1852: Inflation PANDEMIC- The Problem of our Lifetime, Jason Speaking in Dallas, Empowered Investor Pro

This show is produced by the Hartman Media Company. For more information and links to all our great podcasts, visit hartmanmedia.com My name is Jeremy. I'm a big supporter of Jason Hartman and grateful to Jason for a lot of what I've learned over the last four years. I can attest to him. We've had some good success using the strategies, being a little more conservative on some of the decisions. So we've purchased a couple of properties through Jason's network and just really feel like I owe a lot to Jason and the team for the education part.

Welcome to the Creating wealth show with Jason Hartman. You're about to learn a new slant on investing, some exciting techniques and fresh new approaches to the world's most historically proven asset class that will enable you to create more wealth and freedom than you ever thought possible. Jason is a genuine, self made multimillionaire who's actually been there and done it.

He.

He's a successful investor, lender, developer and entrepreneur who's owned properties in 11 states, had hundreds of tenants, and been involved in thousands of real estate transactions. This program will help you follow in Jason's footsteps on the road to your financial Independence day. You really can do it. And now, here's your host, Jason Hartman with the complete solution for real estate investors.

Hey, empowered investors, welcome to episode 1852. 1852. And yes, you can make fun of my new haircut if you're watching me on video. You know, I departed from my usual great clips haircut visit and Instead of paying $15, I paid $45 and got a good haircut. But I don't know if this is so good. They, they took a lot off. I mean, where's my hair? But it actually does look a little better because there's not much to work with. And oddly, when your hair is shorter, it sort of looks fuller in a way. I don't know. It's a com. You know why? Because everybody's mind automatically asks the question when looking at something.

Compared to what?

Life's most important question. The Jason Hartman question compared to what? There you go. So when you're losing your hair, if your hair is shorter, it actually looks fuller.

It's a paradox.

Yes, it is a paradox. But anyway, yeah, I don't know if.

I'll pay $45 again.

May not be worth it. Not sure. Not sure. But what do we have today? So today we have a bunch of exciting stuff on tap for you. And, and we will start with the quote for the day. You've probably heard this before. From me, Income Property is the most historically proven asset class in the world. In fact, I usually say it a little differently, but for this social media meme, I said it this way. Income Property is the most historically proven asset class in the world. And I really challenge anybody to challenge me on that, because it is true. In fact, if you look at the past few months, you'll notice that Income Property is far and away the best performing asset class in the entire world. I mean, compared to what? Stocks, bonds, cryptocurrencies. There just ain't nothing that comes close. The only time you can beat it is is with a great business success story. A business could outperform Income Property, but again, highly volatile, highly risky, and demands tons of attention. Businesses are very needy creatures, for sure, but I like it. Maybe I'm a glutton for punishment. So this cute dog that you see on the screen went to Dallas with me recently, and I did a couple of speeches there. Actually, I did three of them, and one of them we're going to share with you today. So here she is waiting for the plane at the airport, and we go to Dallas, do this speech. Now, we edited this one down. Ashley took a knife to this reel and edited way down, so we're not so redundant. And we just got the main points of the speech. The rest of it is on the cutting room floor. Or actually, I guess it's in Ashley's computer today as it goes. Okay, so inflation, the topic of. I was going to say the year. It's really the topic of our lifetimes. And I mentioned this, I think, last week, but here's the article on it. Can you imagine if you lived in Turkey? Turkey is a pretty developed economy. It's not a backward country. Totally in every way. In some ways, I think it is a bit. Of course, they've got this dictatorial tyrant running a place. Erdogan. Erdogan. What's his name? Erdogan. Yeah, I guess he's still there. Right? Unless I'm out of date on this. But inflation has run rampant in one country. The cost of living is up almost 70%. That's almost double. Can you imagine the devastation that has caused to people's lives? Just awful. Just awful, awful devastation. And it's going to do the same thing in the United States. Inflation can be a lot lower than 70%, as you know, and still cause devastation to a wide swath of a population in any given country. And that's what's happening in the US Gasoline prices are absolutely out of control. Absolutely out of control. Look at this. In Turkey, right, like many other countries, Turkey is facing rising inflation caused by factors such as the pandemic and the war in Ukraine.

You know, I really don't like the.

