Speaker 1: Everyone, Welcome to another episode of the Market Disruptor Show.
Speaker 1: I am sitting down again with real estate expert Jason Hartman. Um.
Speaker 1: We've had some great discussions and I have a lot
Speaker 1: of questions for him. I'm really looking forward to. Uh So, Jason,
Speaker 1: Welcome to the show. Hey Mark, Thanks, it's good to
Speaker 1: be back. And uh go boy, we we've got to
Speaker 1: talk more often. There is so much going on in
Speaker 1: the world that I've been every time, you know, something
Speaker 1: is going on, I'm thinking, I want to ask Mark,
Speaker 1: what would he think of this? You know, yeah, yeah,
Speaker 1: things are There's a quote I can't remember who says it,
Speaker 1: but it's something about there's decades, uh that seemed like
Speaker 1: they I'm butchering the quote now, but there's years go
Speaker 1: by with nothing, and then sometimes there's days that seemed
Speaker 1: like years or whatever. Anyway, there's so much stuff going
Speaker 1: on right now. You know. Another way to say that
Speaker 1: is in a time of like pandemic COVID and and
Speaker 1: civil unrest and race riots, you know, it's like a
Speaker 1: week is like a year. I mean, it's changing so
Speaker 1: quickly and there's so much to talk about that it's
Speaker 1: like dog years, right, that's a that's a that's a
Speaker 1: better way to put it. So, Um, you're the real
Speaker 1: estate expert, you're an investing expert. You get the whole
Speaker 1: big picture, which is why I like talking to you. Right,
Speaker 1: you can't just look at one segment. You have to
Speaker 1: understand everything. Um, And so you you get that. And
Speaker 1: there's some questions that I have, and I know my
Speaker 1: audience has, because I've recently done a series of videos
Speaker 1: and I've talked about different segments of the market. Um,
Speaker 1: I've made the case that there's going to be this
Speaker 1: great migration happening for different reasons. I've made the case
Speaker 1: that maybe prices are still cheap, but everybody's fixated on
Speaker 1: one thing, and that is the pandemic. And because fifty
Speaker 1: million people are out of jobs and maybe a lot
Speaker 1: of these jobs might not come back, who knows how
Speaker 1: long it's going to take. Whatever. Because of that, the
Speaker 1: entire real estate market must crash. People are stuck in
Speaker 1: that trap. And I don't see it that way. I
Speaker 1: believe there's nuance in there. But people have this view
Speaker 1: where because the pandemic, real estate has to crash. What
Speaker 1: would you say about that? Well, Uh, it's a multilayered discussion.
Speaker 1: So first of all, UM, you know when you say
Speaker 1: people say that, I know some people say that because
Speaker 1: I get the comments on my YouTube videos you get
Speaker 1: on yours. UM, but they're completely wrong. I'm just here
Speaker 1: to tell you, okay. I mean business is freaking booming
Speaker 1: for us. UM. We do not have nearly enough inventory
Speaker 1: of properties. My company helps investors by properties nationwide, and
Speaker 1: I mean inventory is super scarce. Things are going like that. Now,
Speaker 1: that's what we do. But like you were saying, UM,
Speaker 1: in in some segments of the market and in some
Speaker 1: geographical areas, it is a completely different picture. If we
Speaker 1: were offering uh properties in any high density city or
Speaker 1: you know, urban area. UM, if we were offering expensive properties,
Speaker 1: I would not be thinking or saying that now. Interestingly, though,
Speaker 1: some of the expensive properties in low density areas are
Speaker 1: actually booming because there's still a lot of people in
Speaker 1: the world with a lot of money, and that money
Speaker 1: is moving. This is a a migration of people and
Speaker 1: money that is happening right now. So whenever a crisis hits,
Speaker 1: and we are definitely in a crisis, I will be
Speaker 1: the first to agree. Please don't give me any silly
Speaker 1: comments on this video that oh gosh, this guy's god
Speaker 1: rose colored glasses. You know. Yeah, no, everything is not okay.
Speaker 1: It's not okay at all. I mean, we are in
Speaker 1: a time of crisis, and um, but in a time
Speaker 1: of crisis, money moves around. People move move around, the
Speaker 1: the you know, the checkers on the checkerboard move around,
Speaker 1: and uh, and that's what's happening now and so uh
Speaker 1: that that reallocation is happening. And you know, I'll share
Speaker 1: some math when when I share my screen and show
Speaker 1: you some of this migration that's going on, and show
Speaker 1: you some of the calculations for the possible migration to come.
Speaker 1: It's just begun. This is I mean, a damn is breaking,
Speaker 1: a tsunami is is forming, and uh, if you're an investor,
Speaker 1: you want to ride this wave and you don't want
Speaker 1: to be on the wrong side of it to where
Speaker 1: it breaks on your head because that is definitely happening
Speaker 1: in some areas. Yeah. Now, um, you last time we talked,
Speaker 1: you had brought up a statement which I've echoed, and
Speaker 1: I want to just kind of stay stay one more
Speaker 1: time for everybody that's listening and say that things you
Speaker 1: are painting it with rose colored glasses. Is that there
Speaker 1: is no such thing as the real estate market, thousands
Speaker 1: of sub markets broken up by area, by price, range,
Speaker 1: by type, by all different types of things, and finance
Speaker 1: markets can be complicated, and there's reasons why people want
Speaker 1: them to be complicated, but really everything breaks down to
Speaker 1: the most simple, which is supply and demand. And everything
Speaker 1: is always driven by supply and demand. And so because
Speaker 1: there's this massive pandemic and there are fifty million people
Speaker 1: out of work, and there are a lot of jobs
Speaker 1: that won't come back, there's a lot of things happening.
