --> 0:04:40.240 Hey guys, let me just interrupt this interview real quick, 0:04:40.279 --> 0:04:43.800 just to plug the show sponsor, and that is block Fi. 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Their paying interest on your 0:05:19.920 --> 0:05:21.800 bitcoin if you park it with them, or you can 0:05:21.880 --> 0:05:24.159 borrow against it. Now, as I broke down in that video, 0:05:24.360 --> 0:05:26.760 you can borrow against your bitcoin, and when you take 0:05:26.839 --> 0:05:29.920 debt against it, it's not taxable. It's not a taxable event. 0:05:30.080 --> 0:05:31.600 You can use that debt for anything that you want, 0:05:31.640 --> 0:05:34.159 including to live off of to leverage up and buy more, 0:05:34.320 --> 0:05:36.680 or roll it into another asset. UM. You can do 0:05:36.720 --> 0:05:39.160 something like I've done recently, like sell some real estate 0:05:39.360 --> 0:05:42.159 put that money into bitcoin. Now as that bitcoin price 0:05:42.200 --> 0:05:44.360 has risen, I'm able to borrow against it and go 0:05:44.440 --> 0:05:46.799 back and buy the same real estate or something similar. 0:05:46.960 --> 0:05:50.000 And I still own the bitcoin, and I also own 0:05:50.080 --> 0:05:52.120 the new asset as well. Lots of ways you can 0:05:52.120 --> 0:05:54.680 do this UM and block five is the company that 0:05:54.760 --> 0:05:57.200 I recommend. Down in the description, I have a link 0:05:57.200 --> 0:05:58.880 that you can click on. If you choose to use 0:05:58.880 --> 0:06:00.640 that link, you can earn up to a fifty dollars 0:06:00.680 --> 0:06:03.720 in decoin just for using that link. So check out blockline. Now, 0:06:04.560 --> 0:06:06.040 such a good way to look at that. UM. A 0:06:06.080 --> 0:06:08.479 lot of people don't realize that, but right we're always 0:06:08.560 --> 0:06:11.279 trading one thing for another. So I'm trading my dollars 0:06:11.360 --> 0:06:13.960 for the real estate or trading my dollars for that meal. 0:06:14.640 --> 0:06:17.200 But to your point, it could have been trading rice 0:06:17.320 --> 0:06:19.520 or oil for that that house with that meal. UM 0:06:19.680 --> 0:06:23.080 and and and uh. I I often throw these numbers 0:06:23.080 --> 0:06:26.000 out and I don't have the numbers. I just say hypothetically. 0:06:26.320 --> 0:06:28.920 But you know, let's say, you know, nine six the 0:06:29.000 --> 0:06:31.720 median home price was fifty dollars. Today it's now up 0:06:31.720 --> 0:06:34.760 to like three. But back then it was so many 0:06:34.760 --> 0:06:37.080 ounces of gold, there's so many barrels of oil, and 0:06:37.120 --> 0:06:39.560 today it's about the same amount of ounces of gold 0:06:39.600 --> 0:06:42.320 and same amounts of barrels of oil. UM. But of course, 0:06:42.360 --> 0:06:43.920 I'm just kind of spitball on that, but I think 0:06:44.000 --> 0:06:46.599 you actually have some data that shows that we do. 0:06:46.720 --> 0:06:48.600 We do. We have a whole bunch of data on 0:06:49.200 --> 0:06:51.120 not just oil and gold, but a whole bunch of 0:06:51.120 --> 0:06:54.560 other things. So let's dive into it. Yeah, let's dive 0:06:54.600 --> 0:06:56.559 into it because I think, again it's something I pound 0:06:56.560 --> 0:06:58.279 the table on the video that went live yesterday. Again 0:06:58.320 --> 0:07:01.560 I tell people start thinking about things in terms of 0:07:01.600 --> 0:07:05.039 purchasing power, not dollars, and and and just while you 0:07:05.040 --> 0:07:06.800 get ready, I know you're gonna show some slides. I'm 0:07:06.800 --> 0:07:08.560 excited to see them, but to set the stage a 0:07:08.600 --> 0:07:10.520 little bit um. You know, I've done quite a bit 0:07:10.520 --> 0:07:14.880 of a discussion on hyperinflation that's happened in other countries. 0:07:15.120 --> 0:07:17.560 And one thing that really just shocked me. I did 0:07:17.560 --> 0:07:20.840 this video on when when, uh how a currency dies? 0:07:21.240 --> 0:07:23.560 And and I read this book called When Money Dies, 0:07:23.600 --> 0:07:26.960 and it talks about hyperinflation in Germany after the war. 0:07:27.400 --> 0:07:30.320 And what was interesting is um as the prices were 0:07:30.320 --> 0:07:34.160 going higher in their currency, everyone thought they were getting rich. 0:07:34.400 --> 0:07:37.480 My house has never been worth this much money, My 0:07:37.640 --> 0:07:41.200 goal has never been worth much money. I better sell 0:07:41.760 --> 0:07:45.440 my whatever asset now. While it's still high before it 0:07:45.520 --> 0:07:48.239 drops back down. So they did, and so they sold 0:07:48.280 --> 0:07:50.920 all our assets for currency, which then ended up being 0:07:50.960 --> 0:07:53.200 worthless and they were it was they ended up burning 0:07:53.240 --> 0:07:54.960 it in the fireplace instead of would because it was 0:07:54.960 --> 0:07:59.000 actually worth less than would. So anyway, it's super important 0:07:59.040 --> 0:08:01.120 to understand purchasing are So let's go ahead and jump 0:08:01.120 --> 0:08:03.720 in and yeah, and do you know, mark to your point, 0:08:04.040 --> 0:08:06.840 if if you go to Wikipedia and you type in 0:08:06.960 --> 0:08:11.400 Wimar Republic, Wimar Germany, right, you'll see that picture which 0:08:11.440 --> 0:08:15.360 you I'm sure you've seen of a woman basically loading 0:08:15.920 --> 0:08:20.880 the the currency, okay, the Deutsche marks into a furnace 0:08:21.360 --> 0:08:24.760 to extract heat from them because it was cheaper than 0:08:24.800 --> 0:08:28.480 trading the currency units for wood. I mean, you know, 0:08:28.600 --> 0:08:32.199 it's it's just amazing, yeah, you know. And every fiat 0:08:32.240 --> 0:08:36.400 currency ever throughout history has gone to incenttrinsic value the 0:08:36.400 --> 0:08:42.520 paper it's printed on. So, uh, currency is only thirty 0:08:42.520 --> 0:08:45.400 five years and we're at fifty now, so we're we're 0:08:45.440 --> 0:08:47.840 we're living on borrowed time, to say the least. Well, 0:08:47.880 --> 0:08:50.400 this is a seminal moment in history because it is 0:08:50.440 --> 0:08:54.480 the fifth year anniversary of Nixon detaching the dollar from 0:08:54.480 --> 0:08:58.120 the gold standard. It's actually next month. So uh yeah, 0:08:58.200 --> 0:09:01.000 truly truly amazing. So yeah, I'll share my screen and 0:09:01.040 --> 0:09:02.760 let's dive into this. I'm glad we're on the same 0:09:02.800 --> 0:09:06.080 page with that. And so you know, it's really all 0:09:06.120 --> 0:09:09.360 about the measuring stick. And like we were saying, people 0:09:09.360 --> 0:09:11.800 are using the dollar the major as the measuring stick, 0:09:11.840 --> 0:09:15.240 and that is a mistake. Uh. You know, no one 0:09:15.400 --> 0:09:19.600 cares about dollars. They only care what dollars can buy us, right. Uh. 0:09:19.640 --> 0:09:22.120 And you know, before I dive into this too deeply, 0:09:22.200 --> 0:09:24.320 I just want to reiterate something I've talked on your 0:09:24.320 --> 0:09:26.959 show about before. There are really three types of real 0:09:27.080 --> 0:09:32.520 estate markets, linear, cyclical, and hybrid markets. They act differently. Uh. 0:09:32.559 --> 0:09:35.440 In this example today, just for the interest of time, 0:09:35.720 --> 0:09:39.840 we only are comparing to median home price. But just 0:09:40.000 --> 0:09:43.320 understand that if you were to drill down, things change 0:09:43.360 --> 0:09:46.960 whether you're in Los Angeles or Memphis, right, very different 0:09:47.200 --> 0:09:49.439 in the markets we buy properties. And so so I 0:09:49.640 --> 0:09:51.760 just want you to know that. And the question is 0:09:51.800 --> 0:09:54.960 compared to what it happens with trading in the economy, 0:09:55.280 --> 0:09:57.880 it also happens in every other part of our life. 0:09:58.200 --> 0:10:01.480 You know, we are comparison be beings by nature. We 0:10:01.520 --> 0:10:03.920 look at our neighbor's house. We look at our neighbor's 0:10:04.000 --> 0:10:06.640 yard and say, hey, are they doing better than I am? 0:10:06.920 --> 0:10:09.480 We look at their car. Uh. You know, when we 0:10:09.480 --> 0:10:13.120 were single, we look in the marketplace for a mate 0:10:13.440 --> 0:10:17.680 and we compare the Only reason you know, for example, 0:10:18.000 --> 0:10:20.800 that your wife, the woman you married, is more beautiful 0:10:20.800 --> 0:10:23.840 than another was by comparison. Right, That's that's the only 0:10:23.840 --> 0:10:27.080 way we know anything is by comparison. So life's most 0:10:27.080 --> 0:10:29.840 important question is compared to what to drill down on 0:10:29.880 --> 0:10:33.680 that question? Uh? For this example as we're talking today 0:10:34.160 --> 0:10:37.760 is Uh, let's talk about our friend George's question is 0:10:37.760 --> 0:10:41.320 is it cheap or is it expensive? And so as 0:10:41.360 --> 0:10:43.760 we do that and we consider whether or not we're 0:10:43.800 --> 0:10:46.880 in a bubble, the index can give us the answer. 0:10:47.040 --> 0:10:50.160 The h C I, the Heartman comparison index can give 0:10:50.240 --> 0:10:54.439 us the answer. And um, it can also maybe we'll 0:10:54.480 --> 0:10:57.400 leave that up to the people listening and watching, will it? 0:10:57.840 --> 0:11:00.240 Will it tell us when the bubble will pop? Right? 