Way they call that the war in Ukraine. They should call it the invasion of Ukraine because that's what it is. Unlike other countries, Turkey has responded by cutting interest rates, not raising them. That's interesting. Mostly as we're doing here in the US they raise rates to try and cool the economy, but in Turkey, they've done the opposite. And the result has been what one analyst calls a spectacular failure. Official figures released Thursday show that the inflation rate has soared to 70% in April with the cost of food and non alcoholic drinks up 89%. So that's the overall inflation rate of 70% for cost of living, but food and non alcoholic drinks, the necessities up 89% and prices of transportation sector up 105.9%. So we'll call it 106%. This is just unbelievable. Unbelievable. And in the US we're not terribly far away from that. But I'll tell you, as the inflation pandemic, which really is what it is, it's an inflation pandemic, certainly a word we've all become familiar with over the last couple of years, hits the world, the US Will be better off than probably any other country on earth. Ah boy. We're going to talk about this tomorrow. We've got our Empowered Investor Pro. By the way, we changed the name of this used to be called the Inner Circle. We wanted to shorten it, make it a little more catchy. So we called it Empowered Investor Pro. We changed the name. First Tuesday of every month we have a Zoom meeting with our members and that is tomorrow night. If you're not a member, go to empoweredinvestor.com and join us because we'd love to have you on the agenda for tomorrow. I'm going to answer questions and respond to any needs for assistance with people's property portfolios. We've got a new lender, a guest to EI Pro who's going to talk about some unique angles on the mortgage market and answer questions. We're going to talk about getting business credit for your LLCs. This can be a way to not impact your FICO score, but get a lot of additional credit that you can use to buy wholesale properties for down payments on long term. Buy and hold cash flow, hold properties. Our investment counseling team will be on hand to discuss the changing markets market and we have a bonus Zoom meeting. For the folks that attended our Jacksonville event just about two weeks ago. We've got a bonus zoom meeting on Wednesday, so be sure to look for an email on that if you attended our Jacksonville meeting. We're going to talk about tech and our Empowered Investor Pro members are invited to that as well. We're going to talk about some cool real estate tech that allows you to find motivated sellers. And again, this is for people want more hands on approach to investing, less passive approach and who want to get in there and create a business out of investing or a side hustle and potentially become partners with us where you can sell properties through our network and make some very handsome profits on that. By the way, I'm almost wondering if that's a politically incorrect thing to say handsome profits? Are the PC trolls out there on that one? Handsome usually refers to males. What about beautiful profits? Okay, what about non binary profits? I don't know. I don't know how to say it folks. Pardon my ignorance, so go to jasonartman.com ask and correct my ignorance on that one. Okay, so another inflationary pressure in the wings here and that is the unemployment rate and the labor force participation rates. You probably know already, but companies, businesses are desperate to hire people. Now it's interesting because we have some cross currents here and we have some big tech companies. These are these overfunded companies that really didn't have a real business in most cases announcing hiring freezes and and in some cases even announcing layoffs. So if you're looking to hire tech people like I am for my software company, real estate tools and property tracker might be a better time. Finally there will be some relief maybe, and you'll be able to hire some people. But overall the job market is super, super tight. Look at this chart. If you're looking on video, this is us. Job openings remained right remarkably strong in April, indicating a persistent tightness in the labor market. Yes, companies desperate to hire people and unemployment rate, extremely low labor force participation rate. It's just showing incredible, incredible tightness on every aspect. Here's another chart showing the ratio of unemployed workers to job opening, right? So how many job openings are there and how many unemployed workers are there? Well, not many. Okay, Lots of job openings. Not many people who are unemployed able to take advantage of those job openings. Here's another chart about the dollar. And this really is a compared to what question? If there ever was a compared to what question. Because for all of those doom and gloomers out there talking about the dollar losing its reserve currency status, the dollar Declining. Yeah, I'm talking to you, Peter Schiff and the others. You've just absolutely been so wrong, Wrong, wrong. We need to point that out with punctuation. Wrong, wrong. Yeah, You've been so wrong about the dollar. And I've been so right about the dollar. Yes, I have. Because it's all relative, folks. It's all relative. That's the thing. This is all a compared to what issue. And the dollar strength is answering the question, compared to what? Compared to the yen, the euro, the peso, the Brazilian real.

What? Compared to what?