Speaker 1: People are gonna be working from home, People want to
Speaker 1: lose certain areas, and and as you just made the case,
Speaker 1: people start moving. And it's the moving that creates supply
Speaker 1: and demand. And so if you can chase those trends,
Speaker 1: you can find the pockets. I mean, I guess is
Speaker 1: that is that what you're seeing? Yeah? And I mean
Speaker 1: better than chasing them, even although you can still make
Speaker 1: a lot of money chasing them. But is to do
Speaker 1: what the great Wayne Gretzky said, And you probably know
Speaker 1: what I'm gonna say, right, I skate to where the
Speaker 1: puck is going, right, you know, like that's that's the
Speaker 1: thing you want to do is skate to where the
Speaker 1: puck is going. And uh so it's definitely going to
Speaker 1: suburban markets, and it's leaving urban markets. And eight of
Speaker 1: the population of the United States lives in what the
Speaker 1: census considers an urban market. Okay, now, let's kind of
Speaker 1: lay a little groundwork if we can, because you're alluded
Speaker 1: to it just a second ago. Mark. Um. You know,
Speaker 1: I've always talked for the last sixteen seventeen years, as
Speaker 1: I've been educating investors and helping them invest nationwide, I've
Speaker 1: always talked about three types of markets. Linear markets, cyclical markets,
Speaker 1: and hybrid markets. Linear markets are the markets we like
Speaker 1: and invest in, their boring markets. Uh their places like um,
Speaker 1: you know, Memphis, Tennessee, Little Rock, Arkans Saw, Um, some
Speaker 1: of the Texas cities, their places like Indianapolis. Um, there's
Speaker 1: a bunch of them, and you know they're all on
Speaker 1: my website at Jason Hartman dot com, so you can
Speaker 1: see what linear markets are. Most of the world is
Speaker 1: a linear market. It's most of the world is a
Speaker 1: boring real estate market where prices just chug along. They
Speaker 1: don't go up much, but they don't go down much
Speaker 1: either in bad times, and these properties have really good
Speaker 1: cash flow. And I know you you agree with me
Speaker 1: on this type of investing. The problem is the news
Speaker 1: media doesn't pay attention to these markets. But the news
Speaker 1: media pays attention to is the cyclical markets, the markets that,
Speaker 1: if you're looking at a graph, look like a roller coaster.
Speaker 1: They have glorious highs and ugly lows. Those are places
Speaker 1: like the West coast of the United States, South Florida,
Speaker 1: just a little bit south of where I live. Um,
Speaker 1: you know, Miami area, Fort Lauderdale, UM, the expense of
Speaker 1: Northeastern markets, New York, Washington, d C, Boston, some of
Speaker 1: the areas of Connecticut, et cetera. Around the world, they
Speaker 1: are places like Dubai, Paris, London, Hong Kong, a k
Speaker 1: In these markets, I wouldn't touch them with a ten
Speaker 1: foot poll Okay. Also, interestingly, the cyclical markets tend to
Speaker 1: be urban markets that are high density. That are markets
Speaker 1: that people are fleeing. They have civil unrest, they have
Speaker 1: a high chance of catching a virus, a place where
Speaker 1: you can't socially distance, and they're expensive, and most of
Speaker 1: them are business unfriendly. There they have high taxes, they
Speaker 1: have intrusive governments. Um. And you know, I think people
Speaker 1: have just woken up that these they just don't have
Speaker 1: that much to offer. You know, I have several friends,
Speaker 1: as I'm sure you do, Mark that live in places
Speaker 1: like New York City, and one of them, for example,
Speaker 1: just Um, left New York City, uh, a six hundred
Speaker 1: square foot apartment that was thirty eight hundred dollars a month,
Speaker 1: and moved to South Carolina, Okay, And you know it's
Speaker 1: like you can you can trade in your four thousand
Speaker 1: dollar a month, six d square foot apartment for a
Speaker 1: three bedroom, two bath, two car garage fifty a hundred
Speaker 1: square foot home for one third of the costs. Yeah,
Speaker 1: in some of these markets that we're in, it's just
Speaker 1: a much better deal. And now that everybody's telecommuting and
Speaker 1: you know, working on Zoom and stuff, it doesn't matter
Speaker 1: where you live. It just it doesn't matter that much.
Speaker 1: So that's the trend we're seeing. So then I think
Speaker 1: maybe it could be easy for some people to believe
Speaker 1: there's this migration happening. Um. Baby boomers want to leave
Speaker 1: expensive areas and move to sunbelt states. People want to
Speaker 1: get out of high density areas go to low tax areas.