0:11:00.679 --> 0:11:04.160 And so's the question I want to know the answer to, right, right, Well, 0:11:04.160 --> 0:11:06.760 we're gonna explore that one for sure. And uh, and 0:11:06.800 --> 0:11:10.040 we need to understand that when we're thinking about this 0:11:10.600 --> 0:11:14.679 that a house or an apartment complex as investors, right, 0:11:15.120 --> 0:11:18.000 it's made up of commodities. And that's why I call 0:11:18.080 --> 0:11:23.240 this packaged commodities investing. So we're gonna look at ingredients 0:11:23.840 --> 0:11:28.959 steal lumber, copper, wire, petroleum products, etcetera. We just have 0:11:29.040 --> 0:11:31.440 to understand that a house is just a set of 0:11:31.520 --> 0:11:35.960 commodities that are assembled in package. Um. So of course 0:11:36.000 --> 0:11:37.880 I've got that free book for all of your listeners 0:11:38.120 --> 0:11:40.760 at Pandemic Investing dot com. Or I've taken a lot 0:11:40.760 --> 0:11:43.520 of these principles and applied them to the times we're 0:11:43.559 --> 0:11:46.800 living in, and that's at Pandemic Investing dot com. We 0:11:46.920 --> 0:11:50.479 talked before on your show about inflation induced debt destruction 0:11:50.960 --> 0:11:55.559 and it totally uh shows when you look at the index, 0:11:56.000 --> 0:11:59.880 because when you price things in real dollars and you 0:12:00.160 --> 0:12:03.200 compare say the consumer price Index with the Case Shiller 0:12:03.320 --> 0:12:06.640 Housing Index, you see that mostly it's parallel, but at 0:12:06.679 --> 0:12:09.880 times it gets really out of sync. And uh, that's 0:12:09.920 --> 0:12:13.400 just what happens. Uh. And we've had our our money 0:12:13.440 --> 0:12:17.280 printer in chief, Jerome Powell, printing money like crazy. Um, 0:12:17.920 --> 0:12:21.359 it wouldn't before we dive into the index and the comparisons. 0:12:21.360 --> 0:12:24.440 We have to talk about a couple other indexes real quickly. 0:12:25.080 --> 0:12:28.960 One is the HPI, the house price index. I think 0:12:29.000 --> 0:12:32.000 it's very flawed and does not do as good a 0:12:32.080 --> 0:12:35.240 job as the index will talk about. Uh. And then 0:12:35.280 --> 0:12:39.240 of course the Case Shiller index also very flawed, because 0:12:39.760 --> 0:12:44.199 the twenty markets the Case Shiller Index profiles could really 0:12:44.320 --> 0:12:47.680 lead someone to make big, big mistakes. Why do I 0:12:47.760 --> 0:12:51.680 say that, because fifteen of those twenty markets, two thirds 0:12:51.720 --> 0:12:56.439 of the mark are cyclical markets, and it just wouldn't 0:12:56.520 --> 0:12:59.280 be uh, it wouldn't be prudent for a real estate 0:12:59.320 --> 0:13:03.839 investor to decisions based on only those cyclical markets or 0:13:03.840 --> 0:13:08.040 at least two thirds cyclical. UM. The big, big, the 0:13:08.080 --> 0:13:10.839 big problem that I have with with those those home 0:13:10.840 --> 0:13:13.079 price indexes and the Schiller index UM, and I've done 0:13:13.120 --> 0:13:16.040 videos on this as well, is that UM, they take 0:13:16.080 --> 0:13:19.440 into account the price of the home, but nobody pays 0:13:19.480 --> 0:13:22.160 the price of the home, right so wall um, we're 0:13:22.200 --> 0:13:24.880 back up the two thousand eight levels or maybe slightly above. 0:13:25.280 --> 0:13:28.640 Interest rates are half and so if you look at 0:13:28.640 --> 0:13:31.400 the month payment, I think it's you know, over of 0:13:31.559 --> 0:13:34.880 first time buyers are financing the home financings. So it's 0:13:34.880 --> 0:13:37.480 always about the monthly payment. And so if you look 0:13:37.520 --> 0:13:40.439 at um the payment amount, because interest rates have dropped 0:13:40.440 --> 0:13:43.000 in hal since two thou eight, UM, it gives you 0:13:43.040 --> 0:13:46.280 a different picture. Do you take that into consideration? Absolutely, 0:13:46.360 --> 0:13:49.240 that's the second part of the index is payment. The 0:13:49.280 --> 0:13:52.360 first price part is price. And I couldn't agree with 0:13:52.400 --> 0:13:55.240 you more. Nobody buys a house based on the price. 0:13:55.280 --> 0:13:57.679 They only buy it based on the payment. So you're 0:13:57.720 --> 0:14:02.840 absolutely right about that. UM. This index, the Housing Affordability Index, 0:14:03.120 --> 0:14:07.200 is actually my favorite outside of the new HCI index 0:14:07.240 --> 0:14:11.480 that we launched, because it does consider payment. It looks 0:14:11.520 --> 0:14:15.360 at median house payment versus media and income in a 0:14:15.360 --> 0:14:19.680 given area. It's major flaw, though, is it doesn't account 0:14:20.000 --> 0:14:26.680 for foreign money or retirees that buy properties for cash. Okay, 0:14:26.760 --> 0:14:29.480 so there are some flaws in that as well, and 0:14:29.560 --> 0:14:33.440 I think the UH the Comparison index really really gives 0:14:33.520 --> 0:14:37.400 us the answer. So let's look at gold gold. Although 0:14:37.440 --> 0:14:39.760 I'm not a gold bug, and I don't think you 0:14:39.800 --> 0:14:43.200 are either. Although I'm not sure I've I've been a 0:14:43.240 --> 0:14:46.000 gold bug for a dozen years now. I consider myself 0:14:46.040 --> 0:14:49.440 a sound of money advocate. Yes, I love it, and 0:14:49.920 --> 0:14:52.160 I'm guessing bitcoin is your sound money. So we're gonna 0:14:52.200 --> 0:14:55.320 get to that one next. But but let's look at gold. 0:14:55.520 --> 0:14:58.560 I mean look gold, to be fair to it has 0:14:58.600 --> 0:15:03.480 been considered money for five thousand years. Humanity has considered 0:15:03.560 --> 0:15:07.080 gold to be money, and uh so it would be 0:15:07.240 --> 0:15:11.520 completely unfair to not consider gold. So if you go 0:15:11.600 --> 0:15:15.720 back to nineteen seventy, nineteen seventy one year before we 0:15:15.720 --> 0:15:18.440 went off the gold standard, if you wanted to buy 0:15:18.440 --> 0:15:21.520 the Median Price House for twenty two thousand dollars I'm 0:15:21.600 --> 0:15:25.160 rounding off here obviously, and you had gold at thirty 0:15:25.240 --> 0:15:29.040 five dollars, it would cost six hundred and forty six 0:15:29.080 --> 0:15:33.520 ounces of gold to buy the Median Price house. Fast 0:15:33.560 --> 0:15:38.800 forward to the year two thousand, a generation ago. Back then, 0:15:39.320 --> 0:15:42.320 twenty one years ago, to buy the Median Price House 0:15:42.360 --> 0:15:45.920 for a hundred and seventy three thousand dollars with gold 0:15:45.960 --> 0:15:48.360 at two hundred and eighty three dollars an ounce, it 0:15:48.360 --> 0:15:51.480 would take you six hundred and ten ounces of gold 0:15:51.800 --> 0:15:56.120 to buy the Median Price House. But guess what mark today, 0:15:56.240 --> 0:15:58.400 if you want to buy the Median Price House, it 0:15:58.440 --> 0:16:01.760 will only own only cost you a hundred and ninety 0:16:01.880 --> 0:16:06.480 four gold. So your briefcase full of gold has gotten 0:16:06.480 --> 0:16:11.680 a lot lighter. Okay. Um, it's so measured in gold 0:16:11.920 --> 0:16:17.240 or priced in gold, is housing cheap or expensive? Cheep? 0:16:17.840 --> 0:16:21.600 It's got much very go on from six to two Yeah, yes, 0:16:23.080 --> 0:16:27.200 sixty six, yeah, yeah, you're right, and even compared to 0:16:27.240 --> 0:16:31.680 a generation ago or fifty one years ago, it's truly 0:16:31.720 --> 0:16:34.520 amazing that if you were saving your money in gold, 0:16:34.960 --> 0:16:37.800 your house has gotten a lot cheaper. Okay. So let's 0:16:37.840 --> 0:16:40.840 look at bitcoin, your favorite, right, and hey, I'm a 0:16:40.840 --> 0:16:44.640 fan too. I I hope bitcoin succeeds wildly. I would 0:16:44.680 --> 0:16:48.040 love it. Uh, it doesn't go back far enough with bitcoin. 0:16:48.440 --> 0:16:51.880 But in two thousand ten is you know, that's where 0:16:51.880 --> 0:16:54.840 we start to buy the median price house at two 0:16:54.960 --> 0:16:58.680 hundred and twenty four thousand dollars take you seven hundred 0:16:58.680 --> 0:17:03.160 and seventy three is in bitcoin? Uh? A year ago, 0:17:03.560 --> 0:17:06.800 last year to buy the median price house at three 0:17:07.000 --> 0:17:12.360 hundred and fifty nine thousand dollars twelve bitcoin. And today 0:17:12.440 --> 0:17:15.640 even though bitcoin isn't that much higher because it's had 0:17:15.680 --> 0:17:21.359 some losses lately, Uh, the house price at three five Uh, 0:17:21.480 --> 0:17:26.879 you're you're looking at thirty four thousand bitcoin? Okay, But 0:17:29.240 --> 0:17:34.800 dollar bitcoin dollar bitcoin, and it takes ten bitcoin. Okay, 0:17:34.840 --> 0:17:39.080 So priced in bitcoin, is housing cheaper expensive? Right? It's 0:17:39.119 --> 0:17:43.760 gotten from seven thousand two to ten a lot cheaper, 0:17:43.920 --> 0:17:47.800 A lot cheaper, Okay. The most important commodity on Earth, 0:17:47.880 --> 0:17:51.199 I would argue as oil. There is no commodity on 0:17:51.280 --> 0:17:54.320 Earth that is more important than oil. Forget about what 0:17:54.359 --> 0:17:57.359 all the tree huggers say doesn't matter. The fact is, 0:17:57.560 --> 0:17:59.200 at the end of the day, the world is still 0:17:59.280 --> 0:18:03.359 running on all. Okay. In nineteen seventy oil was only 0:18:03.480 --> 0:18:09.360 three dollars a barrel three bucks. Today it's seventy five. Right. 