What other currency is going to do better than the dollar?

The ruble?

I mean, folks, this is only a compared to what question. That's all it ever is. All fiat currencies are nothing but a race to the bottom. No question about that. But when you have the reserve currency and the biggest brand of the world has ever known, the American brand is the biggest brand of all time. Certainly bigger than Coca Cola or any other brand, or bigger than Disney, bigger than whatever, right? The America brand. And that is a brand and the largest military the world has ever known. You're going to keep that reserve currency status come hell or high water. And that's just the way it is. And it's not going away anytime soon. Okay, our raffle winners, our giveaway winners for last week. We've got YouTube commenter Brooklyn soccer. Brooklyn soccer. You've won a $50Amazon gift card. The comment was love, content and delivery, Jason. Good stuff. That makes you think wider, for sure. Could you do a feature episode on rent control localities as compared to historical housing supply? Brooklyn Soccer. That's a good question, a good idea. So thank you for that comment and we will look into that. I love your ideas. This is how we get ideas for future segments, future content. So keep them coming. And by the way, always go to jasonhartman.com ask with any questions you have, any comments you have, any feedback you have, and also you go to the same place to claim your prize.

Okay.

For the Apple podcast review, $50Amazon gift card winner for the week. Interested in real estate? Subscribe now. Jason does an incredible job explaining the benefits and strategies associated with real estate investing. And this handle is E train 7273. E train 7273. You are a winner. Go to jasonhartman.com ask okay, let's get to the abridged version of my speech recently in Plano, Texas.