Speaker 1: So maybe and and now Twitter and Facebook say you
Speaker 1: don't have to work at the office anymore. You can
Speaker 1: live wherever you want for another year than just that
Speaker 1: was just out today, right, and uh so, so maybe people,
Speaker 1: maybe people can believe that that great migration is happening. Um,
Speaker 1: but will the amount of people going out of work
Speaker 1: be too much to offset that? Yeah, that's a great question.
Speaker 1: And even let me just broaden your your thesis a
Speaker 1: little bit there, because that's a great question and it's
Speaker 1: one that definitely needs to be answered. Look, there is
Speaker 1: no doubt the economy is in crisis. The question is
Speaker 1: which trend is bigger? Is the trend of the economy
Speaker 1: being in crisis or the trend of the mass migration
Speaker 1: of people and money both of those things, people and money, Um,
Speaker 1: which trend is bigger? Well, I don't know the answer,
Speaker 1: and I've tried to figure it out, and it's very
Speaker 1: hard to figure out. But I don't know if we
Speaker 1: need to know the answer to that question. All we
Speaker 1: need to do is play in our little piece of
Speaker 1: that and we know for sure that there's a migration
Speaker 1: out of high density areas to low density areas. So
Speaker 1: people would rather live in Indianapolis, Memphis, Little Rock, Atlanta, Okalla, Florida.
Speaker 1: That's Florida by the way, Ocala, Jacksonville, any of these
Speaker 1: markets that we sell properties in, then they would in
Speaker 1: you know, New York City, downtown Chicago, and um, you
Speaker 1: know that is happening. So I don't know about the
Speaker 1: broader economy. I mean, we are certainly in trouble, but
Speaker 1: I think what what I would say is that you're
Speaker 1: you're right, Uh, you can't look at the broad economy.
Speaker 1: So all of that selling, that potential selling, is going
Speaker 1: to cause an impact. But again back to supply and demand.
Speaker 1: When people leave one area and mass leave a bunch
Speaker 1: of areas to go to a few a few areas,
Speaker 1: the supply and demand is going to offset that. And um, yeah,
Speaker 1: you have a lot of people losing their jobs, but
Speaker 1: there's always people gonna need the place to live, and
Speaker 1: so there's always gonna be segments of the market. Maybe
Speaker 1: the MC mansions are soft, but maybe the entry level
Speaker 1: homes are always gonna have high demand because someone's always
Speaker 1: going to be an entry level home. So you have
Speaker 1: to look at the areas, you have to look at
Speaker 1: the property types. You have to really dig into the segments, right, yes,
Speaker 1: you do. You have to. You have to peel back
Speaker 1: the onion people that make these silly generalizations about, oh,
Speaker 1: it's a terrible time to buy real estate. Well, you
Speaker 1: know what they said that night too. Would you like
Speaker 1: to own have owned some property that you purchased in
Speaker 1: ninety or night or two thousand and eight. You'll be
Speaker 1: doing great right now. Okay. They people always say that
Speaker 1: stuff because they make silly, sweeping generalizations. Um Mark, Right
Speaker 1: before we started today, you said something that was very
Speaker 1: very important. You talked about how people don't uh, they don't.
Speaker 1: You basically were saying that people don't buy a house
Speaker 1: based on the price, they buy it based on the
Speaker 1: payment and because the interest rates are so incredibly insanely low,
Speaker 1: where they're literally paying us to borrow the money after
Speaker 1: inflation and taxes. You're getting paid to borrow even if
Speaker 1: you never write your house out, okay, even if it's vacant,
Speaker 1: you're getting paid to borrow after inflation and taxes. Okay.
Speaker 1: So with that said, we're in an era of truly
Speaker 1: negative interest rates. You get that dead asset with the house,
Speaker 1: and if you look at the average mortgage payments, or
Speaker 1: you compare an apples to Apple's property in terms of
Speaker 1: what it was ten years ago, fifteen years ago. And now, yes,
Speaker 1: the price is higher, I get it, but the payment
Speaker 1: is lower, okay. So so real estate for most people
Speaker 1: has actually gotten cheaper okay, based on a payment. But interestingly,
Speaker 1: the rent has continued to go up, right even though
Speaker 1: the payment got lower for the landlord. So um, I
Speaker 1: want to dig into that a little bit. But um,
Speaker 1: just for the listeners, um that are that are paying attention.
Speaker 1: I wanna, I really want to talk about this great migration.
Speaker 1: And as you said, the great Wayne Gretzky says, skate
Speaker 1: to where the puck is going to be. You told me,
Speaker 1: don't chase the money, get in front of it, so
Speaker 1: you can make a lot of money chasing it too, right,
Speaker 1: smart money gets in front of it. And so I
Speaker 1: want you to tell us, uh and maybe show us.
Speaker 1: You said you have some charts of where what's happening
Speaker 1: with this great migration? And but before we jump into
Speaker 1: those lines, let's not. Let's not jumping up yet. So
Speaker 1: I want to get into I'm just telling the listeners
Speaker 1: I want to. I want to I want to. I
Speaker 1: want you to show us some slides and show us
Speaker 1: this great migration so we can understand where the puck
Speaker 1: is going to be. But before we do that, UM,
Speaker 1: I just wanted to dig into what you said real quick.