0:18:11.200 --> 0:18:14.520 The median house price twenty three thousand dollars, give or 0:18:14.560 --> 0:18:19.560 take sixty seven hundred barrels of oil to trade that 0:18:19.720 --> 0:18:23.520 for a house. Okay, I'll jump to the year two thousand, 0:18:24.400 --> 0:18:28.240 sixty three hundred or rounded off sixty d barrels of 0:18:28.280 --> 0:18:33.720 oil to buy the median house. Today only forty hundred 0:18:33.800 --> 0:18:37.119 barrels of oil will buy you the Median house. So 0:18:37.280 --> 0:18:42.880 priceton oil is housing cheaper expensive? Well, it's definitely gone 0:18:42.920 --> 0:18:45.560 from gotten cheaper about a about a third cheaper than 0:18:45.600 --> 0:18:49.800 it was in What's interesting is is I like to 0:18:49.840 --> 0:18:53.480 ask people this question which is, do you think, given 0:18:53.640 --> 0:18:58.439 all the advancements technology, that it's actually more work to 0:18:58.480 --> 0:19:02.480 bring oil to the marketplace? Uh like to try to 0:19:02.520 --> 0:19:04.919 to bring it out, to bring it to transport it package? Like, 0:19:05.160 --> 0:19:07.280 do you actually think it's more expensive or is it 0:19:07.400 --> 0:19:09.960 less expensive? Right, it's gotten easier, it should have gotten 0:19:10.119 --> 0:19:11.720 I mean, has gotten easier and should have been cheaper. 0:19:11.720 --> 0:19:13.439 But but it's gone the other way. And and not 0:19:13.480 --> 0:19:15.840 only that, you know, what you mentioned is certainly true. 0:19:15.920 --> 0:19:19.520 The technology of the actual you know, running of the plant, 0:19:19.600 --> 0:19:23.440 like we'll call it the heavy equipment that's better and cheaper, right, 0:19:23.800 --> 0:19:27.880 but also just the technology of the software that controls 0:19:27.920 --> 0:19:32.359 the inventory supply and manages that and manages this shipping 0:19:32.359 --> 0:19:35.320 and supply chain that's gotten so much better and so 0:19:35.400 --> 0:19:39.480 much more efficient, just radically efficient that um, yeah, it 0:19:39.560 --> 0:19:42.080 is cheaper. So that what that really shows is that 0:19:42.119 --> 0:19:48.040 the dollar is just losing value dramatically. Okay, So orange juice, 0:19:48.119 --> 0:19:50.800 now this one is different. Okay, this one is different 0:19:51.160 --> 0:19:54.120 in orange joice priced and orange juice houses have become 0:19:54.160 --> 0:19:57.760 a lot more expensive. So what I recommend to all 0:19:57.800 --> 0:20:01.239 of our listeners is, uh, you know, just to go 0:20:01.440 --> 0:20:05.240 look at the chart n seventy it took you fifty 0:20:05.280 --> 0:20:09.560 one thousand pounds of orange juice to buy a house. Uh, 0:20:09.680 --> 0:20:13.000 two thousand, because I'm just skipping to you know, make 0:20:13.119 --> 0:20:15.399 in the interest of time, two hundred and ten thousand 0:20:15.440 --> 0:20:18.040 pounds of orange juice to buy a house today two 0:20:18.080 --> 0:20:21.280 hundred and eighty thousand pounds to buy a house. Right, 0:20:21.520 --> 0:20:25.520 so priced in orange juice, houses have become expensive. So 0:20:25.640 --> 0:20:30.040 my recommendation is that everybody dilute their orange juice with 0:20:30.359 --> 0:20:35.520 champagne or vodka. Ok. Well, Also, what it does illustrates 0:20:35.640 --> 0:20:39.000 that what you use as your store of value and 0:20:39.040 --> 0:20:43.320 your unit of account matters. It does matter, absolutely matters, 0:20:43.400 --> 0:20:47.920 absolutely matters. So uh, I'll do rice and then we'll 0:20:47.920 --> 0:20:50.680 move on to the payment side of the equation, just too, 0:20:50.880 --> 0:20:53.560 in the interest of time. So the reason I pick 0:20:53.760 --> 0:20:56.760 rice as a very important thing is, you know, rice 0:20:57.000 --> 0:21:00.359 is the food stock for two thirds of the world. 0:21:00.680 --> 0:21:04.520 Two thirds of humanity survives on rice. Yeah, they eat 0:21:04.560 --> 0:21:07.720 other things a little bit too, but rice is their staple. Okay, 0:21:07.760 --> 0:21:10.280 it's like the base food. And you did a great 0:21:10.359 --> 0:21:13.080 video by the way, recently on the Great Reset of Food. 0:21:13.320 --> 0:21:17.000 I really want to recommend that to people. So uh, 0:21:17.240 --> 0:21:21.200 nineteen seventy, if you wanted to buy the median price house, 0:21:21.640 --> 0:21:26.560 it would take you uh, forty two thousand pounds of 0:21:26.880 --> 0:21:30.240 forty three thousand pounds of rice. Okay. Um, in two 0:21:30.280 --> 0:21:34.000 thousand it would be thirty one thousand. Today it's only 0:21:34.040 --> 0:21:40.639 twenty seven thousand, so priced in rice, housing is cheaper, okay. 0:21:40.680 --> 0:21:48.600 Would say, yeah, yeah, nice, Uh, you know what, Let's 0:21:48.600 --> 0:21:51.360 not move on too quickly. I want to do SMP. Okay. 0:21:51.359 --> 0:21:54.840 This is important because the SMP the standard and pours. 0:21:54.880 --> 0:22:00.359 The SMP five hundred index accounts for seventy two percent 0:22:00.480 --> 0:22:04.439 of all consumers spending in the country. It's a pretty 0:22:04.480 --> 0:22:08.040 good measure for how the economy is doing. Um. You know, 0:22:08.080 --> 0:22:10.919 the SMP five hundred is a large part of the 0:22:11.000 --> 0:22:16.240 overall economy. So in nineteen seventy, it would cost you 0:22:16.359 --> 0:22:21.200 two hundred and forty three shares of the SMP index 0:22:21.480 --> 0:22:25.359 at ninety three dollars to buy the median price house 0:22:27.920 --> 0:22:31.080 two hundred and forty three shares to buy a house 0:22:31.480 --> 0:22:36.600 in nineteen seventy. In two thousand, it would cost you 0:22:36.640 --> 0:22:39.520 a hundred and nineteen shares of the SMP to buy 0:22:39.520 --> 0:22:43.800 the median price house. But today it only costs you 0:22:43.880 --> 0:22:47.520 eighty shares of the SMP to buy the median price house. 0:22:47.880 --> 0:22:51.959 So priced in the SMP, housing is a lot cheaper 0:22:52.240 --> 0:23:00.159 than in median income. Not so cheap. Okay, uh uh 0:23:00.640 --> 0:23:03.440 you know how many years do you need to work 0:23:03.760 --> 0:23:07.520 to buy a house with cash? Right in nineteen seventy 0:23:07.720 --> 0:23:11.320 you needed to work two point six years. In two thousand, 0:23:11.640 --> 0:23:14.920 four point one years, Today you have to work four 0:23:15.000 --> 0:23:17.639 point eight years if you were in the median income 0:23:17.680 --> 0:23:19.800 to buy a house. Now we're going to get to 0:23:19.800 --> 0:23:23.480 the payment part in a moment. It was in two thousand, Uh, 0:23:23.520 --> 0:23:26.920 in two thousand, four point one years. Yeah, four point 0:23:26.920 --> 0:23:29.680 one two point six, four point one four point eight Yeah, 0:23:29.840 --> 0:23:32.439 going from nineteen seventy to two thousand? What that? What 0:23:32.520 --> 0:23:35.320 that tells you? The way that I look at that is, um, 0:23:35.359 --> 0:23:37.720 this is uh the reason why the money is losing 0:23:37.760 --> 0:23:40.280 values because they keep printing so much of it. And 0:23:40.400 --> 0:23:42.840 uh and this illustration right here took two and a 0:23:42.920 --> 0:23:45.600 half years of your life. That's your life. That the 0:23:45.600 --> 0:23:49.320 most scarce asset in history is your time. All other 0:23:49.320 --> 0:23:50.960 assets we can get more of if we lose it, 0:23:51.000 --> 0:23:53.160 but you can't get back your time. So it took 0:23:53.200 --> 0:23:55.040 two and a half years of your life that you 0:23:55.080 --> 0:23:57.520 can't get back. To buy that house today, it takes 0:23:57.760 --> 0:24:01.639 almost five to double. And so what they're doing by 0:24:01.680 --> 0:24:05.840 the money printer is actually stealing your life. They're still 0:24:05.920 --> 0:24:10.800 your life absolutely. You know, listen to what Mark just 0:24:10.880 --> 0:24:14.280 said their folks that the only thing any of us 0:24:14.320 --> 0:24:17.640 really have is our time. That's it. And what Mark 0:24:17.720 --> 0:24:21.160 said is right on. You just nailed it, because they 0:24:21.200 --> 0:24:27.080 are literally by debasing the currency, they are also stealing 0:24:27.359 --> 0:24:31.040 the years of your life away. So that's why you 0:24:31.119 --> 0:24:34.720 listen to this show because you want to learn how 0:24:34.720 --> 0:24:37.640 to how to turn that the other way. You want 0:24:37.640 --> 0:24:40.760 to learn how to not be affected or maybe even 0:24:40.800 --> 0:24:45.320 to thrive by aligning your interests with what I call 0:24:45.400 --> 0:24:47.960 the two most powerful entities that have ever existed in 0:24:48.080 --> 0:24:51.960 human history, governments and central banks. And that's what we're 0:24:51.960 --> 0:24:55.000 here to help you do. Okay, So so yeah, it's 0:24:55.040 --> 0:24:59.159 a lot now. Now Forbes, Interestingly, Forbes magazine publishes in 0:24:59.440 --> 0:25:02.439 their own economic index, their own version mark of the 0:25:02.600 --> 0:25:06.320 c p I, the Consumer Price Index, but they call 0:25:06.400 --> 0:25:11.879 it the cost of living very well, so this is 0:25:11.920 --> 0:25:15.320 like the c p I for rich people. Okay. And 0:25:15.320 --> 0:25:18.800 and what's interesting about it is that we also took 0:25:18.920 --> 0:25:21.800 in the Hartman Comparison Index. In the h c I, 0:25:22.480 --> 0:25:26.560 we compared the cost of living very well index to 0:25:26.640 --> 0:25:30.880 house prices, and here's what we found. In nine seventy 0:25:31.880 --> 0:25:36.439 it would take five hundred and eighty one shares of 0:25:36.520 --> 0:25:41.199 this index to buy the median price house. Today it 0:25:41.240 --> 0:25:45.560 only takes five hundred and six shares. So for wealthy people, 0:25:45.680 --> 0:25:49.879 houses have become cheaper, not two thirds cheaper like some 0:25:49.920 --> 0:25:52.560 of the people that held the gold or a bitcoin 0:25:52.760 --> 0:25:57.840 radically cheaper or whatever, oil, etcetera, but still cheaper. Okay, 0:25:58.280 --> 0:26:02.399 in the cost of living very well indexed UM. Now copper, Uh, 0:26:02.520 --> 0:26:05.440 you're going to find some differences there. Copper is a 0:26:05.480 --> 0:26:09.439 super important commodity. They call it dr copper for a reason. 