Speaker 1: When you look at prices, are things expensive or are
Speaker 1: they cheap? And are they expensive or cheap compared to
Speaker 1: what relative to what? Now a lot of people think
Speaker 1: that real estate is way too expensive. It's at record highs,
Speaker 1: but expensive compared to what compared to U. S. Dollars
Speaker 1: or compared to gold or oil, or rice or orange juice.
Speaker 1: And you need to understand there's a difference of price
Speaker 1: than U. S dollars and purchasing power, the purchasing power
Speaker 1: of those units. When you understand from this perspective, you
Speaker 1: get a whole new way to look at things. And
Speaker 1: so today I am joined by my good friend Jason Hartman.
Speaker 1: He's a real estate expert, a market analyst, and he
Speaker 1: is going to show us a new way to look
Speaker 1: at things and reframe things so that you can have
Speaker 1: more success. Um. He's got the facts, the data. Uh Um.
Speaker 1: I took a ton of notes. This is something that
Speaker 1: really good and it's going to give a different perspective
Speaker 1: on where we're at in the market. We're at the
Speaker 1: market sect and we also dig into some tough topics
Speaker 1: including um where I where he thinks we're going in
Speaker 1: the future, how you should look at the market. If
Speaker 1: you're a real estate investor or a homeowner. UM, what
Speaker 1: factors like Wells Fargo shutting off lending does? What factors
Speaker 1: like black Rock and Wall Street jumping into buy um
Speaker 1: all the residential real estate what those do? Um? And
Speaker 1: even guessing what the FED might do with housing? So
Speaker 1: many good topics that we jumped in with Jason. Um.
Speaker 1: It really gives you a whole new perspective that I
Speaker 1: think is powerful. So let's go ahead, just jump right in. Everyone.
Speaker 1: Welcome to another episode of the Market Disruptors Show. And
Speaker 1: today I am joined again by my good friend Jason Hartman,
Speaker 1: who is a market analyst and a real estate expert,
Speaker 1: and he has come up with some amazing ways to
Speaker 1: look at the data in the markets and maybe even
Speaker 1: tell us where things are going. So Jason, thank you
Speaker 1: so much for coming back and joining us again. Market's
Speaker 1: great to be here. And yes, uh, you know for
Speaker 1: so many years or decades that I've been in the
Speaker 1: real estate business uh and and real estate investing. I
Speaker 1: bought my first rental property when I was twenty years old. Uh.
Speaker 1: You know, Uh, the magic question that is always what's
Speaker 1: going to happen next? Right? How do we predict the
Speaker 1: market cycles and you teach people that all the time
Speaker 1: on your show. And Um, so I've I've developed an
Speaker 1: index uh and it basically is a measuring stick comparing
Speaker 1: real estate prices to many other things in the world. Uh.
Speaker 1: And I believe they can tell us where we've been,
Speaker 1: where we are now, and where we're going in the future.
Speaker 1: That's interesting on so many levels for me. Um. I've
Speaker 1: been working on this big thesis on cycles, which I
Speaker 1: know I've shared with you and and and the reason
Speaker 1: why I like historian cycles is for the same reason
Speaker 1: it tells. It helps us know how we got here,
Speaker 1: what's going on, and where we're going in the future.
Speaker 1: So it's cool that you said that. Um. Now, the
Speaker 1: other thing that also catches my interest is, Um, you're
Speaker 1: talking about looking at the price of real estate relative
Speaker 1: to other things. I think that you're talking about, and
Speaker 1: that's nothing I kind of pound. The table on is
Speaker 1: is to look at things in terms of purchasing power
Speaker 1: and not just us dollar term, right that what you're
Speaker 1: talking about, Yes, definitely to an extent, because you know,
Speaker 1: if you think about it, Mark, Um, people think housing
Speaker 1: is really expensive now because they measure it only in
Speaker 1: one thing, US dollars and no. But you know, for example,
Speaker 1: take this example someone saving for a house, right or
Speaker 1: you know, uh, and say they've been saving ten years
Speaker 1: to buy a house and they're just a home buy
Speaker 1: or not an investor. Right, but they could be an
Speaker 1: investor either, right, Um, so they've been saving, Well, no
Speaker 1: one forced them to save their money denominated in US dollars, right,
Speaker 1: they could have easily converted as soon as they earned
Speaker 1: their dollars, they could have converted them to gold, rice, bitcoin, oil,
Speaker 1: any one of a number of other things. And had
Speaker 1: they done that, they would feel the price of real
Speaker 1: estate is dramatically different than what they think of it
Speaker 1: as based in dollars. So it's really very interesting, and
Speaker 1: we're developing this whole new index around this whole concept
Speaker 1: of the question that I think is really life's most
Speaker 1: important question. I ask it all the time on my
Speaker 1: podcast and YouTube channel, and that question is compared to
Speaker 1: what that is life's most important question in my opinion.
Speaker 1: Hey guys, let me just interrupt this interview real quick,
Speaker 1: just to plug the show sponsor, and that is block Fi. Now.
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Speaker 1: You can use that debt for anything that you want,
Speaker 1: including to live off of to leverage up and buy more,
Speaker 1: or roll it into another asset. UM. You can do
Speaker 1: something like I've done recently, like sell some real estate
Speaker 1: put that money into bitcoin. Now as that bitcoin price
Speaker 1: has risen, I'm able to borrow against it and go
Speaker 1: back and buy the same real estate or something similar.
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Speaker 1: such a good way to look at that. UM. A
Speaker 1: lot of people don't realize that, but right we're always
Speaker 1: trading one thing for another. So I'm trading my dollars
Speaker 1: for the real estate or trading my dollars for that meal.
Speaker 1: But to your point, it could have been trading rice
Speaker 1: or oil for that that house with that meal. UM
Speaker 1: and and and uh. I I often throw these numbers
Speaker 1: out and I don't have the numbers. I just say hypothetically.
Speaker 1: But you know, let's say, you know, nine six the
Speaker 1: median home price was fifty dollars. Today it's now up
Speaker 1: to like three. But back then it was so many
Speaker 1: ounces of gold, there's so many barrels of oil, and
Speaker 1: today it's about the same amount of ounces of gold
Speaker 1: and same amounts of barrels of oil. UM. But of course,
Speaker 1: I'm just kind of spitball on that, but I think
Speaker 1: you actually have some data that shows that we do.
Speaker 1: We do. We have a whole bunch of data on
Speaker 1: not just oil and gold, but a whole bunch of
Speaker 1: other things. So let's dive into it. Yeah, let's dive
Speaker 1: into it because I think, again it's something I pound
Speaker 1: the table on the video that went live yesterday. Again
Speaker 1: I tell people start thinking about things in terms of
Speaker 1: purchasing power, not dollars, and and and just while you
Speaker 1: get ready, I know you're gonna show some slides. I'm
Speaker 1: excited to see them, but to set the stage a
Speaker 1: little bit um. You know, I've done quite a bit
Speaker 1: of a discussion on hyperinflation that's happened in other countries.
Speaker 1: And one thing that really just shocked me. I did
Speaker 1: this video on when when, uh how a currency dies?
Speaker 1: And and I read this book called When Money Dies,
Speaker 1: and it talks about hyperinflation in Germany after the war.
Speaker 1: And what was interesting is um as the prices were
Speaker 1: going higher in their currency, everyone thought they were getting rich.