Speaker 1: And you said that interest rates are so low that
Speaker 1: we're basically getting paid to borrow. Now, interest rates are
Speaker 1: what two and a half percent or whatever? Um, And
Speaker 1: I understand what you mean, but most people probably don't
Speaker 1: follow that. So if I'm paying two and a half
Speaker 1: or three percent, what do you mean I'm actually getting
Speaker 1: paid to borrow. Let's say you're paying even more. Let's
Speaker 1: take the example, a real world example of one of
Speaker 1: our clients who just purchased the property and closed on it.
Speaker 1: And I had him, I interviewed him on my podcast
Speaker 1: and I talked about it. He's got a three and
Speaker 1: a half percent, three decade long mortgage, so literally he
Speaker 1: will not make the last payment on that mortgage he
Speaker 1: and his wife until two thousand and fifty. Okay, Like,
Speaker 1: think about that two thousand and fifty, three decades from now.
Speaker 1: In three decades, there will be about ninety million more
Speaker 1: people in the United States. And who thinks with all
Speaker 1: this money printing and all this quantitative using that we're
Speaker 1: going to have some inflation somewhere in there. Maybe it
Speaker 1: won't be right away. I get it, you know, I
Speaker 1: don't know when it will be, but it's coming eventually.
Speaker 1: It has to come. Okay, Like Milton Friedman said, and
Speaker 1: you know, people disagree with us, but he said it's
Speaker 1: a good quote. He said, inflation is everywhere and always
Speaker 1: a monetary phenomenon. And what that means is that when
Speaker 1: the printing press runs, when there's more supply of money
Speaker 1: chasing a limited supply of goods and services, prices have
Speaker 1: to go up. You talk about supply and demand a
Speaker 1: lot mark and you know you're you're a bitcoin investor,
Speaker 1: and you know that's one of the reasons I think
Speaker 1: you like it, right because it can't be inflated like
Speaker 1: dollar can. Right. So um to add to that, um,
Speaker 1: just real quick, Um, the Fed right there printing money,
Speaker 1: endless money, trillions and trillions of dollars and they said, uh,
Speaker 1: just recently, I think it was a week or two ago,
Speaker 1: they said, quote, they are going to let the inflation
Speaker 1: run hot. So what happens is typically as they're starting
Speaker 1: to get close to their two percent target, they start
Speaker 1: to taper down to slow it down. They said they're
Speaker 1: gonna run it hot, let it just run pat, which
Speaker 1: means they're gonna overshoot that too. And and as you said,
Speaker 1: what Milton Freema said, it's a phenomenon that I don't
Speaker 1: believe can be controlled. So if they're gonna let it
Speaker 1: run hot past two percent, it's gonna overshoot the ten
Speaker 1: percent or something. Who knows, right? So, Um, anyway, but
Speaker 1: go ahead and finish back with your example. So he
Speaker 1: pays pain three and a half percent, but because inflation
Speaker 1: will end up running as high as two and a
Speaker 1: half or three percent, the goals two percent. Um. Somehow
Speaker 1: that means that he's getting paid to borrow. Yeah. So, UM,
Speaker 1: just one comment before that on on your inflation comment.
Speaker 1: You know, um on shadow stats dot com, which I'm
Speaker 1: we haven't talked about it, but I'm sure that's a
Speaker 1: website you've referenced before. Um. John Williams, the founder, was
Speaker 1: on my show before, and he has a real inflation
Speaker 1: calculator on shadow stats, and people should go check that
Speaker 1: out and you will just see how inflation is much
Speaker 1: higher than we're being told five or six percent at least. Yeah. Yeah,
Speaker 1: but but that said, you know, the the FED and
Speaker 1: the government clearly state that their goal is to have
Speaker 1: two percent inflation. Okay, so let's just take them at
Speaker 1: their order and say it's two percent for this example. Okay.
Speaker 1: Mortgage interest is tax deductible. Okay. So if you are
Speaker 1: paying three percent or three sorry, three and a half
Speaker 1: percent on the mortgage, depending on your tax bracket, you know,
Speaker 1: state and federal tax combined, you're gonna have about one
Speaker 1: point five percent of that be deductible. Okay. I'm assuming
Speaker 1: there's no income against it. The house is vacant, you
Speaker 1: never rent it to anybody, which is terrible. Of course
Speaker 1: you're gonna rent it, okay, but let's say you don't, okay.
Speaker 1: So uh, and if you have two percent inflation in
Speaker 1: one point five percent tax deduction, okay, then you're getting
Speaker 1: the money for free. If you're paying three and a
Speaker 1: half percent, period, it's free money even if you never
Speaker 1: ever rent the house out. Now, if you rent the
Speaker 1: house out, you have got uh. The reason we love
Speaker 1: real estate investing is because we have what we call
Speaker 1: self liquidating debt. Okay, lookay, I love debt when I
Speaker 1: don't have to pay it when I can outsource the
Speaker 1: repayment obligation to someone called a tenant dead is awesome. Otherwise,
Speaker 1: I don't like debt at all. I mean, the only
Speaker 1: supposed debt I have is my car lease, and I
Speaker 1: do think the car lease is actually a decent deal.