0:26:09.960 --> 0:26:15.080 Um four forty eight thousand pounds of copper to buy 0:26:15.119 --> 0:26:17.879 the house two thousand, two hundred and four thousand pounds 0:26:17.880 --> 0:26:21.600 and two thousand today only eight one tho pounds. So 0:26:21.920 --> 0:26:27.320 from two thousand today basically a generation twenty one years right, um, 0:26:27.320 --> 0:26:31.399 housing has is less than half the price in copper 0:26:31.480 --> 0:26:35.760 than it was then. Okay, so so everything everything but 0:26:35.840 --> 0:26:39.560 o j yeah, yeah, orange juice, orange juice, definitely, yeah, 0:26:39.600 --> 0:26:41.720 not so not so good. Okay, So now let's talk 0:26:41.760 --> 0:26:44.200 about the payment. Okay, we we compare it to a 0:26:44.240 --> 0:26:47.040 whole bunch of other things. Find out more at my 0:26:47.119 --> 0:26:49.919 website Jason Hartman dot com or on my YouTube channel 0:26:50.040 --> 0:26:54.040 or podcast, The Creating Weald Show. But payment, you you 0:26:54.160 --> 0:26:56.479 mentioned that earlier, and I want to get to payment 0:26:56.760 --> 0:26:59.879 because the index considers not only the price of the house, 0:27:00.800 --> 0:27:06.520 but also the typical mortgage payment, and with interest rates, 0:27:06.560 --> 0:27:10.000 like you said, mark being half of what they were. Uh, 0:27:10.200 --> 0:27:13.359 it's really staggering what happens to the payment. So let's 0:27:13.400 --> 0:27:18.040 look at the mortgage payment based in UM the median 0:27:18.119 --> 0:27:25.240 home price, adjusted for inflation, and then priced in bitcoin. Okay, staggering, 0:27:25.560 --> 0:27:30.119 what's happened? So the media mortgage payment was a hundred 0:27:30.160 --> 0:27:36.199 and forty two bucks by two thousand, was today compared 0:27:36.240 --> 0:27:40.720 to two thousand, it's only eleven seventy. But when you 0:27:40.800 --> 0:27:45.480 adjusted for inflation back in was a hundred and forty 0:27:45.520 --> 0:27:48.640 two bucks today it's only one sixty nine. It's not 0:27:48.720 --> 0:27:52.760 that much more expensive adjusted for the official rate of inflation, 0:27:52.840 --> 0:27:58.840 which is fake, which is manipulated. So basically, uh, if 0:27:58.880 --> 0:28:02.280 you put in the real rate of inflation, the house 0:28:02.320 --> 0:28:05.960 payment has become quite a bit cheaper than it was 0:28:06.160 --> 0:28:10.399 in nineteen seventy. Based in bitcoin, it's almost free to 0:28:10.520 --> 0:28:16.280 have a house payment, okay um based in gold though, um. 0:28:16.320 --> 0:28:19.000 To make your payment in gold in nineteen seventy it 0:28:19.040 --> 0:28:22.600 took four point one ounces. In two thousand, it took 0:28:22.640 --> 0:28:25.360 three and a half ounces of gold. Today it only 0:28:25.400 --> 0:28:29.480 takes point seven ounces of gold to pay your mortgage. 0:28:30.240 --> 0:28:34.240 Um in barrels of oil. Nine seventy took forty two 0:28:34.240 --> 0:28:36.840 barrels of oil to pay the house payment. In two 0:28:36.880 --> 0:28:41.640 thousand thirty six barrels, and today only sixteen barrels a 0:28:41.680 --> 0:28:45.560 month to live in that house for your mortgage payment. Okay, 0:28:45.720 --> 0:28:48.640 orange juice, it's gotten a little more expensive. It's not 0:28:48.720 --> 0:28:53.040 the most expensive. It was nine D forty four pounds 0:28:53.040 --> 0:28:57.400 of orange juice per month today, uh, three D nineteen 0:28:57.400 --> 0:29:00.920 in nineteen seventy, but in two thousand twelve hundred barrels 0:29:01.000 --> 0:29:04.560 or not barrels pounds, So it's a little cheaper than 0:29:04.560 --> 0:29:08.239 it was in two thousand. Yeah, it's worth yea. How 0:29:08.240 --> 0:29:12.480 about shares of the SMP. Okay, if you want to 0:29:12.480 --> 0:29:14.920 pay your house payment, you could cash in one and 0:29:14.960 --> 0:29:17.960 a half shares of the SMP converted to dollars pay 0:29:17.960 --> 0:29:21.720 your mortgage in two thousand, if you did that, it 0:29:21.760 --> 0:29:25.640 would only take point seven less than half to pay 0:29:25.680 --> 0:29:29.720 your mortgage payment. Today it only takes point three. So 0:29:29.920 --> 0:29:34.120 priced in the SMP or mortgage payment is dramatically cheaper. 0:29:34.600 --> 0:29:38.000 Dramatically cheaper in a bunch of things. Okay, how about 0:29:38.160 --> 0:29:42.640 hours worked at the average wage in nineteen seventy you 0:29:42.640 --> 0:29:47.080 you talk mark about stealing your time in forty one 0:29:47.160 --> 0:29:51.880 hours at the average wage to pay your mortgage in 0:29:51.920 --> 0:29:55.280 two thousand, it took sixty nine hours. Today it only 0:29:55.320 --> 0:29:59.320 takes forty six hours. So, you know, cheaper than it 0:29:59.400 --> 0:30:01.680 was twenty one years ago, a little more expensive than 0:30:01.720 --> 0:30:06.000 it was fifty one years ago. UM tuition, we do 0:30:06.080 --> 0:30:09.800 it indexed in tuition, college tuition, UM, a whole bunch 0:30:09.800 --> 0:30:14.480 of other things. But the bottom line is, housing overall 0:30:14.800 --> 0:30:19.920 is cheaper in almost anything you compare it to today, 0:30:20.880 --> 0:30:23.640 both on a price of the house basis, but even 0:30:23.680 --> 0:30:28.560 more so on a monthly payment basis, is getting cheaper. 0:30:28.720 --> 0:30:33.920 And that's why I say we've got a few good 0:30:34.040 --> 0:30:36.600 years ahead of us probably in the housing market. Now. 0:30:36.840 --> 0:30:39.600 I do want to make the disclaimer that the index 0:30:39.680 --> 0:30:43.360 is a comparison index. It's called the Heartman comparison Index. 0:30:43.680 --> 0:30:49.120 It compares things. It doesn't consider other things like foreclosure, moratoriums, 0:30:49.720 --> 0:30:54.160 in ventory levels, all of that stuff. But I will say, uh, 0:30:54.400 --> 0:30:56.640 a lot of data is in the price of things. 0:30:57.360 --> 0:31:01.720 The price of anything offers a ton of data. Rice 0:31:01.840 --> 0:31:05.560 price is data prices communicating the prices. This is the 0:31:05.600 --> 0:31:09.720 signal that communicates everything. And so um, that's of course 0:31:09.760 --> 0:31:12.360 that's what it is. Yeah. M curious though, because um, 0:31:14.480 --> 0:31:17.400 George George says, uh, you know, is is it expensive 0:31:17.480 --> 0:31:21.680 or is it cheap? Um? But that doesn't tell everything, right, So, uh, 0:31:21.920 --> 0:31:25.120 just because homes maybe aren't as expensive on a monthly 0:31:25.120 --> 0:31:27.640 basis or comparatively as they were in the past doesn't 0:31:27.680 --> 0:31:30.320 necessarily mean that they won't cry in And just because 0:31:30.600 --> 0:31:32.160 or because they're lower doesn't mean they can keep going 0:31:32.240 --> 0:31:35.600 up either, right right, So right now, we're doing the 0:31:35.680 --> 0:31:39.800 index on a quarterly basis. We're putting in new numbers 0:31:39.880 --> 0:31:42.480 every quarter, okay, and we want to get it to 0:31:42.560 --> 0:31:44.760 a monthly basis. But hey, this is a new thing, 0:31:44.880 --> 0:31:48.600 and we're staffing up there okay for the index. Uh 0:31:48.720 --> 0:31:52.000 and uh, and so you know, just keep following the index, 0:31:52.600 --> 0:31:57.440 and when when the index says housing is expensive compared 0:31:57.480 --> 0:32:00.520 to all these other things, then you know that is 0:32:00.560 --> 0:32:03.680 a dangerous point. And we will get there, especially if 0:32:03.720 --> 0:32:07.120 these dysfunctionally low interest rates continue, we will good to 0:32:07.200 --> 0:32:11.920 that point. So we're just not there yet. Hey, sorry 0:32:11.960 --> 0:32:14.160 to interrupt this video just one more time. I'm not 0:32:14.360 --> 0:32:17.040 running Google ads, so it's actually way less interruption than 0:32:17.080 --> 0:32:19.080 I normally would have on a video. UM, and that's 0:32:19.080 --> 0:32:22.640 because it's sponsored by block five. UM. They are opening 0:32:22.760 --> 0:32:25.560 up the world of bitcoin and financial products offering to 0:32:25.640 --> 0:32:29.000 pay you interest on your bitcoin. UM better than own 0:32:29.000 --> 0:32:30.720 in a rental property that you have to manage and 0:32:30.800 --> 0:32:32.720 control and have the risks. You can just earn interest 0:32:32.760 --> 0:32:35.320 on it, or you can leverage against it. Now, I 0:32:35.520 --> 0:32:39.040 plan to hold my bitcoin forever and literally never sell 0:32:39.240 --> 0:32:41.160 my bitcoin. So how do you do that? Well, if 0:32:41.200 --> 0:32:43.240 I need money, I don't want to sell that bitcoin. 