How many of you think there is a housing bubble? You gotta be kidding. Really? Wow. Okay, so this is an Optimistic group, Right. Aren't you watching any of the doom and gloomers on YouTube? I mean, they've got clickbait titles, they've got charts and graphs and they're constantly talking about how the sky is falling. You're not watching this stuff. Come on, where's the negativity? Okay, all right, so let's dissect this stuff. You know, it just drives me crazy when you listen to these people in the mainstream media or you see the real estate specific people on YouTube and they're talking about this, that and the other thing. And you know, the market's always going to collapse. It's always the end of the world. And you know, this market has been going for a long time. Time. How long can it last? I mean, how many are familiar with the, the term the business cycle from Austrian economics? Right, the business cycle. And before Trump got elected, you know, a lot of people were talking about how the business cycle is coming to its end. It's going to flip on him. And this business friendly president is really going to suffer in his term as president because the business cycle is going to change. Change. But a lot of them, and what I was talking about on my podcast at the time is how a lot of them weren't really evaluating that properly because they were evaluating from an artificial low point during the Great Recession. I mean, think about it. That's the worst economy we had in over seven decades, right? The 2008 Great Recession. And really that happened in two parts. Most people think it was just one thing. They blame it on real estate. They talk about the mortgage meltdown. Now, that was part one of the Great Recession. And I actually predicted that. Other people predicted it. I remember doing conferences and seminars back in 2004 when I was like six. Okay. And when I was doing that, I was getting into arguments with realtors that were constantly talking about how you're, you're wrong, you're wrong, you're wrong. That was so easy to predict the part one of the Great Recession. Why was it easy? Because you could simply look at the number of adjustable rate mortgages that occurred during that time and how people got these teaser rates and they got three or five one arms, they locked them in and then the rates fully adjusted to the fully indexed rate. And of course, there was a massive payment shock. That was easy to predict. That was not hard at all. The hard part was the sham that was going on after that with Wall Street. Part two of the Great Recession after the mortgage meltdown. And that's when the Wall Street Criminals were basically packaging these loans. And that's what the movie the Big Short is about, right? How many of you read the book or saw the movie? Right, okay, so we all know the story there, but that was really a two part thing and that's what's important to understand about that. Okay, so predictions. Predictions are a dangerous business and I'm going to attempt to make some today. You know, back in 1485, I just learned this the other day. Leonardo da Vinci invented the parachute. The highest building in 1485 was the Leaning Tower of Pisa. A parachute wouldn't have worked from like 132ft or whatever that is. It's not very high by today's standards. We couldn't fly in 1485, but someone invented the parachute. Just think about that. Crazy, huh? Then they actually rebuilt this parachute from the materials available at the time, and it worked. But the question is, are we at a turning point in the market? Market? Well, maybe. Definitely maybe, right? Is it a red light in terms of investing, a yellow light or a green light? What are the headwinds? What are the things that really could hurt the real estate market? Obviously the thing we're all thinking about the past month or so is rising mortgage rates. Also, we've had a huge mass migration occur where people have moved to suburban and rural America. And this remote work thing, it was a big deal. It's still a big deal. But compared to the amount of migration that has already occurred, I think it's fair to say that it's slowing a bit. And in the socialist places like the Socialist Republic of California, my former home and, you know, I'm glad to say former, all of these restrictions on freedom have really kind of dissipated. Thank you to the Canadian truckers and all the people who fought for freedom. So these places have actually become a little bit more desirable than they used to be during the really severe parts of the lockdowns, inflation in commodities and virtually everything else. Now this is actually a good thing for us as real estate investors, right? We actually love inflation. Not for the reason most people think, necessarily. Most people think, well, real estate's a great hedge against inflation, right? The price of housing will go up at a rate equal to or maybe hopefully greater than inflation. Sure, that's fine. But there's a hidden wealth creator. And if any of you follow my work or follow me on YouTube, podcast or whatever, you know that I created a phrase, it's kind of a mouthful. It's called inflation induced debt destruction. And this is the hidden wealth creator in Real estate, it's the really powerful thing. So you look around the world though, there is a bit of some slowing demand for these commodities as China really came into its own over the past 20 years. They were just sucking up materials, concrete, copper, all these ingredients of houses. And they were building like crazy. But we are seeing a slowdown in this, a dramatic slowdown. And if you look at countries like Russia and Japan and Western Europe as a region, right, they're literally not having any children. And folks, in 50 years, Japan, I wonder if it'll even be a country, if Russia will even be a country. You can't have a country if you don't have kids. You got to have people to have a country, period, right? And so this narrative from the wacko left has been, you know, people are the scourge of the earth and we gotta have less people, right? And this all started in the 60s and 70s. It's a completely false narrative. And Elon Musk realizes it. You heard him say it. If you caught this clip of him, he says, we don't need less people, we need more people. How many of you hire people have you noticed? There's a shortage, There's a huge shortage. How many of you are customers of other businesses? Everybody, of course, right? You go into another business, nobody answers the frickin phone anymore. There's nobody there to wait on you. Even hotels like this, you know, they operate these hotels on like skeleton crews. There's just no people anymore. They're trying to automate everything. You can't blame them, right? But this is a tailwind or a headwind for sure, right? Political pressure for rent control. Obviously, initially this is a headwind for housing, but ultimately it's probably good because in every rent controlled place, what do we have? We have a bigger housing shortage. So in the long term, actually this might benefit you, okay, if you own the properties, right? It's a hassle. I know the central planners try to fix the problem. They always it up. Look at New York, look at San Francisco, right? It's a disaster. The only solution to the housing shortage is to let people build more houses. That is the solution, period. There's no other discussion about that. You have to build more houses. They have to ease up on zoning requirements. They have to make it easier for builders to build things. That is the only solution, full stop. Okay? Anyway, I want to ask this guy some questions. So he talks about the foreclosure moratorium and says, look, had the foreclosures been allowed to happen, there wouldn't be a housing shortage. This housing shortage is fake. It's all created by the government. And I'll be the first to admit the government massively distorts markets. No question about it. Central planning does not work, period. It never works. It's never worked anywhere in the world world. It's never worked at any time in history. It's an absolute disaster every time. And it hurts the people. They always say they're trying to help. That's the reality of it. So he says, look, there's this shortage, right? And if the foreclosures were allowed to happen, there would have been about 700,000 foreclosures that would have happened had it not been for the moratoriums. Okay, fine, here's what he doesn't tell you is that these foreclosures would have happened over time, over the last two years, and so