Speaker 1: My house has never been worth this much money, My
Speaker 1: goal has never been worth much money. I better sell
Speaker 1: my whatever asset now. While it's still high before it
Speaker 1: drops back down. So they did, and so they sold
Speaker 1: all our assets for currency, which then ended up being
Speaker 1: worthless and they were it was they ended up burning
Speaker 1: it in the fireplace instead of would because it was
Speaker 1: actually worth less than would. So anyway, it's super important
Speaker 1: to understand purchasing are So let's go ahead and jump
Speaker 1: in and yeah, and do you know, mark to your point,
Speaker 1: if if you go to Wikipedia and you type in
Speaker 1: Wimar Republic, Wimar Germany, right, you'll see that picture which
Speaker 1: you I'm sure you've seen of a woman basically loading
Speaker 1: the the currency, okay, the Deutsche marks into a furnace
Speaker 1: to extract heat from them because it was cheaper than
Speaker 1: trading the currency units for wood. I mean, you know,
Speaker 1: it's it's just amazing, yeah, you know. And every fiat
Speaker 1: currency ever throughout history has gone to incenttrinsic value the
Speaker 1: paper it's printed on. So, uh, currency is only thirty
Speaker 1: five years and we're at fifty now, so we're we're
Speaker 1: we're living on borrowed time, to say the least. Well,
Speaker 1: this is a seminal moment in history because it is
Speaker 1: the fifth year anniversary of Nixon detaching the dollar from
Speaker 1: the gold standard. It's actually next month. So uh yeah,
Speaker 1: truly truly amazing. So yeah, I'll share my screen and
Speaker 1: let's dive into this. I'm glad we're on the same
Speaker 1: page with that. And so you know, it's really all
Speaker 1: about the measuring stick. And like we were saying, people
Speaker 1: are using the dollar the major as the measuring stick,
Speaker 1: and that is a mistake. Uh. You know, no one
Speaker 1: cares about dollars. They only care what dollars can buy us, right. Uh.
Speaker 1: And you know, before I dive into this too deeply,
Speaker 1: I just want to reiterate something I've talked on your
Speaker 1: show about before. There are really three types of real
Speaker 1: estate markets, linear, cyclical, and hybrid markets. They act differently. Uh.
Speaker 1: In this example today, just for the interest of time,
Speaker 1: we only are comparing to median home price. But just
Speaker 1: understand that if you were to drill down, things change
Speaker 1: whether you're in Los Angeles or Memphis, right, very different
Speaker 1: in the markets we buy properties. And so so I
Speaker 1: just want you to know that. And the question is
Speaker 1: compared to what it happens with trading in the economy,
Speaker 1: it also happens in every other part of our life.
Speaker 1: You know, we are comparison be beings by nature. We
Speaker 1: look at our neighbor's house. We look at our neighbor's
Speaker 1: yard and say, hey, are they doing better than I am?
Speaker 1: We look at their car. Uh. You know, when we
Speaker 1: were single, we look in the marketplace for a mate
Speaker 1: and we compare the Only reason you know, for example,
Speaker 1: that your wife, the woman you married, is more beautiful
Speaker 1: than another was by comparison. Right, That's that's the only
Speaker 1: way we know anything is by comparison. So life's most
Speaker 1: important question is compared to what to drill down on
Speaker 1: that question? Uh? For this example as we're talking today
Speaker 1: is Uh, let's talk about our friend George's question is
Speaker 1: is it cheap or is it expensive? And so as
Speaker 1: we do that and we consider whether or not we're
Speaker 1: in a bubble, the index can give us the answer.
Speaker 1: The h C I, the Heartman comparison index can give
Speaker 1: us the answer. And um, it can also maybe we'll
Speaker 1: leave that up to the people listening and watching, will it?
Speaker 1: Will it tell us when the bubble will pop? Right?
Speaker 1: And so's the question I want to know the answer to, right, right, Well,
Speaker 1: we're gonna explore that one for sure. And uh, and
Speaker 1: we need to understand that when we're thinking about this
Speaker 1: that a house or an apartment complex as investors, right,
Speaker 1: it's made up of commodities. And that's why I call
Speaker 1: this packaged commodities investing. So we're gonna look at ingredients
Speaker 1: steal lumber, copper, wire, petroleum products, etcetera. We just have
Speaker 1: to understand that a house is just a set of
Speaker 1: commodities that are assembled in package. Um. So of course
Speaker 1: I've got that free book for all of your listeners
Speaker 1: at Pandemic Investing dot com. Or I've taken a lot
Speaker 1: of these principles and applied them to the times we're
Speaker 1: living in, and that's at Pandemic Investing dot com. We
Speaker 1: talked before on your show about inflation induced debt destruction
Speaker 1: and it totally uh shows when you look at the index,
Speaker 1: because when you price things in real dollars and you
Speaker 1: compare say the consumer price Index with the Case Shiller
Speaker 1: Housing Index, you see that mostly it's parallel, but at
Speaker 1: times it gets really out of sync. And uh, that's
Speaker 1: just what happens. Uh. And we've had our our money
Speaker 1: printer in chief, Jerome Powell, printing money like crazy. Um,
Speaker 1: it wouldn't before we dive into the index and the comparisons.
Speaker 1: We have to talk about a couple other indexes real quickly.
Speaker 1: One is the HPI, the house price index. I think
Speaker 1: it's very flawed and does not do as good a
Speaker 1: job as the index will talk about. Uh. And then
Speaker 1: of course the Case Shiller index also very flawed, because
Speaker 1: the twenty markets the Case Shiller Index profiles could really
Speaker 1: lead someone to make big, big mistakes. Why do I
Speaker 1: say that, because fifteen of those twenty markets, two thirds
Speaker 1: of the mark are cyclical markets, and it just wouldn't
Speaker 1: be uh, it wouldn't be prudent for a real estate
Speaker 1: investor to decisions based on only those cyclical markets or
Speaker 1: at least two thirds cyclical. UM. The big, big, the
Speaker 1: big problem that I have with with those those home
Speaker 1: price indexes and the Schiller index UM, and I've done
Speaker 1: videos on this as well, is that UM, they take
Speaker 1: into account the price of the home, but nobody pays
Speaker 1: the price of the home, right so wall um, we're
Speaker 1: back up the two thousand eight levels or maybe slightly above.
Speaker 1: Interest rates are half and so if you look at
Speaker 1: the month payment, I think it's you know, over of
Speaker 1: first time buyers are financing the home financings. So it's
Speaker 1: always about the monthly payment. And so if you look
Speaker 1: at um the payment amount, because interest rates have dropped
Speaker 1: in hal since two thou eight, UM, it gives you
Speaker 1: a different picture. Do you take that into consideration? Absolutely,
Speaker 1: that's the second part of the index is payment. The
Speaker 1: first price part is price. And I couldn't agree with
Speaker 1: you more. Nobody buys a house based on the price.
Speaker 1: They only buy it based on the payment. So you're
Speaker 1: absolutely right about that. UM. This index, the Housing Affordability Index,
Speaker 1: is actually my favorite outside of the new HCI index
Speaker 1: that we launched, because it does consider payment. It looks
Speaker 1: at median house payment versus media and income in a
Speaker 1: given area. It's major flaw, though, is it doesn't account
Speaker 1: for foreign money or retirees that buy properties for cash. Okay,
Speaker 1: so there are some flaws in that as well, and
Speaker 1: I think the UH the Comparison index really really gives
Speaker 1: us the answer. So let's look at gold gold. Although
Speaker 1: I'm not a gold bug, and I don't think you
Speaker 1: are either. Although I'm not sure I've I've been a
Speaker 1: gold bug for a dozen years now. I consider myself
Speaker 1: a sound of money advocate. Yes, I love it, and
Speaker 1: I'm guessing bitcoin is your sound money. So we're gonna
Speaker 1: get to that one next. But but let's look at gold.