0:32:43.240 --> 0:32:45.360 I'm gonna pay tax on it, all right, I'm gonna 0:32:45.400 --> 0:32:47.640 end up with less and I don't have the bitcoin anymore. 0:32:47.760 --> 0:32:49.760 So a better way to do it is to borrow 0:32:49.960 --> 0:32:52.840 against the bitcoin. So I've put all my money into bitcoin. 0:32:53.080 --> 0:32:54.720 If I want to buy a car, or I want 0:32:54.760 --> 0:32:57.320 to buy a house, I can borrow against it at 0:32:57.520 --> 0:33:00.479 very very low competitive rates. Get my house, get my car, 0:33:00.520 --> 0:33:03.320 or whatever that may be, and get to keep the bitcoin. 0:33:03.400 --> 0:33:05.880 I've done a whole video on this. You can find it. 0:33:05.880 --> 0:33:07.840 I'll link it down in the description below, how to 0:33:08.000 --> 0:33:10.360 retire off a bitcoin without paying taxes, and you can 0:33:10.400 --> 0:33:12.880 do that with block five services. I'll link to the 0:33:12.960 --> 0:33:14.560 video down below. I'm also going to put a link 0:33:14.600 --> 0:33:16.320 to block Fight. If you choose to click on that 0:33:16.360 --> 0:33:17.960 link to check them out. You can earn up to 0:33:17.960 --> 0:33:20.840 two fifty dollars in free bitcoin just for using that link. 0:33:21.160 --> 0:33:22.680 And that's it. Let's go ahead and get back to 0:33:22.840 --> 0:33:26.800 the interview. Yeah, so, um, it looks at the price things, 0:33:26.880 --> 0:33:30.280 and UM, I like that because it's most basic. Most 0:33:30.360 --> 0:33:32.240 people are like, oh, real estate, it's way too expensive. 0:33:32.240 --> 0:33:36.000 It's got a crash any moment um. So it gets 0:33:36.000 --> 0:33:37.640 a different perspective on the price. Like I said, I 0:33:37.720 --> 0:33:39.840 keep pounding the table on this. Purchasing power brings you 0:33:39.920 --> 0:33:42.040 back to that, which so it's perfect for that. I 0:33:42.160 --> 0:33:44.080 was I was taking notes and writing down a bunch 0:33:44.080 --> 0:33:46.480 of those amounts because I'm gonna use some of that data. Um. 0:33:47.720 --> 0:33:49.800 But um, like I said, just because price is cheap 0:33:49.880 --> 0:33:51.520 doesn't mean it's gonna get going up. But just because 0:33:51.520 --> 0:33:55.640 it's expensive doesn't mean. Uh, we have the wild card, 0:33:55.720 --> 0:33:58.600 as I call it, These are the banksters, and we 0:33:58.680 --> 0:34:00.720 don't know what the banksters are gonna do. So for example, 0:34:00.880 --> 0:34:03.400 the FED and the government has done anything other power 0:34:03.480 --> 0:34:05.840 to prop the market up. Um. You know, over the 0:34:05.920 --> 0:34:08.480 last year they've spent trillions of dollars to do that, 0:34:08.920 --> 0:34:10.840 and a lot of it has been done in the 0:34:10.920 --> 0:34:14.840 mortgage industry specifically, um, you know, buying mortgage backed securities 0:34:14.880 --> 0:34:18.120 and whatnot. And uh. And then even with the you know, 0:34:18.239 --> 0:34:22.960 rear rams and eviction moratorium, they're helping for payments. Um. 0:34:23.080 --> 0:34:26.000 So it seems like that's a big wild card and 0:34:26.080 --> 0:34:28.759 we don't know what in their head will they do? 0:34:28.960 --> 0:34:31.800 You will they nah? So how does that? How do 0:34:31.840 --> 0:34:35.000 you factor that in? I am really glad you mentioned 0:34:35.080 --> 0:34:39.080 that what we are adding to the Heartman Comparison Index 0:34:39.800 --> 0:34:45.080 is a mortgage sensitivity component, a mortgage interest rate sensitivity component. 0:34:45.480 --> 0:34:49.799 Because it's a good question what would happen if they 0:34:50.000 --> 0:34:53.600 FED and the government and the banksters. Uh, you know, 0:34:53.800 --> 0:34:57.840 this collusion between these entities, which is so secretive and 0:34:58.440 --> 0:35:02.279 just ridiculous frankly. Uh, you know what would happen if 0:35:02.360 --> 0:35:07.640 they tighten the money supply and and interest rates go up? Well, 0:35:07.800 --> 0:35:10.760 the ft doesn't directly control mortgage rates, but they certainly 0:35:10.840 --> 0:35:14.000 influence them in a huge way. And so you know 0:35:14.080 --> 0:35:16.759 if rates went up I say one percent, which is 0:35:16.840 --> 0:35:20.920 really a thirty three percent increase depending on the exact rate, 0:35:21.719 --> 0:35:26.160 very approximate there um. Uh, you know, then it would 0:35:26.280 --> 0:35:30.759 it would certainly make housing much less affordable. So you're 0:35:30.800 --> 0:35:36.520 absolutely right. But when that happens, the likelihood is all 0:35:36.640 --> 0:35:39.360 of the other compared to what items in the h 0:35:39.480 --> 0:35:43.560 C I will also react to that, right, Certainly, the 0:35:43.760 --> 0:35:47.400 S and P will, gold prices will uh, copper prices, 0:35:47.480 --> 0:35:51.400 everything reacts, right. But here's the problem, and here's why 0:35:51.480 --> 0:35:53.920 it's so hard to make predictions right, And here's why 0:35:54.000 --> 0:35:56.560 so many people who claim to be good at making 0:35:56.640 --> 0:36:00.600 predictions fall on their sword at some point and right 0:36:01.080 --> 0:36:04.680 is because these things don't act in lockstep. There's a 0:36:04.840 --> 0:36:09.320 lag time between these reactions of different items in the economy. 0:36:09.840 --> 0:36:13.240 And so, uh, you know what you can be pretty 0:36:13.320 --> 0:36:16.880 safe with, I think is looking at big macro trends, 0:36:17.520 --> 0:36:19.360 and that's that's what I like looking at, and I 0:36:19.360 --> 0:36:22.040 think it's where you like looking at too. Uh. If 0:36:22.080 --> 0:36:25.320 you're trying to make predictions and be a day trader, 0:36:25.520 --> 0:36:33.239 you're probably gonna get in trouble. Okay. So, um, I'm curious. Um, well, 0:36:34.000 --> 0:36:35.960 I want to see I want to ask you. I 0:36:36.000 --> 0:36:38.200 want to nail you down as to what you see 0:36:38.440 --> 0:36:41.520 in the near and long term future. But before we 0:36:41.640 --> 0:36:44.040 jump into that, for everybody watching, make sure you stay 0:36:44.080 --> 0:36:46.680 to that because I'm gonna ask Jason. This is a causation. Um, 0:36:46.760 --> 0:36:48.799 As I was walking down the beach trail last night 0:36:48.840 --> 0:36:51.439 with my wife here in southern California. I mean homes 0:36:51.480 --> 0:36:54.840 have doubled. I mean they're up a hundred percent in 0:36:55.120 --> 0:36:57.520 in in a year and a half. I mean it's insanity. 0:36:57.880 --> 0:36:59.719 Then we're having this conversation. So I want to nail 0:36:59.719 --> 0:37:01.040 you down ask you what you think about that. But 0:37:01.080 --> 0:37:03.000 before we do, I'd like to ask you about two 0:37:03.040 --> 0:37:06.839 other triggers that I'm looking at. Um. So one is, um, 0:37:07.600 --> 0:37:09.360 there's been big news. I did a video on this 0:37:09.800 --> 0:37:14.080 about black Rock and the hedge funds and Wall Street 0:37:14.280 --> 0:37:18.280 buying up single family homes. Now they are basically taking 0:37:19.040 --> 0:37:21.880 near free money from the money printer getting their buddies 0:37:21.920 --> 0:37:25.040 at the FED. They're getting it for almost free, and 0:37:25.160 --> 0:37:28.440 they're buying up entire tracks of single family homes the 0:37:28.480 --> 0:37:32.480 bread and butter as US real estate, and and they're 0:37:32.600 --> 0:37:36.080 over pain by a large amount of money because they're 0:37:36.120 --> 0:37:38.319 looking at different numbers than we are. You can get 0:37:38.400 --> 0:37:40.640 free money and make two or three percent. Heck, they're 0:37:40.680 --> 0:37:43.960 fine with that's a little overpay um, and that's a 0:37:44.120 --> 0:37:46.600 big trend, and it doesn't continue to be slowing down. 0:37:46.719 --> 0:37:52.040 How does that piece fit into the narrative? I guess, um, Yeah, 0:37:52.120 --> 0:37:54.640 it's a good question. I think it's bullish for real 0:37:54.760 --> 0:37:59.319 estate prices and bullish for real estate rents because these 0:37:59.400 --> 0:38:03.600 institute have more data than we do and they obviously 0:38:04.520 --> 0:38:09.120 are still doing what they do right and and because 0:38:09.200 --> 0:38:12.600 of that, I think I think it's bullish. So I 0:38:13.480 --> 0:38:17.640 mean meaning in the investment world, we'd call that the 0:38:17.719 --> 0:38:20.160 smart meaning where the dumb money. So then meaning if 0:38:20.200 --> 0:38:22.359 the smart money is putting their money there, then maybe 0:38:22.560 --> 0:38:26.080 we think about as well. Right, Yeah, I think it's 0:38:26.080 --> 0:38:28.399 a good indicator. Yeah, I do, even though they're even 0:38:28.440 --> 0:38:32.160 though they're potentially over paying because their number metrics are 0:38:32.200 --> 0:38:34.960 way different than ours. Fair enough, that's a that's a 0:38:35.080 --> 0:38:38.920 very good point. Um, yeah, I think it's okay. And 0:38:39.120 --> 0:38:42.120 here's the thing. You know, a lot of people I 0:38:42.239 --> 0:38:45.320 got asked a question similar to yours just recently on 0:38:45.440 --> 0:38:49.000 another podcast I was doing, and um, you know, the 0:38:50.480 --> 0:38:52.680 at the end of the day, we have to remember, Um, 0:38:53.640 --> 0:38:58.120 the number of houses and the amount of housing demand 0:38:59.520 --> 0:39:02.920 isn't changing that much. Right, There's