Speaker 1: So I usually lease my car. Is not always sometimes
Speaker 1: I just buy them, but uh, sometimes I lease them.
Speaker 1: So my current car is on a lease and the
Speaker 1: rate is super cheap. Okay, so I think that's a
Speaker 1: good deal to lease the car. Um But the only
Speaker 1: debt I have is mortgage debt. That's it. Other debts
Speaker 1: are too expensive and they're not self liquidating. They require
Speaker 1: me to pay it. Now, if you think back to
Speaker 1: all these famous corporate raiders Ivan bow Ski, Okay t
Speaker 1: Boon Pickens who you know passed away recently, um Carl Icon,
Speaker 1: you know all these names we've all heard about, right.
Speaker 1: What they are sometimes famous for is what's called an
Speaker 1: l BO leveraged buyout, and that leveraged buyout basically is
Speaker 1: the technique where they will acquire a company and then
Speaker 1: the way they pay for the they levered up with debt.
Speaker 1: They put a lot of debt on the company, but
Speaker 1: the way they pay the debt back is through the
Speaker 1: company's own revenue that it generates. So it's a self
Speaker 1: liquidating debt. It's like it's like, you know, buying a
Speaker 1: cow and then paying for the cow with the milk
Speaker 1: the cow produces. Right, you don't pay for it yourself.
Speaker 1: It's only only half the milk it produces. Yeah, that's
Speaker 1: even better. That means that's called positive cash flow. Um. Yeah,
Speaker 1: that's that's a great example. So yeah, I mean there's
Speaker 1: there's all these things that are happening. Um, there's one
Speaker 1: more thing that I want to throw out there before
Speaker 1: we jump into telling you telling us where people are moving,
Speaker 1: where the puck is going to be. But the other
Speaker 1: thing that I think people need to keep in mind
Speaker 1: is that the future is uncertain. We have no idea
Speaker 1: what's going to happen. Um, I think we we have probabilities.
Speaker 1: We deal with probabilities, right, we don't. We don't. We
Speaker 1: don't make predictions. We deal with probabilities. The probability of
Speaker 1: inflation is extremely high. I mean, they're printing chillions of dollars.
Speaker 1: They're probably gonna print another tenant chillion before it's over.
Speaker 1: So the probability of inflation is really high. But there's
Speaker 1: another probability that people are are completely dismissing and they're
Speaker 1: automatically assuming that foreclosures are going to rock the entire economy.
Speaker 1: But there's no reason to really believe that because in
Speaker 1: two thousand and eight the government held off foreclosures for
Speaker 1: four years. Yeah, and we're already seen already. We've seen
Speaker 1: rent forgiveness, mortgage forgiveness, rent uh eviction forbearance, rent payment forbearance.
Speaker 1: So we've already seen it just in the beginning. To
Speaker 1: imagine how much more the government could do to just
Speaker 1: forgive payments or whole full foreclosures or whatever. They've already
Speaker 1: done it before, Why wouldn't they do it again? Absolutely,
Speaker 1: you're absolutely right. Look at the government. Um, no government
Speaker 1: and no central bank wants a bad economy. That's a
Speaker 1: bad deal for them. One thing we know for sure
Speaker 1: that they want is inflation, because inflation makes it cheaper
Speaker 1: for them to pay their debts off. And the US
Speaker 1: is in a very enviable position having the world's reserve currency.
Speaker 1: People like Peter Shifts saying, you know, the US is
Speaker 1: going to lose its reserve currency status. You know, he'll
Speaker 1: probably be right long after he's gone. Okay, I mean, yes,
Speaker 1: someday that may happen, sure, But the reality is, at
Speaker 1: the end of the day, the country that's going to
Speaker 1: control the reserve currency to the world is the country
Speaker 1: with the most aircraft carriers and that's the United States. Okay, Um,
Speaker 1: I mean the ability to wage war and you know,
Speaker 1: keep us interests are that's gonna win the day. It
Speaker 1: always as it always boils down to the military at
Speaker 1: the end of the day. Well, that's a whole separate
Speaker 1: conversation that we could definitely discuss because I don't know
Speaker 1: if we see that eye to eye, but um, that's okay.