would the buyer demand, and they would have been absorbed. There's this huge leap in logic here that says, okay, you just take 700,000 and poof, add it to the existing low inventory and then you get the right inventory. Like some snapshot in time. That's not the way markets work. They happen over time. They happen every day as everybody, everybody makes decisions in the market. Here's another part of this false timeline comparison. And you know, everybody will constantly say this type of stuff. And since I've been working with investors for the last 18 years, okay, and I've heard their narratives over and over and all their concerns and you know, you have too. And you've probably thought a lot of these things yourself, right? So in 2010, we were two years into the Great Recession. Properties were super cheap. Buyers with confidence were buying properties then. And everybody was saying, oh my gosh, how long is the recession going to continue? How long is this down market continue? I got to wait, right? And then in 2015, they were saying, wow, you know, the Great Recession happened seven years ago. The market's been going up since then. This has got to be a bubble. I'm going to wait in time the market, right. You know, we, we all think this ourselves. I know we do. I certainly do. And we all hear this from other people. So here they say 2020. Well, you know, prices are low comparatively. I mean, they're high historically, but you know, it feels pretty cheap. And we have the lowest rates in 5,000 years. Yes, you can go back and get a 5,000 year history of interest rates, believe it or not. Now here's a false comparison people make all the time. They say, well, rates are double What? They were at their lowest point in 5,000 years. It must be bad. But they're still cheaper than they have been in decades, right? Of course there are little blips down in between, but overall they're very cheap. Right? Red hat housing market. The crash has got to be coming. So we heard this last year and today we have these higher rates and people are saying, well, they're going to time the market, they're going to wait for the crash. Even a broken clock is right twice a day. There will be a crash. There's no question. I'm not denying that. I'm just saying that I think this market's going to last for a while. Take a look at this. This is the percentage of disposable income that people have and how high their mortgage burden is compared to their disposable income. It's not as low as it was at one point. Sure, it was cheaper when we had the lowest rates in 5,000 years and before housing prices really took a climb because of those low rates. It's not as good. But compared to what? It's still cheaper than it has been in a long, long time, even with the higher interest rate rates. So this debt burden is not that high yet. Now every deal looks good in the rear view mirror, doesn't it? I mean, think of the houses that you thought you were paying too much for two years ago, five years ago, 10 years ago, 20, 30 years ago. They all look cheap today, right? And that's the reality, by the way. This was a meme from the Canadian truckers. Freedom is closer than it appears, right? Isn't that great? The rearview mirror. But deals always look great in the rearview mirror. They never look great initially. We always are concerned we're overpaying. Now here's another thing you're going to hear about that's going to freak you out. This is coming, okay, in the news media. They're going to talk about all of these people who bought new construction homes. And as they bought these new construction homes, they qualified based on a mortgage around 3%. And most people, right, they max out the amount they can purchase. Do you agree with that? They pretty much buy as much home as they can afford, right? Okay, so there are going to be a lot of cancellations on builder contracts and the media is going to report this and all the doom and gloomers are going to report this like, oh, the market's collapsing, it's the end of the world, et cetera, et cetera. But it's not, here's why Those builders that are going to take nine months to build a house or 12 months to build a house, that locked in these buyers. But the buyers couldn't lock in their rates that long. And guess what? The lenders are finding reasons not to honor the rate locks anyway. These disgusting, unethical lenders are doing that. And they're saying, well, you can't qualify, or they'll find some way not to honor that cheap rate even if it was locked in. Right. We're seeing a lot of that now, unfortunately. But these buyers will cancel, and everybody will think the market is over, and everybody will think this is the end of the world. But here's what they won't tell you. If the first time buyers locked in their mortgage at 3% and they bought a $300,000 house, what they won't tell you is, yes, they won't qualify anymore and they'll cancel. That's true. But there's another buyer that locked in a $400,000 house at 3% above them. And if you look up into the market, you realize that that buyer also will cancel, and they will simply adjust their expectations down and they'll buy the $300,000 house. And this is what is never reported. There's a thing I say on my podcast a lot, and it's a really important thing to think about in life and everything. You can't hear the dogs that don't bark. You can't hear the dogs that don't bark. Think about. True, that is, in so many parts of life, people never pay attention to what doesn't happen happen. We only tend to pay attention to what does happen. But sometimes what doesn't happen is way more important than what does happen. Just something to think about in every area of life. So where are we now? Last year, the average homeowner gained over $57,000 in equity. That was a 31% increase, totaling about $3.2 trillion. Just to be, you know. Compared to what? To answer that question, how much is 3.2 trillion? I doubt any of us have that much money. Even Elon doesn't have that much money. But the GDP of the country is just over 20 trillion. So 3.2 trillion. Right. That's a comparison. The amount of output the United States does every year is a little over $20 trillion. So 3 trillion is a big deal. That's a lot of money. Lot of gain in homeowner equity. I posted this on my social media the other day on Facebook and Insta. I hate Facebook. I mean, I love the Software, but I hate the people that run it. So this is a good thing. It really sums it up pretty well. And I bet all of you intuitively know this. Let's say there are a thousand buyers who can afford a home with a 3% mortgage and 800 who can qualify at 4%, but only 600 at 5%. None of this matters because there's only 100 homes for sale, right? And that's the market we're in. Does everybody agree with that? Does that make sense? You intuitively know this, right, because you're operating in the business, but buyers don't understand this. So show buyers that meme. I think it's a good one. We started the year off with the lowest housing inventory ever. Ever. That was 241,000 homes for sale. Right? Now, as of about three weeks ago, we had 293,000 homes for sale. Compared to what? Well, the experts will tell you we need about 900,000 to 1.5 million homes for sale to be in a quote, unquote, normal market. That's normal. That's not a down market. It's not a bad market. It's a normal market market. So all we really have to do to know where the market is going is just watch the inventory numbers. But I want to caution you, because it depends whose data you're counting or looking at. National association of Realtors has a different way of calculating the inventory numbers. If you look at their charts, they will give you a much higher number. Why? Well, I had Lawrence Hume, the chief economist for nar, on my show just about two weeks ago, and he explained it. NAR counts the pending sales and the contingent sales. Altos Research only counts the properties for sale. That's why there's a big discrepancy in the numbers. So you got to really, really drill down on this data to understand the differences. We are commodities investors. Unless we're buying vacant land, we're commodities investors. Here's another thing almost nobody's talking about. I literally, for the first time ever, and I consume a lot of this news. Three weeks ago, heard one person mention this, and I've been mentioning it for two years. It is the looming housing shortage. I know you're saying, but, Jason, isn't there already a housing shortage? Yeah, there is, but it's going to get worse.