still a shortage of 0:39:02.960 --> 0:39:06.000 about five point five million houses according to n a 0:39:06.200 --> 0:39:09.640 R National Association of Realtors that has a very big 0:39:09.719 --> 0:39:14.400 statistical uh you know research department and um, and so 0:39:14.520 --> 0:39:17.160 we still have that same shortage. It doesn't matter if 0:39:17.200 --> 0:39:20.000 their rental homes or for sale homes. The fact is 0:39:20.080 --> 0:39:22.520 we have people that need a place to live. Right, 0:39:22.760 --> 0:39:24.680 That's what happens at the end of the day. Now, 0:39:24.880 --> 0:39:26.560 I do want to mention though, and this is a 0:39:26.800 --> 0:39:29.719 far out thing, so no one needs to worry about 0:39:29.719 --> 0:39:33.880 it today. But uh, you know, in thirty to forty years, 0:39:34.200 --> 0:39:37.479 this dynamic looks like it will change quite dramatically because 0:39:37.520 --> 0:39:41.600 the birth rate is declining. And um, the one thing 0:39:41.760 --> 0:39:44.520 that has to happen for all of this real estate 0:39:44.600 --> 0:39:47.560 investing to work is you have to have demand, you 0:39:47.640 --> 0:39:49.680 have to have people, you have to have population growth 0:39:49.800 --> 0:39:52.919 or at least stable population. And uh, and so that's 0:39:53.040 --> 0:39:56.320 that's super important. And you have to not have a 0:39:56.520 --> 0:40:02.480 disruptive construction technology that supplies a lot more housing to 0:40:02.600 --> 0:40:06.520 the market. And so you know, I've done deep, deep 0:40:06.640 --> 0:40:10.720 research on my shows about three D printed homes, about 0:40:10.800 --> 0:40:14.759 manufactured homes, and none of these things. Forget about the 0:40:14.880 --> 0:40:18.720 hyper earring, it's bs. It's simply not true. I've hired 0:40:18.719 --> 0:40:21.080 a consultant to look at it and all sorts of stuff, 0:40:21.480 --> 0:40:25.120 and um, none of these things are disrupting housing construction 0:40:25.239 --> 0:40:30.480 anytime soon. It's a low tech process, and it requires materials. 0:40:30.680 --> 0:40:33.799 Even if they're three D printed, it's still concrete, right, 0:40:33.880 --> 0:40:37.800 It's still materials. And uh, there are land use restrictions 0:40:37.840 --> 0:40:40.759 and all kinds of problems with buildings. So I'm not 0:40:41.080 --> 0:40:43.840 I'm not worried about too much supply anytime soon, and 0:40:43.920 --> 0:40:48.600 I'm not worried about declining demand anytime soon. Okay, Um, now, um. 0:40:49.040 --> 0:40:51.399 On the new question I had was our good friend 0:40:51.440 --> 0:40:54.319 George Gammon has been talking quite a bit about what's 0:40:54.320 --> 0:40:56.800 going on the report market, and now the reverse repot 0:40:56.840 --> 0:41:00.640 market and without getting deep into that. Basically, the banks 0:41:00.680 --> 0:41:03.040 were running out of money back in and so the 0:41:03.080 --> 0:41:06.680 FED was giving them liquidity. Now it's verse repost, so 0:41:06.719 --> 0:41:09.799 the banks are putting money back to the Fed. Um. 0:41:10.320 --> 0:41:12.680 This seems to be a signal of a big problem. 0:41:12.760 --> 0:41:14.360 The banks have all this money, they don't want to 0:41:14.440 --> 0:41:17.200 lend it out, um, and now they're putting it back 0:41:17.200 --> 0:41:19.239 to the Then on top of that, I want to 0:41:19.280 --> 0:41:22.239 dive super and deep into that. But yesterday big news 0:41:22.360 --> 0:41:26.000 came across the news world of Wells Fargo wanting to 0:41:26.120 --> 0:41:29.719 shut down lines of credit, lines of credit, equity, lines 0:41:29.760 --> 0:41:32.640 of credit. Um, what do you think about that? Is 0:41:32.680 --> 0:41:34.520 that like a warning sign? Because after the two thou 0:41:34.760 --> 0:41:37.880 eight crash, everybody's credit lines got pulled right, it was 0:41:38.000 --> 0:41:39.759 it was it was it was too I mean, the 0:41:39.800 --> 0:41:41.640 liquidity dried up, it was too risky for them to 0:41:41.719 --> 0:41:44.120 lend money. And now it's almost as if they're pre 0:41:44.239 --> 0:41:47.480 emptively doing What do you think, Well, I think that's 0:41:47.480 --> 0:41:52.520 a bearers sign. A credit contraction will definitely uh cause 0:41:53.400 --> 0:41:56.960 demand to level off as the FED tapers, which some 0:41:57.200 --> 0:41:59.960 argue they're about to do, and some argue that it's 0:42:00.040 --> 0:42:02.080 gonna be a couple of years. I don't know. Nobody 0:42:02.120 --> 0:42:06.040 really knows for sure except your own power. Um. Even 0:42:06.080 --> 0:42:09.160 that he doesn't probably. You know, real estate is a 0:42:09.280 --> 0:42:13.440 credit based asset class. If you constrict the supply of credit, uh, 0:42:13.600 --> 0:42:17.600 you're going to constrict the affordability. But remember something, Um, 0:42:18.200 --> 0:42:22.440 that doesn't reduce the population and it doesn't increase the supply. 0:42:23.200 --> 0:42:26.400 So if people can't buy houses, they'll rent them. They 0:42:26.400 --> 0:42:29.200 will be forced to rent them. Right, there's only two choices, 0:42:29.320 --> 0:42:32.360 all three I rent or be homeless. Right. Uh, so 0:42:33.360 --> 0:42:38.000 that options in to um. But you know, between that 0:42:38.280 --> 0:42:40.000 between drying up a little bit of the credit like 0:42:40.040 --> 0:42:42.440 with Wells Fargo, that's maybe a canary in the coal 0:42:42.520 --> 0:42:45.520 mine maybe. Uh. And then we've seen interest rates start 0:42:45.560 --> 0:42:49.040 picking back up again from their lows as well. So uh, 0:42:49.239 --> 0:42:52.040 the interest rates tick up and the lack of credit 0:42:52.600 --> 0:42:54.879 both do the same thing, which is make it more 0:42:54.960 --> 0:42:58.920 expensive at home. The monthly payment goes up. Um. And 0:42:59.000 --> 0:43:01.279 if the monthly pay that goes up, does that bring 0:43:01.360 --> 0:43:04.600 the price of the home back down? Well, here's what 0:43:04.920 --> 0:43:08.280 really happens. Yes, it does put downward pressure on prices, 0:43:08.840 --> 0:43:14.040 but what people really um, it's just weird to me, Mark, 0:43:14.160 --> 0:43:16.759 and I've you know, over the last twenty years of 0:43:16.880 --> 0:43:21.200 having discussions about this exact thing. People will say, well, 0:43:21.560 --> 0:43:26.680 you know, if incomes are stagnant and prices are rising, um, 0:43:26.840 --> 0:43:29.120 how are tenants going to be able to afford to 0:43:29.239 --> 0:43:31.800 rent my house from me? Or you know, if the 0:43:31.880 --> 0:43:36.040 economy is bad, unemployments high, whatever, right, whatever happens, The 0:43:36.160 --> 0:43:40.719 point is what gives in the equation mostly is the 0:43:40.880 --> 0:43:46.440 standard of living. People are forced to move down or 0:43:46.640 --> 0:43:50.000 not move up in the first place, right, So uh, 0:43:50.280 --> 0:43:52.719 you know, if if you talk to one of your 0:43:52.760 --> 0:43:56.160 tenants today and then you talk to that same tenant 0:43:56.360 --> 0:43:59.880 five years from now, if if these things happen, right, 0:44:00.480 --> 0:44:02.960 they all say things like, well, you know, we used 0:44:02.960 --> 0:44:06.239 to live in a square foot house in a better 0:44:06.320 --> 0:44:09.000 neighborhood and now we live in a twelve hundred square 0:44:09.040 --> 0:44:12.719 foot house in an inferior neighborhood with worst schools. That 0:44:12.960 --> 0:44:17.839 what gives is the standard of living. But economists don't 0:44:17.880 --> 0:44:21.600 follow this very well. They follow oh, yeah, the rate 0:44:21.640 --> 0:44:25.600 of inflation through the highly manipulated bogus CPI, the consumer 0:44:25.640 --> 0:44:29.080 price in next, sure, but they don't follow people, right, 0:44:29.200 --> 0:44:33.320 and they don't say this exact couple that had this 0:44:33.600 --> 0:44:36.960 life five years ago has this life today, right, They 0:44:37.000 --> 0:44:39.400 don't do that, I mean not very much. Ats not 0:44:39.480 --> 0:44:41.920 in any real and that's ah, that's such an important 0:44:41.920 --> 0:44:45.719 point that you hit on because again as real estate investors, 0:44:45.880 --> 0:44:48.359 we talked to as I mentioned about the Bread and Butter, right, 0:44:48.400 --> 0:44:51.440 So that's an entry level three bedroom to bath home. 0:44:52.000 --> 0:44:54.160 And the reason why we've always liked those, at least 0:44:54.160 --> 0:44:57.200 speaking for myself, is because to your point, it's the 0:44:57.480 --> 0:45:00.720 entry level that people come to and if people fall down, 0:45:00.960 --> 0:45:03.200 they're gonna fall down to that level. And also people 0:45:03.280 --> 0:45:05.839 coming up are to that level. And so that's why 0:45:05.920 --> 0:45:08.000 the entry level is great because you catch them either 0:45:08.080 --> 0:45:11.839 way moving down the economic ladder and others moving up. 0:45:12.440 --> 0:45:15.480 But that's exactly where black Rock and the and the 0:45:15.640 --> 0:45:18.880 Wall Street hedge funds are targeting. Is entry level three bedroom, 0:45:18.920 --> 0:45:21.319 two bass as well. Sure, but it's also where all 0:45:21.360 --> 0:45:23.760 of our investors target as well, and where you target 0:45:23.880 --> 0:45:26.400 so you know we all do that. But but I 0:45:26.440 --> 0:45:29.279 guess just just reinforcing the point of maybe