Speaker 1: But either way, we agree that the government doesn't want
Speaker 1: these foreclosures. They've they've held them off before. They can
Speaker 1: definitely hold them off again. And so a lot of
Speaker 1: people don't see that. I think they're You're right, they're
Speaker 1: gonna have They're gonna have every which bailout, every program,
Speaker 1: every loan modification. You know, they'll they'll do another TARP program,
Speaker 1: the Troubled Asset Relief program type thing, and they'll they'll
Speaker 1: push the banks to do loan modifications. They'll push the
Speaker 1: banks to do short sales and workouts and whatever they
Speaker 1: need to do. Look there, there will be certainly an
Speaker 1: increase in foreclosures, but will it be in these little
Speaker 1: inexpensive bread and butter rental properties. I doubt it, I think,
Speaker 1: and I think, i'm i'm. I did a video about this,
Speaker 1: and I'm continuing to grow in my chances of probability
Speaker 1: this happen. And a lot of big name people Porter
Speaker 1: Stansbury and others are also saying the same thing. And
Speaker 1: there's a real chance we see a debt jubilee. Yeah,
Speaker 1: you can see massive debt forgiveness happening. That's not off
Speaker 1: the table by any means. So anyway, just keep that
Speaker 1: in mind. But let's let's talk about um that that aside, right,
Speaker 1: supply and demand. People are bailing out of a lot
Speaker 1: of areas creating too much supply, and they're going to
Speaker 1: other areas that are creating too much demand. You think
Speaker 1: you have some insider or I shouldn't say you think
Speaker 1: you do? You have some insight, you had some charts
Speaker 1: while you fill us in on that. Yeah, yeah, I'll
Speaker 1: share my screen with you. But one comment about that,
Speaker 1: this Standsbury comment, you know, in his his most recent book,
Speaker 1: it's about the debt jubilee. And remember something that the
Speaker 1: whole thing, it's always unequal. Everything is unequal. This pandemic
Speaker 1: is making a very uneven thing. Some people are getting rich, um,
Speaker 1: and some people are getting poorer. And it's really sad.
Speaker 1: It's always unequal. But if there's a debt jubilee, guess
Speaker 1: who benefits the most the people who have the most debt.
Speaker 1: So and and how do you get the highest quality,
Speaker 1: best debt in the highest quantity for most people, Not
Speaker 1: not a corporate rader like Ivan Bowski or whatever. Right, Um,
Speaker 1: you just buy properties because real estate is the most
Speaker 1: debt friendly asset class in the United States. It's the
Speaker 1: most tax favorite asset class in the United States, and
Speaker 1: I think it's the most historically proven asset class in
Speaker 1: the entire world. Um so um, I'll just share a
Speaker 1: couple of the migration trends I see, like Mark asked
Speaker 1: me to and um, what's uh screen, Yeah, that's a
Speaker 1: great point about the about the debt you know. Um.
Speaker 1: The one thing that I think everybody can easily see
Speaker 1: and agree to is that there's a real probability of
Speaker 1: having like a student loan debt forgiven, and uh, you know,
Speaker 1: I just think how unfair is that because how many
Speaker 1: people didn't take on debt the right way. Well, it's
Speaker 1: not fair to them. Now your debt's gonna be forgiven.
Speaker 1: And then okay, well I didn't go to college and
Speaker 1: now I've had to work a low paying job. Should
Speaker 1: you really should you pay me the difference of what
Speaker 1: I would have made if I would have gone, Like,
Speaker 1: it's unfair, but but it is what it is. And
Speaker 1: those who have the college debt are probably gonna get
Speaker 1: it forgiven, and so the same is true those who
Speaker 1: have mortgage debt. Maybe we'll get it forgiven. I know.
Speaker 1: That's why it's uneven. So if you want to if
Speaker 1: you want to get the benefit of the coming debt
Speaker 1: you believe, you believe there's gonna be one, then you
Speaker 1: should stock up on exceptionally low cost, high quality, investment
Speaker 1: grade debt that's attached to good income properties. That's the
Speaker 1: way to do that. So, yeah, it's totally unfair. You know,
Speaker 1: if there's a student loan forgiveness and you don't have
Speaker 1: a student loan, what are you going to get out
Speaker 1: of it? Nothing? Right, nothing, So anyway you can see
Speaker 1: my screen, right, okay. Good. So here we've got a
Speaker 1: tidal wave of the tsunami and that's what's happening. So
Speaker 1: I think there are six megatrends mark that are really
Speaker 1: adding to this, uh, that are going to be very
Speaker 1: Oh my gosh, it's so frustrating. I'm sorry. Here just
Speaker 1: a moment, no problem, we gonna edit this out. Just
Speaker 1: you know what what happened is as soon as I
Speaker 1: shared the screen, it clicked off and I couldn't see
Speaker 1: you anymore. So you don't worry what ed it it up? Yeah, okay,
Speaker 1: I'm okay. I may not be able to see you, Okay,
Speaker 1: So I'll just talk through this and and I gotta
Speaker 1: I gotta wrap it up in ten minutes for sure.
Speaker 1: And that's why I've been trying to kind of rush
Speaker 1: through it. No no problem at all, Okay, okay, so
Speaker 1: here we go. Oh wait, okay, so you can see
Speaker 1: my screen now, okay. So here are the six megatrends. Okay.
Speaker 1: And one of them is roommates. Okay. And this is
Speaker 1: one that really nobody's talking about, but about thirty plus
Speaker 1: percent of the United States housing market is roommates. It's
Speaker 1: it's people cohabitating in non romantic relationships. Okay, and most
Speaker 1: of these roommates are in urban areas that have expensive
Speaker 1: real estate. These also happened to be as I talked
Speaker 1: about earlier, these are mostly cyclical markets. Okay, So think
Speaker 1: about this conversation, Mark, I mean, we can all you know,
Speaker 1: maybe we've all had a roommate at sometime. And you know,
Speaker 1: you've got a couple of young professionals living together. They've
Speaker 1: got a two bedroom house and now they're working at home.