Speaker 1: I mean look gold, to be fair to it has
Speaker 1: been considered money for five thousand years. Humanity has considered
Speaker 1: gold to be money, and uh so it would be
Speaker 1: completely unfair to not consider gold. So if you go
Speaker 1: back to nineteen seventy, nineteen seventy one year before we
Speaker 1: went off the gold standard, if you wanted to buy
Speaker 1: the Median Price House for twenty two thousand dollars I'm
Speaker 1: rounding off here obviously, and you had gold at thirty
Speaker 1: five dollars, it would cost six hundred and forty six
Speaker 1: ounces of gold to buy the Median Price house. Fast
Speaker 1: forward to the year two thousand, a generation ago. Back then,
Speaker 1: twenty one years ago, to buy the Median Price House
Speaker 1: for a hundred and seventy three thousand dollars with gold
Speaker 1: at two hundred and eighty three dollars an ounce, it
Speaker 1: would take you six hundred and ten ounces of gold
Speaker 1: to buy the Median Price House. But guess what mark today,
Speaker 1: if you want to buy the Median Price House, it
Speaker 1: will only own only cost you a hundred and ninety
Speaker 1: four gold. So your briefcase full of gold has gotten
Speaker 1: a lot lighter. Okay. Um, it's so measured in gold
Speaker 1: or priced in gold, is housing cheap or expensive? Cheep?
Speaker 1: It's got much very go on from six to two Yeah, yes,
Speaker 1: sixty six, yeah, yeah, you're right, and even compared to
Speaker 1: a generation ago or fifty one years ago, it's truly
Speaker 1: amazing that if you were saving your money in gold,
Speaker 1: your house has gotten a lot cheaper. Okay. So let's
Speaker 1: look at bitcoin, your favorite, right, and hey, I'm a
Speaker 1: fan too. I I hope bitcoin succeeds wildly. I would
Speaker 1: love it. Uh, it doesn't go back far enough with bitcoin.
Speaker 1: But in two thousand ten is you know, that's where
Speaker 1: we start to buy the median price house at two
Speaker 1: hundred and twenty four thousand dollars take you seven hundred
Speaker 1: and seventy three is in bitcoin? Uh? A year ago,
Speaker 1: last year to buy the median price house at three
Speaker 1: hundred and fifty nine thousand dollars twelve bitcoin. And today
Speaker 1: even though bitcoin isn't that much higher because it's had
Speaker 1: some losses lately, Uh, the house price at three five Uh,
Speaker 1: you're you're looking at thirty four thousand bitcoin? Okay, But
Speaker 1: dollar bitcoin dollar bitcoin, and it takes ten bitcoin. Okay,
Speaker 1: So priced in bitcoin, is housing cheaper expensive? Right? It's
Speaker 1: gotten from seven thousand two to ten a lot cheaper,
Speaker 1: A lot cheaper, Okay. The most important commodity on Earth,
Speaker 1: I would argue as oil. There is no commodity on
Speaker 1: Earth that is more important than oil. Forget about what
Speaker 1: all the tree huggers say doesn't matter. The fact is,
Speaker 1: at the end of the day, the world is still
Speaker 1: running on all. Okay. In nineteen seventy oil was only
Speaker 1: three dollars a barrel three bucks. Today it's seventy five. Right.
Speaker 1: The median house price twenty three thousand dollars, give or
Speaker 1: take sixty seven hundred barrels of oil to trade that
Speaker 1: for a house. Okay, I'll jump to the year two thousand,
Speaker 1: sixty three hundred or rounded off sixty d barrels of
Speaker 1: oil to buy the median house. Today only forty hundred
Speaker 1: barrels of oil will buy you the Median house. So
Speaker 1: priceton oil is housing cheaper expensive? Well, it's definitely gone
Speaker 1: from gotten cheaper about a about a third cheaper than
Speaker 1: it was in What's interesting is is I like to
Speaker 1: ask people this question which is, do you think, given
Speaker 1: all the advancements technology, that it's actually more work to
Speaker 1: bring oil to the marketplace? Uh like to try to
Speaker 1: to bring it out, to bring it to transport it package? Like,
Speaker 1: do you actually think it's more expensive or is it
Speaker 1: less expensive? Right, it's gotten easier, it should have gotten
Speaker 1: I mean, has gotten easier and should have been cheaper.
Speaker 1: But but it's gone the other way. And and not
Speaker 1: only that, you know, what you mentioned is certainly true.
Speaker 1: The technology of the actual you know, running of the plant,
Speaker 1: like we'll call it the heavy equipment that's better and cheaper, right,
Speaker 1: but also just the technology of the software that controls
Speaker 1: the inventory supply and manages that and manages this shipping
Speaker 1: and supply chain that's gotten so much better and so
Speaker 1: much more efficient, just radically efficient that um, yeah, it
Speaker 1: is cheaper. So that what that really shows is that
Speaker 1: the dollar is just losing value dramatically. Okay, So orange juice,
Speaker 1: now this one is different. Okay, this one is different
Speaker 1: in orange joice priced and orange juice houses have become
Speaker 1: a lot more expensive. So what I recommend to all
Speaker 1: of our listeners is, uh, you know, just to go
Speaker 1: look at the chart n seventy it took you fifty
Speaker 1: one thousand pounds of orange juice to buy a house. Uh,
Speaker 1: two thousand, because I'm just skipping to you know, make
Speaker 1: in the interest of time, two hundred and ten thousand
Speaker 1: pounds of orange juice to buy a house today two
Speaker 1: hundred and eighty thousand pounds to buy a house. Right,
Speaker 1: so priced in orange juice, houses have become expensive. So
Speaker 1: my recommendation is that everybody dilute their orange juice with
Speaker 1: champagne or vodka. Ok. Well, Also, what it does illustrates
Speaker 1: that what you use as your store of value and
Speaker 1: your unit of account matters. It does matter, absolutely matters,
Speaker 1: absolutely matters. So uh, I'll do rice and then we'll
Speaker 1: move on to the payment side of the equation, just too,
Speaker 1: in the interest of time. So the reason I pick
Speaker 1: rice as a very important thing is, you know, rice
Speaker 1: is the food stock for two thirds of the world.
Speaker 1: Two thirds of humanity survives on rice. Yeah, they eat
Speaker 1: other things a little bit too, but rice is their staple. Okay,
Speaker 1: it's like the base food. And you did a great
Speaker 1: video by the way, recently on the Great Reset of Food.
Speaker 1: I really want to recommend that to people. So uh,
Speaker 1: nineteen seventy, if you wanted to buy the median price house,
Speaker 1: it would take you uh, forty two thousand pounds of
Speaker 1: forty three thousand pounds of rice. Okay. Um, in two
Speaker 1: thousand it would be thirty one thousand. Today it's only
Speaker 1: twenty seven thousand, so priced in rice, housing is cheaper, okay.
Speaker 1: Would say, yeah, yeah, nice, Uh, you know what, Let's
Speaker 1: not move on too quickly. I want to do SMP. Okay.
Speaker 1: This is important because the SMP the standard and pours.