it's a 0:45:29.320 --> 0:45:32.480 bullet signal, right, they know what they're doing kind of thing, right, um, 0:45:32.920 --> 0:45:35.360 because I think you know one thing and again, so 0:45:35.440 --> 0:45:37.480 much of this is unknown because these banksters, you know, 0:45:37.560 --> 0:45:39.640 we don't know what's in their head. But um, I 0:45:39.880 --> 0:45:44.560 tend to think that they didn't just create eight trillion 0:45:44.600 --> 0:45:49.440 dollars in the last four months to stop now, right, 0:45:49.719 --> 0:45:51.480 Like they're not going to just do that just to 0:45:51.640 --> 0:45:54.879 stop now? Why would they not keep it going? You're 0:45:55.160 --> 0:45:58.000 absolutely right, look at the you know, it's amazing to me, Mark, 0:45:58.080 --> 0:46:00.440 And I'm sure you have the same thought I do. Right, 0:46:00.680 --> 0:46:04.680 every time the G seven meets or the G twenty meets, 0:46:04.760 --> 0:46:07.640 you know, the big industrialized countries, right, every time there's 0:46:07.680 --> 0:46:10.640 a meeting in Jackson Hole, Wyoming where the FED has 0:46:10.680 --> 0:46:13.560 their annual meeting, or or they go to Davos, Switzerland, 0:46:13.680 --> 0:46:18.640 and you know, the the creepy World Economic Forum. Right, basically, 0:46:18.760 --> 0:46:21.799 they're only answer, they can call it whatever they want. 0:46:21.880 --> 0:46:26.200 They've got all these complicated names, but they're only answer 0:46:26.640 --> 0:46:31.800 to any of these problems is create more currency units, 0:46:32.600 --> 0:46:36.480 print money. It's it, that's it. That's all they got. Okay. Yeah, 0:46:36.520 --> 0:46:39.680 they've got these little things and dials they turn and 0:46:40.400 --> 0:46:42.399 but that's basically at the end of the day, it's 0:46:42.400 --> 0:46:45.480 all just money printing, okay. And they're not going to 0:46:45.640 --> 0:46:49.799 stop because no politician or FED chair or central bank 0:46:49.880 --> 0:46:52.160 chair of any other central bank, the European Central Bank, 0:46:52.280 --> 0:46:55.400 Bank of Japan, whatever, they don't want to make people 0:46:55.520 --> 0:46:59.399 take the tough medicine during their tenure. The only guy 0:46:59.719 --> 0:47:03.000 that ever did that was the late Paul Vulker, who 0:47:03.080 --> 0:47:06.080 was FED share in the early eighties. Uh. He he 0:47:06.320 --> 0:47:10.640 did do that. He tightened the money supply, interest rates 0:47:10.719 --> 0:47:15.000 went up through the roof. The economy just stalled like 0:47:15.239 --> 0:47:18.680 a car crashing into a wall. And it was tough, 0:47:19.080 --> 0:47:21.799 but it broke the back of inflation. And I say, 0:47:21.920 --> 0:47:24.760 there is no way that's happening in today's world. People 0:47:24.800 --> 0:47:27.239 are just too wimpy. They're not willing to do it. 0:47:27.520 --> 0:47:31.760 It's never gonna happen. So then um so then looking 0:47:31.800 --> 0:47:35.480 into the future, so then it's like, um, if the 0:47:35.600 --> 0:47:39.840 FED stops, which as we discussed, is probably unlikely, but 0:47:39.960 --> 0:47:42.399 if the FED were to stop with their intervention buying 0:47:42.400 --> 0:47:47.440 mortgage backed securities, propping up banks, etcetera, then um, potentially 0:47:47.480 --> 0:47:49.319 we could see the real estate market turn around and crash. 0:47:49.400 --> 0:47:52.520 From here, however, if they continue down the path they've 0:47:52.560 --> 0:47:54.399 been going down, to your point, when the whole world 0:47:54.440 --> 0:47:56.839 looks like a hammer or a nail. Or when all 0:47:56.880 --> 0:47:58.000 you have is a hammer, the whole world looks like 0:47:58.000 --> 0:48:01.879 a nail. Um, and so UM, if they go till 0:48:01.960 --> 0:48:04.759 they blow, which is kind of what I'm thinking, we 0:48:04.840 --> 0:48:07.719 could potentially see things go way higher and further than 0:48:07.800 --> 0:48:11.680 we might imagine. I think you're right. So if I 0:48:11.920 --> 0:48:14.759 was thinking about buying a peace real estate in the 0:48:14.880 --> 0:48:17.759 United States, UM, I would first divide it into two 0:48:17.840 --> 0:48:22.120 buckets as an investor or as a homeowner. But let's 0:48:22.160 --> 0:48:25.320 say UM, as an investor, I think the only strategy 0:48:25.360 --> 0:48:26.880 really makes sense is to trying to buy it for 0:48:27.000 --> 0:48:29.680 cash flow. Unfortunately, the amount of cash flow that you 0:48:29.680 --> 0:48:33.160 can get today has gotten greatly, partly because of Black 0:48:33.239 --> 0:48:35.399 Rock and Wall Street jumping in there working on rays 0:48:35.440 --> 0:48:37.400 within margins. But let's let's look at it from a 0:48:37.480 --> 0:48:40.560 homeowner perspective. As I said, this is the conversation I 0:48:40.680 --> 0:48:42.960 was having last night. I mean, I'm not kidding, man. 0:48:43.080 --> 0:48:45.720 Here in southern California, prices are up like a hundred 0:48:45.800 --> 0:48:48.319 percent in like a year and a half or two years. 0:48:48.400 --> 0:48:50.840 It's insane. One point eight million dollar homes are not 0:48:50.880 --> 0:48:52.400 going for three and a half million dollars, like just 0:48:52.520 --> 0:48:56.239 like that Um, so is it is? It? Is it 0:48:56.360 --> 0:48:59.240 the top? I mean, would you buy at double the price? 0:48:59.840 --> 0:49:01.680 Or would you wait a couple of years and wait 0:49:01.760 --> 0:49:04.600 for those prices to come back down? Um? Or are 0:49:04.640 --> 0:49:06.239 they going to go till they blow? How do you 0:49:06.360 --> 0:49:08.560 think through something like that? And I know different markets 0:49:08.600 --> 0:49:12.120 are different circle um, you know there, etcetera. But how 0:49:12.160 --> 0:49:14.839 would somebody think through that when they're when they're thinking 0:49:14.880 --> 0:49:17.239 about buying a house for themselves as a family, but 0:49:17.400 --> 0:49:19.680 prices seem to be sky high? Do you wait or 0:49:19.719 --> 0:49:21.600 do you buy? And how do you evaluate that? I 0:49:22.080 --> 0:49:26.000 think in the cyclical markets, meaning the West coast of 0:49:26.000 --> 0:49:29.840 the United States, the expense of Northeastern markets South Florida 0:49:30.560 --> 0:49:34.640 where I live right the if you're in an expensive market, 0:49:35.120 --> 0:49:39.560 I think there's a much greater risk uh two, possibly 0:49:39.640 --> 0:49:42.640 things going the other way. But if you're buying in 0:49:42.719 --> 0:49:47.600 a cheap market where the housing prices are relatively low, 0:49:47.840 --> 0:49:50.160 it's a linear market. You know. If you go to 0:49:50.280 --> 0:49:52.960 Jason Hartman dot com and click on the property's page 0:49:53.320 --> 0:49:56.919 on my website, you'll see properties that are in these good, 0:49:57.040 --> 0:50:03.000 solid linear markets. The insurance arc that people have against 0:50:03.120 --> 0:50:06.920 downturns that that and you know, think about this. When 0:50:07.000 --> 0:50:10.319 you have insurance, you don't worry as much. You don't 0:50:10.400 --> 0:50:13.919 care as much because you're insured. And the insurance people 0:50:14.040 --> 0:50:18.360 have is the linear markets offer good cash flow, and 0:50:18.600 --> 0:50:24.880 cash flow is very reliable. Appreciation is not very reliable. 0:50:25.000 --> 0:50:29.080 It's very speculative. So if you buy a property, you 0:50:29.120 --> 0:50:32.080 know one of my ten commandments of successful investing is 0:50:32.160 --> 0:50:35.920 thou shalt not gamble. It's commandment number five. And that 0:50:36.120 --> 0:50:38.759 means that the property must make sense the day you 0:50:38.880 --> 0:50:41.160 buy it, or you don't buy it. You make your 0:50:41.200 --> 0:50:44.720 money when you yeah, And I don't mean you're buying 0:50:45.040 --> 0:50:48.160 like under market and finding that deal that nobody can 0:50:48.200 --> 0:50:51.200 really find in real life. Right, I mean, the property 0:50:51.600 --> 0:50:56.239 has good cash flow characteristics, and if you do that, 0:50:56.840 --> 0:51:00.200 that's your insurance policy. If the value goes to own, 0:51:00.480 --> 0:51:04.239 who cares. I mean, on my website you'll see properties 0:51:04.600 --> 0:51:10.759 that have projected returns of annually all in right, that's 0:51:10.800 --> 0:51:13.160 not cash on cash, it's all the ways you earn 0:51:13.600 --> 0:51:16.440 returns on a property, and there are many ways. It's 0:51:16.440 --> 0:51:20.880 a multidimensional asset class. Great video on my website, thirty 0:51:20.920 --> 0:51:24.000 two minutes long, that can teach you how to analyze 0:51:24.000 --> 0:51:27.400 the real estate deal. It's been watched zillions of times, 0:51:27.560 --> 0:51:30.520 and it really it really teaches you how to analyze 0:51:30.520 --> 0:51:32.399 the deal so you won't get hurt on a deal. 0:51:32.920 --> 0:51:36.080 And and and then, and that's what people have to 0:51:36.560 --> 0:51:38.160 have to do. You know, if you're buying in a 0:51:38.239 --> 0:51:42.960 cyclical market, you are speculating, so be careful. But as 0:51:43.040 --> 0:51:45.960 as an investor, definitely be careful because if your property 0:51:46.000 --> 0:51:48.600 is worth half as much now, uh, you know in 0:51:48.680 --> 0:51:52.239 California specifically back to California, I mean we saw the 0:51:52.320 --> 0:51:54.239 worst