Speaker 1: They used to never see each other except to come
Speaker 1: home to sleep and say hi or by in the
Speaker 1: morning or evening. Right and they they go to work
Speaker 1: all day. They've come home, they'd run out and they'd socialize.
Speaker 1: If they're maybe single, Uh, they do that, or they
Speaker 1: go to the gym and um and and they hardly
Speaker 1: ever saw each other. But now they're both at home
Speaker 1: and they're both working at home, and one since the other, hey,
Speaker 1: you know, now that I'm working at home, I really
Speaker 1: need that bedroom as a home office. And then the
Speaker 1: other one says, you know, I was thinking the same thing,
Speaker 1: so they split up. Okay, that's thirty percent of the
Speaker 1: housing market that has literally doubled the demand. It's a
Speaker 1: one hundred increase in housing demand, it's from two, or
Speaker 1: it's from one to two. Okay. The same is true
Speaker 1: of the possibility. Okay. And this is a little sad
Speaker 1: of a divorce boom. Okay. I'm not gonna be able
Speaker 1: to go through all this in the interest of time.
Speaker 1: But some have talked about the COVID baby boom. If
Speaker 1: that's happening, then it you know, because people are together
Speaker 1: all with cabin fever, right, so they're gonna do what
Speaker 1: comes naturally. So if the COVID baby boom is happening,
Speaker 1: then that increases demand for housing. If the if the
Speaker 1: COVID COVID divorce boom is happening, then that increases demand
Speaker 1: for housing it too. And by the way, this is
Speaker 1: not a theory because it actually is happening in Wuhan, China. Well,
Speaker 1: and we know the number one reason for divorces is finances.
Speaker 1: So people lost their job, they get stressed out. And
Speaker 1: if I lead a divorce, we know that. And if
Speaker 1: they're on top of each other all day long they
Speaker 1: can't get an escape, that might even make it worse.
Speaker 1: So so there's lots of articles about the baby boom,
Speaker 1: the divorce boom due to these lockdowns. Okay. Um, we
Speaker 1: should realize that percent of the United States lives in
Speaker 1: what is considered to be an urban area. Okay, and
Speaker 1: that is a population of only two three people per
Speaker 1: square mile, whereas in New York City, just as a comparison,
Speaker 1: it's like twenty eight thousand people per square mile. Wow. Okay,
Speaker 1: So just think about the density. The two biggest zones
Speaker 1: are elevators and mass Transit impossible to socially distance in
Speaker 1: those places. So I see this mass migration from high
Speaker 1: density to low density suburban living. Okay. And you know,
Speaker 1: there's a lot of other data here. I'm just gonna
Speaker 1: pass this, but these are the types of markets. These
Speaker 1: are linear markets. This is from our website, uh, and
Speaker 1: these are markets that we're in. Okay. Um. So look
Speaker 1: at the increase in the number of households nineteen sixty
Speaker 1: to two thousand nineteen, and it just shows you how
Speaker 1: big this market is. Let's look at the urban dwellers. Okay.
Speaker 1: This is two d and sixty eight million people. Okay.
Speaker 1: And by the way, this is back of the Napkin math.
Speaker 1: So that's why the screen is literally a napkin. It's
Speaker 1: this is by no means meant to be completely scientific.
Speaker 1: It's rough math, okay, so please don't write the comments
Speaker 1: down below. Oh this math is not accurate. It's it's
Speaker 1: a concept. Okay. Uh So anyway, Um, these people cannot
Speaker 1: socially distance. Let's say only aten percent of them decide
Speaker 1: that they want to move to a safer environment. And
Speaker 1: by the way, I put all this here, before there
Speaker 1: was any civil unrest, this was just lockdown oriented, socially
Speaker 1: distancing oriented. Now these same places have riots in the streets,
Speaker 1: many of them, okay, most of them actually. So, Um,
Speaker 1: if you have this fifteen percent, okay, these forty million people, okay, Um,
Speaker 1: that's twenty million suburban units needed. Okay. And if you
Speaker 1: spread that out, okay into uh what did I do
Speaker 1: as another calculation? Hang on, there's another napkin coming, okay. Um,
Speaker 1: So let me just tell you about apartments for a moment. Okay, Um.
Speaker 1: There are three classifications of apartments. Okay. There's low rise
Speaker 1: or garden style apartments, and those are up to four stories.
Speaker 1: There's mid rise, which is five to twelve stories, and
Speaker 1: then there's high rise, which is twelve stories and above Okay.
Speaker 1: So anytime you're really over three four stories, people are
Speaker 1: using an elevator, okay, and um for mid rise and
Speaker 1: high rise, this is just rental units. It doesn't include condos. Okay.
Speaker 1: There If you combine those two, they're about two point
Speaker 1: three million of those in the United States. Okay. So
Speaker 1: if we only count fifteen percent of those as potential
Speaker 1: movers only, and I say, the number is going to
Speaker 1: be a lot higher than that, but let's just be conservative.