Speaker 1: The SMP five hundred index accounts for seventy two percent
Speaker 1: of all consumers spending in the country. It's a pretty
Speaker 1: good measure for how the economy is doing. Um. You know,
Speaker 1: the SMP five hundred is a large part of the
Speaker 1: overall economy. So in nineteen seventy, it would cost you
Speaker 1: two hundred and forty three shares of the SMP index
Speaker 1: at ninety three dollars to buy the median price house
Speaker 1: two hundred and forty three shares to buy a house
Speaker 1: in nineteen seventy. In two thousand, it would cost you
Speaker 1: a hundred and nineteen shares of the SMP to buy
Speaker 1: the median price house. But today it only costs you
Speaker 1: eighty shares of the SMP to buy the median price house.
Speaker 1: So priced in the SMP, housing is a lot cheaper
Speaker 1: than in median income. Not so cheap. Okay, uh uh
Speaker 1: you know how many years do you need to work
Speaker 1: to buy a house with cash? Right in nineteen seventy
Speaker 1: you needed to work two point six years. In two thousand,
Speaker 1: four point one years, Today you have to work four
Speaker 1: point eight years if you were in the median income
Speaker 1: to buy a house. Now we're going to get to
Speaker 1: the payment part in a moment. It was in two thousand, Uh,
Speaker 1: in two thousand, four point one years. Yeah, four point
Speaker 1: one two point six, four point one four point eight Yeah,
Speaker 1: going from nineteen seventy to two thousand? What that? What
Speaker 1: that tells you? The way that I look at that is, um,
Speaker 1: this is uh the reason why the money is losing
Speaker 1: values because they keep printing so much of it. And
Speaker 1: uh and this illustration right here took two and a
Speaker 1: half years of your life. That's your life. That the
Speaker 1: most scarce asset in history is your time. All other
Speaker 1: assets we can get more of if we lose it,
Speaker 1: but you can't get back your time. So it took
Speaker 1: two and a half years of your life that you
Speaker 1: can't get back. To buy that house today, it takes
Speaker 1: almost five to double. And so what they're doing by
Speaker 1: the money printer is actually stealing your life. They're still
Speaker 1: your life absolutely. You know, listen to what Mark just
Speaker 1: said their folks that the only thing any of us
Speaker 1: really have is our time. That's it. And what Mark
Speaker 1: said is right on. You just nailed it, because they
Speaker 1: are literally by debasing the currency, they are also stealing
Speaker 1: the years of your life away. So that's why you
Speaker 1: listen to this show because you want to learn how
Speaker 1: to how to turn that the other way. You want
Speaker 1: to learn how to not be affected or maybe even
Speaker 1: to thrive by aligning your interests with what I call
Speaker 1: the two most powerful entities that have ever existed in
Speaker 1: human history, governments and central banks. And that's what we're
Speaker 1: here to help you do. Okay, So so yeah, it's
Speaker 1: a lot now. Now Forbes, Interestingly, Forbes magazine publishes in
Speaker 1: their own economic index, their own version mark of the
Speaker 1: c p I, the Consumer Price Index, but they call
Speaker 1: it the cost of living very well, so this is
Speaker 1: like the c p I for rich people. Okay. And
Speaker 1: and what's interesting about it is that we also took
Speaker 1: in the Hartman Comparison Index. In the h c I,
Speaker 1: we compared the cost of living very well index to
Speaker 1: house prices, and here's what we found. In nine seventy
Speaker 1: it would take five hundred and eighty one shares of
Speaker 1: this index to buy the median price house. Today it
Speaker 1: only takes five hundred and six shares. So for wealthy people,
Speaker 1: houses have become cheaper, not two thirds cheaper like some
Speaker 1: of the people that held the gold or a bitcoin
Speaker 1: radically cheaper or whatever, oil, etcetera, but still cheaper. Okay,
Speaker 1: in the cost of living very well indexed UM. Now copper, Uh,
Speaker 1: you're going to find some differences there. Copper is a
Speaker 1: super important commodity. They call it dr copper for a reason.
Speaker 1: Um four forty eight thousand pounds of copper to buy
Speaker 1: the house two thousand, two hundred and four thousand pounds
Speaker 1: and two thousand today only eight one tho pounds. So
Speaker 1: from two thousand today basically a generation twenty one years right, um,
Speaker 1: housing has is less than half the price in copper
Speaker 1: than it was then. Okay, so so everything everything but
Speaker 1: o j yeah, yeah, orange juice, orange juice, definitely, yeah,
Speaker 1: not so not so good. Okay, So now let's talk
Speaker 1: about the payment. Okay, we we compare it to a
Speaker 1: whole bunch of other things. Find out more at my
Speaker 1: website Jason Hartman dot com or on my YouTube channel
Speaker 1: or podcast, The Creating Weald Show. But payment, you you
Speaker 1: mentioned that earlier, and I want to get to payment
Speaker 1: because the index considers not only the price of the house,
Speaker 1: but also the typical mortgage payment, and with interest rates,
Speaker 1: like you said, mark being half of what they were. Uh,
Speaker 1: it's really staggering what happens to the payment. So let's
Speaker 1: look at the mortgage payment based in UM the median
Speaker 1: home price, adjusted for inflation, and then priced in bitcoin. Okay, staggering,
Speaker 1: what's happened? So the media mortgage payment was a hundred
Speaker 1: and forty two bucks by two thousand, was today compared
Speaker 1: to two thousand, it's only eleven seventy. But when you
Speaker 1: adjusted for inflation back in was a hundred and forty
Speaker 1: two bucks today it's only one sixty nine. It's not
Speaker 1: that much more expensive adjusted for the official rate of inflation,
Speaker 1: which is fake, which is manipulated. So basically, uh, if
Speaker 1: you put in the real rate of inflation, the house
Speaker 1: payment has become quite a bit cheaper than it was
Speaker 1: in nineteen seventy. Based in bitcoin, it's almost free to
Speaker 1: have a house payment, okay um based in gold though, um.
Speaker 1: To make your payment in gold in nineteen seventy it
Speaker 1: took four point one ounces. In two thousand, it took
Speaker 1: three and a half ounces of gold. Today it only
Speaker 1: takes point seven ounces of gold to pay your mortgage.
Speaker 1: Um in barrels of oil. Nine seventy took forty two
Speaker 1: barrels of oil to pay the house payment. In two
Speaker 1: thousand thirty six barrels, and today only sixteen barrels a
Speaker 1: month to live in that house for your mortgage payment. Okay,
Speaker 1: orange juice, it's gotten a little more expensive. It's not
Speaker 1: the most expensive. It was nine D forty four pounds
Speaker 1: of orange juice per month today, uh, three D nineteen
Speaker 1: in nineteen seventy, but in two thousand twelve hundred barrels
Speaker 1: or not barrels pounds, So it's a little cheaper than
Speaker 1: it was in two thousand. Yeah, it's worth yea. How
Speaker 1: about shares of the SMP. Okay, if you want to
Speaker 1: pay your house payment, you could cash in one and
Speaker 1: a half shares of the SMP converted to dollars pay
Speaker 1: your mortgage in two thousand, if you did that, it
Speaker 1: would only take point seven less than half to pay
Speaker 1: your mortgage payment. Today it only takes point three. So
Speaker 1: priced in the SMP or mortgage payment is dramatically cheaper.