real estate crash in history was like eight n 0:51:54.520 --> 0:51:57.080 ninety two, and it dropped about during those four years, 0:51:57.320 --> 0:51:59.600 but then in two thousand and eight it dropped sixty 0:52:00.040 --> 0:52:03.360 cent in twelve months. So uh, we've got a different 0:52:03.360 --> 0:52:04.880 taste of what might be possible. And I know what 0:52:04.920 --> 0:52:07.919 happened in Florida as well. Um, but I would say 0:52:08.080 --> 0:52:11.040 so if you're an investor in the property drops like, 0:52:11.280 --> 0:52:13.600 you're screwed. I mean, you're stuck. And I and I 0:52:14.239 --> 0:52:16.560 if you have good cash flow, because you're not forced 0:52:16.600 --> 0:52:19.280 to not not if you have good cash flow, Correctum, 0:52:19.320 --> 0:52:21.200 which is why I said I think for investing in 0:52:21.280 --> 0:52:23.759 real estate, cash flow is the only option today. Um, 0:52:23.840 --> 0:52:26.880 the strategy. But if I was buying a home, I 0:52:26.960 --> 0:52:30.040 think about it like, is this a place that I 0:52:30.120 --> 0:52:33.440 want to live forever? And if I can lock in 0:52:33.520 --> 0:52:36.200 these historically low rates and I'm happy with the payment, 0:52:36.680 --> 0:52:38.840 and if the problem if the value of the property 0:52:38.920 --> 0:52:40.960 dropped in half but I still got to live there 0:52:40.960 --> 0:52:44.160 and I still have a good payment, then why not? Right? 0:52:44.239 --> 0:52:45.600 And so I kind of think about that. But but 0:52:45.640 --> 0:52:47.160 if I was gonna buy for two or three years 0:52:47.400 --> 0:52:49.600 and then hopefully move up, well maybe that's not the 0:52:49.680 --> 0:52:52.439 best decision. What do you think the way people lose 0:52:52.520 --> 0:52:55.719 money on real estate most of the time is they 0:52:55.760 --> 0:52:59.600 are forced to sell a property at an undesirable time. 0:53:00.800 --> 0:53:03.600 That happened to me, okay, So yeah, and and what 0:53:03.760 --> 0:53:07.040 forces them to property that never made sense, that doesn't 0:53:07.080 --> 0:53:10.480 have cash flow, that won't cover its cost, and hopefully 0:53:10.600 --> 0:53:15.239 generate positive cash flow or a divorce those two things, okay? Um? 0:53:15.480 --> 0:53:20.320 And and if you're not forced into that, you're probably 0:53:20.360 --> 0:53:24.040 gonna be okay because you just can wait and and 0:53:24.200 --> 0:53:28.839 earn that that return every single year. Yeah. Now, last 0:53:28.920 --> 0:53:30.839 question I want to ask before we start wrapping this up, 0:53:30.960 --> 0:53:34.120 is um, you've just given us as the index that 0:53:34.239 --> 0:53:36.040 the Jason Hartman index, which I think, I think it's 0:53:36.080 --> 0:53:40.759 really Heartman comparison and hi Heartman compar um. So you know, 0:53:40.880 --> 0:53:44.040 we looked at real estate's cheap compared to gold, bitcoin, 0:53:44.160 --> 0:53:47.000 barrels of oil, um, pounds of rice, not O J 0:53:47.520 --> 0:53:51.520 but s and G etcetera. Now, many people think that 0:53:51.680 --> 0:53:54.440 real estate is the best investment um and it's a 0:53:54.480 --> 0:53:57.120 way to build wealth. But per the h c I, 0:53:57.480 --> 0:54:00.320 it actually looks like it hasn't been that best in sment. 0:54:00.719 --> 0:54:02.600 It actually looks like I should have probably just put 0:54:02.640 --> 0:54:07.000 my money into the SMP uh or you know, oil, gold, bitcoin, etcetera. 0:54:07.400 --> 0:54:10.920 That's a that's an interesting question. But what I didn't 0:54:11.000 --> 0:54:14.360 say is that those other things don't produce income, and 0:54:14.440 --> 0:54:18.200 they don't produce tax benefits, so the income property and 0:54:18.280 --> 0:54:21.120 they don't give you inflation induced debt destruction, So the 0:54:21.239 --> 0:54:25.120 income property is the best investment. But yes, you are right, 0:54:25.200 --> 0:54:27.440 that's very good of you to point that out that 0:54:27.719 --> 0:54:33.799 just on the straight price right uh, you know, buying 0:54:34.360 --> 0:54:39.000 the house in gold versus versus the house, right, Um, 0:54:39.200 --> 0:54:43.120 it's gotten cheaper. Good point. But also in addition to 0:54:43.200 --> 0:54:45.240 the things that you said, so the tax benefits cannot 0:54:45.280 --> 0:54:48.440 be understated. I mean that's a big deal because, like 0:54:48.520 --> 0:54:51.000 you said, some of those properties all in cash on cash, 0:54:51.040 --> 0:54:52.960 they could be three or four percent, but all in 0:54:53.080 --> 0:54:56.279 it could be and the gold doesn't give you any 0:54:56.360 --> 0:55:00.560 yield every year, and the collector rate when you sell 0:55:00.600 --> 0:55:04.960 it where we need no tax, Yeah, we need cash 0:55:05.000 --> 0:55:07.240 flow to live on. And so that's why it's super important. 0:55:07.320 --> 0:55:09.280 The other thing though, that we that you didn't didn't 0:55:09.320 --> 0:55:11.719 call out, but it's the leverage. And so I can 0:55:11.840 --> 0:55:15.080 put ten percent down and control the whole price of 0:55:15.160 --> 0:55:17.560 the house. I can't put ten percent down on gold, 0:55:17.600 --> 0:55:22.399 bitpoin or oil and control that whole asset exactly. Yeah. 0:55:23.120 --> 0:55:24.719 Then and then by being able to by being able 0:55:24.760 --> 0:55:29.520 to control a much bigger asset. Two, But I get 0:55:29.600 --> 0:55:32.920 the twenty dollars of appreciation to twe I'm sorry, the 0:55:32.960 --> 0:55:36.600 two appreciation, two of tax right up, even though I'm 0:55:36.640 --> 0:55:39.040 only controlling it with twenty my own money exactly. So 0:55:39.160 --> 0:55:42.720 your return on investment in that example is one hundred percent. 0:55:43.480 --> 0:55:46.399 You've doubled your money with very little money. So yeah, 0:55:46.640 --> 0:55:49.640 you know, I I liken it to this. Remember when, um, 0:55:50.040 --> 0:55:53.000 when you were a kid and you discovered that your 0:55:53.120 --> 0:55:55.880 shadow was really big, right, Like the sun was at 0:55:55.920 --> 0:55:59.319 your back and you looked forward and you saw your 0:55:59.400 --> 0:56:04.080 shadow along the sidewalk was nine ft right and and 0:56:04.239 --> 0:56:06.640 and you thought that's kind of cool. Well that's really 0:56:06.719 --> 0:56:10.520 what income property allows you to do through leverage is 0:56:10.719 --> 0:56:14.680 you can control, as you said, a much larger asset 0:56:14.800 --> 0:56:18.160 with much less so your risk is lower and your 0:56:18.239 --> 0:56:24.439 ability to generate wealth from that is magnified dramatically. Yeah. Yeah, 0:56:24.640 --> 0:56:27.520 I was just spent the spent spent some time out 0:56:27.560 --> 0:56:30.040 in Arizona hanging out with Robert Kiyosaki, and he kept 0:56:30.080 --> 0:56:33.560 pounding into my head, uh, you know, controlling the asset, um, 0:56:34.080 --> 0:56:36.680 but also not putting your own money into the asset, 0:56:36.760 --> 0:56:38.600 even controling asset you don't even have your own money into. 0:56:38.719 --> 0:56:40.960 So so real estate offers all types of opportunities. We 0:56:41.000 --> 0:56:42.440 won't get into that we don't have time, but offers 0:56:42.440 --> 0:56:45.880 all types of opportunities um that that they can't be overstated. 0:56:45.920 --> 0:56:48.600 But man, Jason, that was some amazing stuff. I really 0:56:48.600 --> 0:56:51.640 appreciate that. That index, Like I said, it's I I 0:56:51.800 --> 0:56:53.319 say stuff like that off the top of my head, 0:56:53.320 --> 0:56:56.399 but I don't have the actual data, the actual numbers. Yeah, 0:56:56.480 --> 0:57:00.200 now you intuitively know this right, Yeah, yeah, into really, 0:57:00.239 --> 0:57:02.719 so I'm gonna do that. Um, so we're gonna that's 0:57:02.800 --> 0:57:04.839 that's Is that available on your website? Should we link 0:57:04.880 --> 0:57:07.520 to that? You know it's not. And the reason I 0:57:07.640 --> 0:57:09.960 haven't done it yet is we're producing a white paper 0:57:10.080 --> 0:57:11.640 right now and we're gonna have a whole book on 0:57:11.719 --> 0:57:14.320 the index. So we're gonna have a ton of material. 0:57:14.440 --> 0:57:16.880 Just get on my mailing list, uh, you know, through 0:57:16.960 --> 0:57:19.200 Jason Hartman dot com or if you want that free 0:57:19.280 --> 0:57:22.880 mini book, go to Pandemic Investing dot com and uh, 0:57:23.120 --> 0:57:25.080 and we'll get that out there. But you know, we're 0:57:25.560 --> 0:57:29.120 we're still tweaking some things, so we didn't want to 0:57:29.160 --> 0:57:31.720 publish anything quite yet, got it, So will link to 0:57:31.800 --> 0:57:33.840 that and then where else do people follow you? Um, 0:57:34.360 --> 0:57:36.880 just Jason Hartman dot com or you know the book 0:57:36.920 --> 0:57:39.440 at Pandemic Investing dot com. Is good, you got it. 0:57:39.600 --> 0:57:40.960 We're gonna make sure we linked to both of those. 0:57:41.040 --> 0:57:43.920 And I know, I'm sorry Mark YouTube or podcast you 0:57:44.000 --> 0:57:48.680 know of course, yeah, yeah, which they'll find on your website. Yep, yep, awesome. 0:57:48.680 --> 0:57:50.360 Well we're gonna ahead and sign off. Jason, Thanks so 0:57:50.480 --> 0:57:52.640 much for sharing that today. Good stuff. Happy investing to 0:57:52.680 --> 0:57:54.280 you and everybody listening. Thanks Mark,