Why?

Because tens of millions of people have either purchased or refinanced their homes with the lowest interest rates in 5,000 years. 5,000 years. And guess what? They think their home is the asset and the mortgage is the liability. I would argue that the mortgage is the asset. And, and the mortgage cannot be moved to a new house. And there are no deals on money. Money is priced very efficiently around the world. Yeah, you know, you can get an eighth of a point difference with one lender versus another. But money is pretty much, there's no deals. You can't bargain and get a better deal on money. It's pretty much the price is the price. Okay, so people will hoard these houses and they won't sell them. They will beg, borrow or steal to stay in these houses. They will take on roommates if times get tough. They will move their parents in if times get tough. They'll move their kids in if times get tough. Well, they're probably already doing that if their kids are millennials, because, you know, millennials don't move out till they're 45. Okay, so anyway, they're going to hoard these houses. But guess what? 40% the homes in the country are paid off. And guess what? People with paid off mortgages tend not to go into foreclosure. So where's the big foreclosure crisis going to come from if only 60% of the people have mortgages in the first place at the lowest interest rates in 5,000 years? These people are going to hoard their houses and they're going to improve their houses. They're going to add on a bedroom, they're going to remodel the kitchen or the bathroom. How many of you are in the construction business? This is a big market for you. How many of you own stock in Home Depot or Lowe's? Might be okay, right? I'm not a stock market guy, but you know, I'm just saying the home improvement thing is gonna gonna be a big deal going forward. Always ask compared to what? That's life's most important question. The action items are have the right philosophy, the right thinking about this stuff. Obviously invest in the right assets. You're all doing that already have the right capital stacked use inflation induced debt destruction with those long term fixed rate mortgages in the right linear markets. As I always say, invest in places that make sense so you can afford to live in places that don't make any sense. Thank you so much for listening. Please be sure to subscribe so that you don't miss any episodes. Be sure to check out this show's specific website and our general website, hartmanmedia.com for appropriate disclaimers and terms of service. Remember that guest opinions are their own and if you require specific legal or tax advice or advice in any other specialized area, please consult an appropriate professional. And we also very much appreciate you reviewing the show. Please go to iTunes or Stitcher Radio or whatever platform form you're using and write a review for the show. We would very much appreciate that. And be sure to make it official and subscribe so you do not miss any episodes. We look forward to seeing you on the next episode.