Speaker 1: Dramatically cheaper in a bunch of things. Okay, how about
Speaker 1: hours worked at the average wage in nineteen seventy you
Speaker 1: you talk mark about stealing your time in forty one
Speaker 1: hours at the average wage to pay your mortgage in
Speaker 1: two thousand, it took sixty nine hours. Today it only
Speaker 1: takes forty six hours. So, you know, cheaper than it
Speaker 1: was twenty one years ago, a little more expensive than
Speaker 1: it was fifty one years ago. UM tuition, we do
Speaker 1: it indexed in tuition, college tuition, UM, a whole bunch
Speaker 1: of other things. But the bottom line is, housing overall
Speaker 1: is cheaper in almost anything you compare it to today,
Speaker 1: both on a price of the house basis, but even
Speaker 1: more so on a monthly payment basis, is getting cheaper.
Speaker 1: And that's why I say we've got a few good
Speaker 1: years ahead of us probably in the housing market. Now.
Speaker 1: I do want to make the disclaimer that the index
Speaker 1: is a comparison index. It's called the Heartman comparison Index.
Speaker 1: It compares things. It doesn't consider other things like foreclosure, moratoriums,
Speaker 1: in ventory levels, all of that stuff. But I will say, uh,
Speaker 1: a lot of data is in the price of things.
Speaker 1: The price of anything offers a ton of data. Rice
Speaker 1: price is data prices communicating the prices. This is the
Speaker 1: signal that communicates everything. And so um, that's of course
Speaker 1: that's what it is. Yeah. M curious though, because um,
Speaker 1: George George says, uh, you know, is is it expensive
Speaker 1: or is it cheap? Um? But that doesn't tell everything, right, So, uh,
Speaker 1: just because homes maybe aren't as expensive on a monthly
Speaker 1: basis or comparatively as they were in the past doesn't
Speaker 1: necessarily mean that they won't cry in And just because
Speaker 1: or because they're lower doesn't mean they can keep going
Speaker 1: up either, right right, So right now, we're doing the
Speaker 1: index on a quarterly basis. We're putting in new numbers
Speaker 1: every quarter, okay, and we want to get it to
Speaker 1: a monthly basis. But hey, this is a new thing,
Speaker 1: and we're staffing up there okay for the index. Uh
Speaker 1: and uh, and so you know, just keep following the index,
Speaker 1: and when when the index says housing is expensive compared
Speaker 1: to all these other things, then you know that is
Speaker 1: a dangerous point. And we will get there, especially if
Speaker 1: these dysfunctionally low interest rates continue, we will good to
Speaker 1: that point. So we're just not there yet. Hey, sorry
Speaker 1: to interrupt this video just one more time. I'm not
Speaker 1: running Google ads, so it's actually way less interruption than
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Speaker 1: And that's it. Let's go ahead and get back to
Speaker 1: the interview. Yeah, so, um, it looks at the price things,
Speaker 1: and UM, I like that because it's most basic. Most
Speaker 1: people are like, oh, real estate, it's way too expensive.
Speaker 1: It's got a crash any moment um. So it gets
Speaker 1: a different perspective on the price. Like I said, I
Speaker 1: keep pounding the table on this. Purchasing power brings you
Speaker 1: back to that, which so it's perfect for that. I
Speaker 1: was I was taking notes and writing down a bunch
Speaker 1: of those amounts because I'm gonna use some of that data. Um.
Speaker 1: But um, like I said, just because price is cheap
Speaker 1: doesn't mean it's gonna get going up. But just because
Speaker 1: it's expensive doesn't mean. Uh, we have the wild card,
Speaker 1: as I call it, These are the banksters, and we
Speaker 1: don't know what the banksters are gonna do. So for example,
Speaker 1: the FED and the government has done anything other power
Speaker 1: to prop the market up. Um. You know, over the
Speaker 1: last year they've spent trillions of dollars to do that,
Speaker 1: and a lot of it has been done in the
Speaker 1: mortgage industry specifically, um, you know, buying mortgage backed securities
Speaker 1: and whatnot. And uh. And then even with the you know,
Speaker 1: rear rams and eviction moratorium, they're helping for payments. Um.
Speaker 1: So it seems like that's a big wild card and
Speaker 1: we don't know what in their head will they do?
Speaker 1: You will they nah? So how does that? How do
Speaker 1: you factor that in? I am really glad you mentioned
Speaker 1: that what we are adding to the Heartman Comparison Index
Speaker 1: is a mortgage sensitivity component, a mortgage interest rate sensitivity component.
Speaker 1: Because it's a good question what would happen if they
Speaker 1: FED and the government and the banksters. Uh, you know,
Speaker 1: this collusion between these entities, which is so secretive and
Speaker 1: just ridiculous frankly. Uh, you know what would happen if
Speaker 1: they tighten the money supply and and interest rates go up? Well,
Speaker 1: the ft doesn't directly control mortgage rates, but they certainly
Speaker 1: influence them in a huge way. And so you know
Speaker 1: if rates went up I say one percent, which is
Speaker 1: really a thirty three percent increase depending on the exact rate,
Speaker 1: very approximate there um. Uh, you know, then it would
Speaker 1: it would certainly make housing much less affordable. So you're
Speaker 1: absolutely right. But when that happens, the likelihood is all
Speaker 1: of the other compared to what items in the h
Speaker 1: C I will also react to that, right, Certainly, the
Speaker 1: S and P will, gold prices will uh, copper prices,
Speaker 1: everything reacts, right. But here's the problem, and here's why
Speaker 1: it's so hard to make predictions right, And here's why
Speaker 1: so many people who claim to be good at making
Speaker 1: predictions fall on their sword at some point and right
Speaker 1: is because these things don't act in lockstep. There's a
Speaker 1: lag time between these reactions of different items in the economy.
Speaker 1: And so, uh, you know what you can be pretty
Speaker 1: safe with, I think is looking at big macro trends,
Speaker 1: and that's that's what I like looking at, and I
Speaker 1: think it's where you like looking at too. Uh. If
Speaker 1: you're trying to make predictions and be a day trader,
Speaker 1: you're probably gonna get in trouble. Okay. So, um, I'm curious. Um, well,
Speaker 1: I want to see I want to ask you. I
Speaker 1: want to nail you down as to what you see
Speaker 1: in the near and long term future. But before we
Speaker 1: jump into that, for everybody watching, make sure you stay
Speaker 1: to that because I'm gonna ask Jason. This is a causation. Um,
Speaker 1: As I was walking down the beach trail last night
Speaker 1: with my wife here in southern California. I mean homes
Speaker 1: have doubled. I mean they're up a hundred percent in
Speaker 1: in in a year and a half. I mean it's insanity.
Speaker 1: Then we're having this conversation. So I want to nail
Speaker 1: you down ask you what you think about that. But
Speaker 1: before we do, I'd like to ask you about two
Speaker 1: other triggers that I'm looking at. Um. So one is, um,
Speaker 1: there's been big news. I did a video on this
Speaker 1: about black Rock and the hedge funds and Wall Street
Speaker 1: buying up single family homes. Now they are basically taking
Speaker 1: near free money from the money printer getting their buddies
Speaker 1: at the FED. They're getting it for almost free, and
Speaker 1: they're buying up entire tracks of single family homes the
Speaker 1: bread and butter as US real estate, and and they're
Speaker 1: over pain by a large amount of money because they're
Speaker 1: looking at different numbers than we are. You can get
Speaker 1: free money and make two or three percent. Heck, they're
Speaker 1: fine with that's a little overpay um, and that's a
Speaker 1: big trend, and it doesn't continue to be slowing down.