Speaker 1: That's three forty thousand homes needed. If you divide that
Speaker 1: into fifty suburban markets, that's basically seven thousand additional homes
Speaker 1: needed in each of those suburban markets where long before
Speaker 1: anyone ever heard the words services sickness, as our friend
Speaker 1: likes to say, okay, um, there was a housing shortage
Speaker 1: in all these markets. All okay, So that's seven thousand
Speaker 1: is a big number. And remember this is only renters.
Speaker 1: It doesn't include condoms. Okay, this is only rental units. Um.
Speaker 1: Combine that with a few other trends. And by the way,
Speaker 1: that's from the Yardy matrix. Look at what happened as
Speaker 1: the pandemic broke. This is the Google search term work
Speaker 1: from home. Look at how it's skyrocketed right as as
Speaker 1: the people started socially distancing. Okay, carl Icon, big corporate radar.
Speaker 1: I talked about shorting commercial real estate. Um, and there's
Speaker 1: the remote workers. Demand for office space has totally fallen
Speaker 1: off a cliff. Uh, here's the roommate discussion again. There's
Speaker 1: then the family discussion. Okay, think of your typical family
Speaker 1: for two adults to kids. Now, both adults are working
Speaker 1: at home and the kids are home from school because
Speaker 1: school has been canceled, so the kids have got to
Speaker 1: study from home. If they lived in a in a
Speaker 1: in a two or three bedroom house, four, think of it.
Speaker 1: They need several extra bedrooms now, assuming they don't even
Speaker 1: have a room for a home gym or anything else. Right,
Speaker 1: So there's a lot of additional demand for typical suburban housing.
Speaker 1: The gyms have clothes, and you know it's not just
Speaker 1: remote work, but I say it's remote working out. This
Speaker 1: is a serious deal. I mean, you know, millions and
Speaker 1: millions of people go to gyms as a normal course
Speaker 1: of their life and they basically can't do it anymore.
Speaker 1: So a lot of trends there. Um. And the last
Speaker 1: one I'll say is multigenerational living. Okay, there in the
Speaker 1: US there are twenty eight million people over seventy years old.
Speaker 1: This is the graying of America trend that has been
Speaker 1: talked about for decades. And um, those people, it's not
Speaker 1: safe to have them in a nursing home anymore or
Speaker 1: an assisted living facility, and so uh they they're going
Speaker 1: to be living at home more and more often in
Speaker 1: the same housing unit or near to their children. This
Speaker 1: is the sandwich generation where you know, the person who's
Speaker 1: in the middle age of their life has children of
Speaker 1: their own plus But does that does that compress the
Speaker 1: housing instead of expanding it. So, for example, that older
Speaker 1: person who would typically move out of that house and
Speaker 1: go to assisted living home, now they're staying in their home.
Speaker 1: And now maybe the families moving in with them, So
Speaker 1: maybe they're compressing their homes instead of expanding. They might
Speaker 1: be that that's certainly possible, but most of the time,
Speaker 1: neither party has a house that's big enough for everybody.
Speaker 1: And look at this is not a common thing in
Speaker 1: the United States, but it's totally common around the world.
Speaker 1: Go to Europe and Asia, South America, people live with
Speaker 1: their parents. This is not unusual at all. Okay, it's
Speaker 1: just the US that's, you know, and so prosperous for
Speaker 1: so long that people haven't had to do multigenerational living here.
Speaker 1: But you know this, I think this trend adds to
Speaker 1: demand for larger suburban homes Okay, and it moves people
Speaker 1: out of the cities even more so. Okay, So that
Speaker 1: pretty much wraps up most of the trends. I know
Speaker 1: there's a lot more to it. I haven't had time
Speaker 1: to discuss, but I just thought i'd touch on it. Yeah,
Speaker 1: and we could keep digging in and digging in, but
Speaker 1: I know your time is short and I appreciate everything
Speaker 1: that you've been able to give to us so far. Um,
Speaker 1: so you know we can we can keep digging in.
Speaker 1: We'll have to have another conversation about it. Of course.
Speaker 1: If anybody likes these topics and wants to know more,
Speaker 1: they should go follow Jason. I think your YouTube channel
Speaker 1: is Jason Hartman. What's the best way for people to
Speaker 1: follow you? Yeah, you can my YouTube channel. It's nothing
Speaker 1: compared to yours. But I'm trying to catch up to you.
Speaker 1: I'm chasing your success and uh and so I'm on YouTube.
Speaker 1: Just look up Jason Hartman and you'll find it and
Speaker 1: uh and then I've got a podcast called The Creating
Speaker 1: Wealth Show that is very popular. That's one of the
Speaker 1: oldest real stayed investing podcast I've been running down for
Speaker 1: about fifteen years now. And my website Jason Hartman dot com.
Speaker 1: Yeah cool. Well, so much good information. I hope that
Speaker 1: everybody realizes that this is a much bigger thing than
Speaker 1: what you maybe kind of just focus on, and that
Speaker 1: that's really the point um and you need to learn
Speaker 1: to look at things from a bunch of different angles.
Speaker 1: So hopefully that makes sense. And that's it. That's what
Speaker 1: we got for you guys today. So to your success. Hey,
Speaker 1: thanks so much. Happy investing everybody, and be safe and
Speaker 1: stay well. Thanks Mark