Speaker 1: How does that piece fit into the narrative? I guess, um, Yeah,
Speaker 1: it's a good question. I think it's bullish for real
Speaker 1: estate prices and bullish for real estate rents because these
Speaker 1: institute have more data than we do and they obviously
Speaker 1: are still doing what they do right and and because
Speaker 1: of that, I think I think it's bullish. So I
Speaker 1: mean meaning in the investment world, we'd call that the
Speaker 1: smart meaning where the dumb money. So then meaning if
Speaker 1: the smart money is putting their money there, then maybe
Speaker 1: we think about as well. Right, Yeah, I think it's
Speaker 1: a good indicator. Yeah, I do, even though they're even
Speaker 1: though they're potentially over paying because their number metrics are
Speaker 1: way different than ours. Fair enough, that's a that's a
Speaker 1: very good point. Um, yeah, I think it's okay. And
Speaker 1: here's the thing. You know, a lot of people I
Speaker 1: got asked a question similar to yours just recently on
Speaker 1: another podcast I was doing, and um, you know, the
Speaker 1: at the end of the day, we have to remember, Um,
Speaker 1: the number of houses and the amount of housing demand
Speaker 1: isn't changing that much. Right, There's still a shortage of
Speaker 1: about five point five million houses according to n a
Speaker 1: R National Association of Realtors that has a very big
Speaker 1: statistical uh you know research department and um, and so
Speaker 1: we still have that same shortage. It doesn't matter if
Speaker 1: their rental homes or for sale homes. The fact is
Speaker 1: we have people that need a place to live. Right,
Speaker 1: That's what happens at the end of the day. Now,
Speaker 1: I do want to mention though, and this is a
Speaker 1: far out thing, so no one needs to worry about
Speaker 1: it today. But uh, you know, in thirty to forty years,
Speaker 1: this dynamic looks like it will change quite dramatically because
Speaker 1: the birth rate is declining. And um, the one thing
Speaker 1: that has to happen for all of this real estate
Speaker 1: investing to work is you have to have demand, you
Speaker 1: have to have people, you have to have population growth
Speaker 1: or at least stable population. And uh, and so that's
Speaker 1: that's super important. And you have to not have a
Speaker 1: disruptive construction technology that supplies a lot more housing to
Speaker 1: the market. And so you know, I've done deep, deep
Speaker 1: research on my shows about three D printed homes, about
Speaker 1: manufactured homes, and none of these things. Forget about the
Speaker 1: hyper earring, it's bs. It's simply not true. I've hired
Speaker 1: a consultant to look at it and all sorts of stuff,
Speaker 1: and um, none of these things are disrupting housing construction
Speaker 1: anytime soon. It's a low tech process, and it requires materials.
Speaker 1: Even if they're three D printed, it's still concrete, right,
Speaker 1: It's still materials. And uh, there are land use restrictions
Speaker 1: and all kinds of problems with buildings. So I'm not
Speaker 1: I'm not worried about too much supply anytime soon, and
Speaker 1: I'm not worried about declining demand anytime soon. Okay, Um, now, um.
Speaker 1: On the new question I had was our good friend
Speaker 1: George Gammon has been talking quite a bit about what's
Speaker 1: going on the report market, and now the reverse repot
Speaker 1: market and without getting deep into that. Basically, the banks
Speaker 1: were running out of money back in and so the
Speaker 1: FED was giving them liquidity. Now it's verse repost, so
Speaker 1: the banks are putting money back to the Fed. Um.
Speaker 1: This seems to be a signal of a big problem.
Speaker 1: The banks have all this money, they don't want to
Speaker 1: lend it out, um, and now they're putting it back
Speaker 1: to the Then on top of that, I want to
Speaker 1: dive super and deep into that. But yesterday big news
Speaker 1: came across the news world of Wells Fargo wanting to
Speaker 1: shut down lines of credit, lines of credit, equity, lines
Speaker 1: of credit. Um, what do you think about that? Is
Speaker 1: that like a warning sign? Because after the two thou
Speaker 1: eight crash, everybody's credit lines got pulled right, it was
Speaker 1: it was it was it was too I mean, the
Speaker 1: liquidity dried up, it was too risky for them to
Speaker 1: lend money. And now it's almost as if they're pre
Speaker 1: emptively doing What do you think, Well, I think that's
Speaker 1: a bearers sign. A credit contraction will definitely uh cause
Speaker 1: demand to level off as the FED tapers, which some
Speaker 1: argue they're about to do, and some argue that it's
Speaker 1: gonna be a couple of years. I don't know. Nobody
Speaker 1: really knows for sure except your own power. Um. Even
Speaker 1: that he doesn't probably. You know, real estate is a
Speaker 1: credit based asset class. If you constrict the supply of credit, uh,
Speaker 1: you're going to constrict the affordability. But remember something, Um,
Speaker 1: that doesn't reduce the population and it doesn't increase the supply.
Speaker 1: So if people can't buy houses, they'll rent them. They
Speaker 1: will be forced to rent them. Right, there's only two choices,
Speaker 1: all three I rent or be homeless. Right. Uh, so
Speaker 1: that options in to um. But you know, between that
Speaker 1: between drying up a little bit of the credit like
Speaker 1: with Wells Fargo, that's maybe a canary in the coal
Speaker 1: mine maybe. Uh. And then we've seen interest rates start
Speaker 1: picking back up again from their lows as well. So uh,
Speaker 1: the interest rates tick up and the lack of credit
Speaker 1: both do the same thing, which is make it more
Speaker 1: expensive at home. The monthly payment goes up. Um. And
Speaker 1: if the monthly pay that goes up, does that bring
Speaker 1: the price of the home back down? Well, here's what
Speaker 1: really happens. Yes, it does put downward pressure on prices,
Speaker 1: but what people really um, it's just weird to me, Mark,
Speaker 1: and I've you know, over the last twenty years of
Speaker 1: having discussions about this exact thing. People will say, well,
Speaker 1: you know, if incomes are stagnant and prices are rising, um,
Speaker 1: how are tenants going to be able to afford to
Speaker 1: rent my house from me? Or you know, if the
Speaker 1: economy is bad, unemployments high, whatever, right, whatever happens, The
Speaker 1: point is what gives in the equation mostly is the
Speaker 1: standard of living. People are forced to move down or
Speaker 1: not move up in the first place, right, So uh,
Speaker 1: you know, if if you talk to one of your
Speaker 1: tenants today and then you talk to that same tenant
Speaker 1: five years from now, if if these things happen, right,
Speaker 1: they all say things like, well, you know, we used
Speaker 1: to live in a square foot house in a better
Speaker 1: neighborhood and now we live in a twelve hundred square
Speaker 1: foot house in an inferior neighborhood with worst schools. That
Speaker 1: what gives is the standard of living. But economists don't
Speaker 1: follow this very well. They follow oh, yeah, the rate
Speaker 1: of inflation through the highly manipulated bogus CPI, the consumer
Speaker 1: price in next, sure, but they don't follow people, right,
Speaker 1: and they don't say this exact couple that had this
Speaker 1: life five years ago has this life today, right, They
Speaker 1: don't do that, I mean not very much. Ats not
Speaker 1: in any real and that's ah, that's such an important
Speaker 1: point that you hit on because again as real estate investors,
Speaker 1: we talked to as I mentioned about the Bread and Butter, right,
Speaker 1: So that's an entry level three bedroom to bath home.
Speaker 1: And the reason why we've always liked those, at least
Speaker 1: speaking for myself, is because to your point, it's the
Speaker 1: entry level that people come to and if people fall down,
Speaker 1: they're gonna fall down to that level. And also people
Speaker 1: coming up are to that level. And so that's why
Speaker 1: the entry level is great because you catch them either
Speaker 1: way moving down the economic ladder and others moving up.
Speaker 1: But that's exactly where black Rock and the and the
Speaker 1: Wall Street hedge funds are targeting. Is entry level three bedroom,
Speaker 1: two bass as well. Sure, but it's also where all
Speaker 1: of our investors target as well, and where you target
Speaker 1: so you know we all do that. But but I
Speaker 1: guess just just reinforcing the point of maybe it's a
Speaker 1: bullet signal, right, they know what they're doing kind of thing, right, um,
Speaker 1: because I think you know one thing and again, so
Speaker 1: much of this is unknown because these banksters, you know,
Speaker 1: we don't know what's in their head. But um, I
Speaker 1: tend to think that they didn't just create eight trillion
Speaker 1: dollars in the last four months to stop now, right,
Speaker 1: Like they're not going to just do that just to
Speaker 1: stop now? Why would they not keep it going? You're
Speaker 1: absolutely right, look at the you know, it's amazing to me, Mark,
Speaker 1: And I'm sure you have the same thought I do. Right,
Speaker 1: every time the G seven meets or the G twenty meets,
Speaker 1: you know, the big industrialized countries, right, every time there's
Speaker 1: a meeting in Jackson Hole, Wyoming where the FED has
Speaker 1: their annual meeting, or or they go to Davos, Switzerland,
Speaker 1: and you know, the the creepy World Economic Forum. Right, basically,
Speaker 1: they're only answer, they can call it whatever they want.
Speaker 1: They've got all these complicated names, but they're only answer
Speaker 1: to any of these problems is create more currency units,
Speaker 1: print money. It's it, that's it. That's all they got. Okay. Yeah,
Speaker 1: they've got these little things and dials they turn and
Speaker 1: but that's basically at the end of the day, it's
Speaker 1: all just money printing, okay. And they're not going to
Speaker 1: stop because no politician or FED chair or central bank
Speaker 1: chair of any other central bank, the European Central Bank,
Speaker 1: Bank of Japan, whatever, they don't want to make people
Speaker 1: take the tough medicine during their tenure. The only guy
Speaker 1: that ever did that was the late Paul Vulker, who
Speaker 1: was FED share in the early eighties. Uh. He he
Speaker 1: did do that. He tightened the money supply, interest rates
Speaker 1: went up through the roof. The economy just stalled like
Speaker 1: a car crashing into a wall. And it was tough,
Speaker 1: but it broke the back of inflation. And I say,
Speaker 1: there is no way that's happening in today's world. People
Speaker 1: are just too wimpy. They're not willing to do it.
Speaker 1: It's never gonna happen. So then um so then looking
Speaker 1: into the future, so then it's like, um, if the
Speaker 1: FED stops, which as we discussed, is probably unlikely, but
Speaker 1: if the FED were to stop with their intervention buying
Speaker 1: mortgage backed securities, propping up banks, etcetera, then um, potentially
Speaker 1: we could see the real estate market turn around and crash.
Speaker 1: From here, however, if they continue down the path they've
Speaker 1: been going down, to your point, when the whole world
Speaker 1: looks like a hammer or a nail. Or when all
Speaker 1: you have is a hammer, the whole world looks like
Speaker 1: a nail. Um, and so UM, if they go till
Speaker 1: they blow, which is kind of what I'm thinking, we
Speaker 1: could potentially see things go way higher and further than
Speaker 1: we might imagine. I think you're right. So if I
Speaker 1: was thinking about buying a peace real estate in the
Speaker 1: United States, UM, I would first divide it into two
Speaker 1: buckets as an investor or as a homeowner. But let's
Speaker 1: say UM, as an investor, I think the only strategy
Speaker 1: really makes sense is to trying to buy it for
Speaker 1: cash flow. Unfortunately, the amount of cash flow that you
Speaker 1: can get today has gotten greatly, partly because of Black
Speaker 1: Rock and Wall Street jumping in there working on rays
Speaker 1: within margins. But let's let's look at it from a
Speaker 1: homeowner perspective. As I said, this is the conversation I
Speaker 1: was having last night. I mean, I'm not kidding, man.
Speaker 1: Here in southern California, prices are up like a hundred
Speaker 1: percent in like a year and a half or two years.
Speaker 1: It's insane. One point eight million dollar homes are not
Speaker 1: going for three and a half million dollars, like just
Speaker 1: like that Um, so is it is? It? Is it
Speaker 1: the top? I mean, would you buy at double the price?
Speaker 1: Or would you wait a couple of years and wait
Speaker 1: for those prices to come back down? Um? Or are
Speaker 1: they going to go till they blow? How do you
Speaker 1: think through something like that? And I know different markets
Speaker 1: are different circle um, you know there, etcetera. But how
Speaker 1: would somebody think through that when they're when they're thinking
Speaker 1: about buying a house for themselves as a family, but
Speaker 1: prices seem to be sky high? Do you wait or
Speaker 1: do you buy? And how do you evaluate that? I
Speaker 1: think in the cyclical markets, meaning the West coast of
Speaker 1: the United States, the expense of Northeastern markets South Florida
Speaker 1: where I live right the if you're in an expensive market,
Speaker 1: I think there's a much greater risk uh two, possibly
Speaker 1: things going the other way. But if you're buying in
Speaker 1: a cheap market where the housing prices are relatively low,
Speaker 1: it's a linear market. You know. If you go to
Speaker 1: Jason Hartman dot com and click on the property's page
Speaker 1: on my website, you'll see properties that are in these good,
Speaker 1: solid linear markets. The insurance arc that people have against
Speaker 1: downturns that that and you know, think about this. When
Speaker 1: you have insurance, you don't worry as much. You don't
Speaker 1: care as much because you're insured. And the insurance people
Speaker 1: have is the linear markets offer good cash flow, and
Speaker 1: cash flow is very reliable. Appreciation is not very reliable.
Speaker 1: It's very speculative. So if you buy a property, you
Speaker 1: know one of my ten commandments of successful investing is
Speaker 1: thou shalt not gamble. It's commandment number five. And that
Speaker 1: means that the property must make sense the day you
Speaker 1: buy it, or you don't buy it. You make your
Speaker 1: money when you yeah, And I don't mean you're buying
Speaker 1: like under market and finding that deal that nobody can
Speaker 1: really find in real life. Right, I mean, the property
Speaker 1: has good cash flow characteristics, and if you do that,
Speaker 1: that's your insurance policy. If the value goes to own,
Speaker 1: who cares. I mean, on my website you'll see properties
Speaker 1: that have projected returns of annually all in right, that's
Speaker 1: not cash on cash, it's all the ways you earn
Speaker 1: returns on a property, and there are many ways. It's
Speaker 1: a multidimensional asset class. Great video on my website, thirty
Speaker 1: two minutes long, that can teach you how to analyze
Speaker 1: the real estate deal. It's been watched zillions of times,
Speaker 1: and it really it really teaches you how to analyze
Speaker 1: the deal so you won't get hurt on a deal.
Speaker 1: And and and then, and that's what people have to
Speaker 1: have to do. You know, if you're buying in a
Speaker 1: cyclical market, you are speculating, so be careful. But as
Speaker 1: as an investor, definitely be careful because if your property
Speaker 1: is worth half as much now, uh, you know in
Speaker 1: California specifically back to California, I mean we saw the
Speaker 1: worst real estate crash in history was like eight n
Speaker 1: ninety two, and it dropped about during those four years,
Speaker 1: but then in two thousand and eight it dropped sixty
Speaker 1: cent in twelve months. So uh, we've got a different
Speaker 1: taste of what might be possible. And I know what
Speaker 1: happened in Florida as well. Um, but I would say
Speaker 1: so if you're an investor in the property drops like,
Speaker 1: you're screwed. I mean, you're stuck. And I and I
Speaker 1: if you have good cash flow, because you're not forced
Speaker 1: to not not if you have good cash flow, Correctum,
Speaker 1: which is why I said I think for investing in
Speaker 1: real estate, cash flow is the only option today. Um,
Speaker 1: the strategy. But if I was buying a home, I
Speaker 1: think about it like, is this a place that I
Speaker 1: want to live forever? And if I can lock in
Speaker 1: these historically low rates and I'm happy with the payment,
Speaker 1: and if the problem if the value of the property
Speaker 1: dropped in half but I still got to live there
Speaker 1: and I still have a good payment, then why not? Right?
Speaker 1: And so I kind of think about that. But but
Speaker 1: if I was gonna buy for two or three years
Speaker 1: and then hopefully move up, well maybe that's not the
Speaker 1: best decision. What do you think the way people lose
Speaker 1: money on real estate most of the time is they
Speaker 1: are forced to sell a property at an undesirable time.
Speaker 1: That happened to me, okay, So yeah, and and what
Speaker 1: forces them to property that never made sense, that doesn't
Speaker 1: have cash flow, that won't cover its cost, and hopefully
Speaker 1: generate positive cash flow or a divorce those two things, okay? Um?
Speaker 1: And and if you're not forced into that, you're probably
Speaker 1: gonna be okay because you just can wait and and
Speaker 1: earn that that return every single year. Yeah. Now, last
Speaker 1: question I want to ask before we start wrapping this up,
Speaker 1: is um, you've just given us as the index that
Speaker 1: the Jason Hartman index, which I think, I think it's
Speaker 1: really Heartman comparison and hi Heartman compar um. So you know,
Speaker 1: we looked at real estate's cheap compared to gold, bitcoin,
Speaker 1: barrels of oil, um, pounds of rice, not O J
Speaker 1: but s and G etcetera. Now, many people think that
Speaker 1: real estate is the best investment um and it's a
Speaker 1: way to build wealth. But per the h c I,
Speaker 1: it actually looks like it hasn't been that best in sment.
Speaker 1: It actually looks like I should have probably just put
Speaker 1: my money into the SMP uh or you know, oil, gold, bitcoin, etcetera.
Speaker 1: That's a that's an interesting question. But what I didn't
Speaker 1: say is that those other things don't produce income, and
Speaker 1: they don't produce tax benefits, so the income property and
Speaker 1: they don't give you inflation induced debt destruction, So the
Speaker 1: income property is the best investment. But yes, you are right,
Speaker 1: that's very good of you to point that out that
Speaker 1: just on the straight price right uh, you know, buying
Speaker 1: the house in gold versus versus the house, right, Um,
Speaker 1: it's gotten cheaper. Good point. But also in addition to
Speaker 1: the things that you said, so the tax benefits cannot
Speaker 1: be understated. I mean that's a big deal because, like
Speaker 1: you said, some of those properties all in cash on cash,
Speaker 1: they could be three or four percent, but all in
Speaker 1: it could be and the gold doesn't give you any
Speaker 1: yield every year, and the collector rate when you sell
Speaker 1: it where we need no tax, Yeah, we need cash
Speaker 1: flow to live on. And so that's why it's super important.
Speaker 1: The other thing though, that we that you didn't didn't
Speaker 1: call out, but it's the leverage. And so I can
Speaker 1: put ten percent down and control the whole price of
Speaker 1: the house. I can't put ten percent down on gold,
Speaker 1: bitpoin or oil and control that whole asset exactly. Yeah.
Speaker 1: Then and then by being able to by being able
Speaker 1: to control a much bigger asset. Two, But I get
Speaker 1: the twenty dollars of appreciation to twe I'm sorry, the
Speaker 1: two appreciation, two of tax right up, even though I'm
Speaker 1: only controlling it with twenty my own money exactly. So
Speaker 1: your return on investment in that example is one hundred percent.
Speaker 1: You've doubled your money with very little money. So yeah,
Speaker 1: you know, I I liken it to this. Remember when, um,
Speaker 1: when you were a kid and you discovered that your
Speaker 1: shadow was really big, right, Like the sun was at
Speaker 1: your back and you looked forward and you saw your
Speaker 1: shadow along the sidewalk was nine ft right and and
Speaker 1: and you thought that's kind of cool. Well that's really
Speaker 1: what income property allows you to do through leverage is
Speaker 1: you can control, as you said, a much larger asset
Speaker 1: with much less so your risk is lower and your
Speaker 1: ability to generate wealth from that is magnified dramatically. Yeah. Yeah,
Speaker 1: I was just spent the spent spent some time out
Speaker 1: in Arizona hanging out with Robert Kiyosaki, and he kept
Speaker 1: pounding into my head, uh, you know, controlling the asset, um,
Speaker 1: but also not putting your own money into the asset,
Speaker 1: even controling asset you don't even have your own money into.
Speaker 1: So so real estate offers all types of opportunities. We
Speaker 1: won't get into that we don't have time, but offers
Speaker 1: all types of opportunities um that that they can't be overstated.
Speaker 1: But man, Jason, that was some amazing stuff. I really
Speaker 1: appreciate that. That index, Like I said, it's I I
Speaker 1: say stuff like that off the top of my head,
Speaker 1: but I don't have the actual data, the actual numbers. Yeah,
Speaker 1: now you intuitively know this right, Yeah, yeah, into really,
Speaker 1: so I'm gonna do that. Um, so we're gonna that's
Speaker 1: that's Is that available on your website? Should we link
Speaker 1: to that? You know it's not. And the reason I
Speaker 1: haven't done it yet is we're producing a white paper
Speaker 1: right now and we're gonna have a whole book on
Speaker 1: the index. So we're gonna have a ton of material.
Speaker 1: Just get on my mailing list, uh, you know, through
Speaker 1: Jason Hartman dot com or if you want that free
Speaker 1: mini book, go to Pandemic Investing dot com and uh,
Speaker 1: and we'll get that out there. But you know, we're
Speaker 1: we're still tweaking some things, so we didn't want to
Speaker 1: publish anything quite yet, got it, So will link to
Speaker 1: that and then where else do people follow you? Um,
Speaker 1: just Jason Hartman dot com or you know the book
Speaker 1: at Pandemic Investing dot com. Is good, you got it.
Speaker 1: We're gonna make sure we linked to both of those.
Speaker 1: And I know, I'm sorry Mark YouTube or podcast you
Speaker 1: know of course, yeah, yeah, which they'll find on your website. Yep, yep, awesome.
Speaker 1: Well we're gonna ahead and sign off. Jason, Thanks so
Speaker 1: much for sharing that today. Good stuff. Happy investing to
Speaker 1: you and everybody listening. Thanks Mark,