2276: The Landlord-Friendly Era: Navigating Higher Rent Prices, Household Incomes, Housing Supply and Inflation in 2025

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In the.

Past six months, taken massive action, and that has not always been my MO So I'm extremely thankful. I think this group has helped me shortcut some of those decisions and taking action. And that's really ultimately what it's about. I think that learning through taking action. And so I'm just very thankful for being able to do that and learning along the way, trying to hold on. And this group has been a big part of that.

So thank you.

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'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.

These are actually the real original. I have them in my office here. The left pile was all the loss that had to be repealed and the right pile where all the laws had to be changed. So I took to milei these two piles that you're seeing here in this picture and we started discussing all the reform program. So basically what we did is we cut 30% of the government structure, you know, the kind of the amount of agencies and.

Positions in the issue, we cut that kind of very quickly. Now moving into 24, we go into what we call the Chainsaw 2.0, which we call the deep chainsaw. Okay, so what is the deep chainsaw? We basically did this exercise in the cabinet that we asked ourselves, what should a libertarian government do or not do? We said, is this something that the private sector can do? Then we shouldn't do it. So we say housing. We don't think the national government should build houses. So basically we are eliminating all the area in the ministry which has to do with housing. If we're actually going through the whole government and asking people, what do you do? And when they answer us what they do, we check if it's in the list of things that we think a libertarian government should do or it's in the list of things that we think the libertarian government should not do. If it's not, if it's in the not to, then we close the area, we shut down the area and then we move on. Imagine that Elon Musk would call me and say what recommendation I have. I would say the thing is not making efficient what you have. The question is asking yourself if this thing the government is doing should be there or not. So you have to ask yourself first a deeper question before you actually tackle the idea of actually simplifying or improving the efficiency. So I talk about the regulation as a pro small firm, pro business, anti corruption. But we think freedom is a value to be aimed for on its own merits. The fight for freedom is tough, but it's worth it. So we're having a time of our best.

Welcome Empowered Investors. This is episode 2276 and today I am coming to you from Bogota, Colombia. It is my first time here in Bogota, Ty, and I'm glad to be with you. So today we have a whole bunch of things to cover and two amazing, incredible, incredibly rare things that two different state governments are doing that are going to blow your mind and affect your real estate portfolio. Oh, just wait. This is good. This is really good. It's really big and it's really rare. So let's get into it. First of all, I want to re invite you to Empowered Investor Live. Thanks to all of you who have purchased tickets already. For those of you who haven't, do not miss out. We've got yours truly. We've got Mike Maloney for the first time coming to our event as one of our keynote speakers. He is an expert on monetary policy, monetary history. Just super fascinating guy, of course. Sharon Lecter, keynote speaker, returning to the event. You all know her of Rich dad fame and she has written many, many other books outside of that series, which are fantastic. And then Tom Wheelwright, Rich Dad, CPA and advisor, always has the greatest, most creative tax strategies and a lot of stuff is changing with the new administration, tax wise. So you must be at this event. We're in Irvine, California, first weekend of April. Do not miss it. Empowered Investor live.com Also, if you purchase a ticket for this event, you also get a free ticket to Rebel Capitalist Live. That's about a month later in Orlando. So we worked out a joint promotion with George Gammon there and that is available to you as well. Okay, what have I got for you? I got some big news that you probably haven't heard and I'm going to keep you in A little bit of suspense for that, but here's some other big news. The Wall Street Journal. Did you see this article just the other day? It says we're headed toward a landlord friendly era. Expect higher rent prices. The prospect of rising apartment rents could further stoke inflation and give the third Fed another reason to pause. Do you see what a problem this is? I mean, think of it. Think of it. If you are the Federal Reserve, you're trying to stimulate the economy and you're trying to give everybody the lower rates they're asking for, but at the same time you're trying to keep inflation down. Housing is such a big part of general inflation. You know, there's that owner's equivalent rent, that complicated formula that we've talked about on other episodes in the past. And if you can't keep rent prices reasonable, you're just going to have a lot of inflation. It's just baked into the system. So when we see this type of thing, what does it tell us? It tells us, remember the multidimensional nature of real estate. Or actually, I didn't mean to say that. That's another concept. What I meant to say is my three dimensions of real estate teaching. You've heard me talk about that before and that is that you simply adjust your strategy based on the kind of market we're in. So we know that sales have been very anemic for last, really the last two years. Last year was very slow as well in terms of sales volume. Prices kept rising in almost every market. There are a couple markets that were in pretty bad shape though, like Austin, Texas, namely. That's the number one biggest reduction. So we've seen this play out and what does it tell us? It tells us we've got to adjust our strategy. And now that the apartment, the big apartment, the institutional landlord, their cycle has changed because they have been hurting for, for several years. It's been in very bad shape. We've reported on that many times and you probably know it. They've been offering huge rent incentives. They've been really concerned about this massive amount of volume of apartment deliveries. Last year, as I reported, we had a record number of apartment deliveries. Now think of that. When I say apartment deliveries, you know, it's important that we think about that correctly. What I'm talking about there is the typical institutional apartment that you see was developed over the last several years in every major American city in a three or a four story building. It's probably got a pool in the middle, it's got units around the outside and it's probably got about 200 apartment units, give or take. Okay. And this typical apartment building has been massively overbuilt. But guess what? The construction halted and the absorption from renters has mostly occurred. So that system has worked itself out. That is now coming back. Right? It's always hard to talk about this because it depends what your perspective is. Right? I'm saying if you are one of those institutional owners, you're in much better shape now than you were even six months ago. Definitely better than you were a year or year and a half or two years ago. So with that coming back, they are now moving to the rent increase phase. That's what they're moving into. And supply is tightened up. Demand is still strong. We know there's a record number of what I call shadow demand for rentals and for purchasing all these millennials and gen zers who haven't formed their households yet. Very late to the party, but they're getting there. And you've got this record demand and an overall shortage in the vast majority of markets. So this article was very interesting. It was just the other day. Supply shortages will increase rental demand. The projected decline in new property developments from Freddie Mac suggests that landlords of well located and well maintained rental properties will see higher demand. A drop in new construct multifamily starts will support the increased rent rates going forward as well. With limited new supply, tenants may be more likely to renew leases and landlords could justify rental increases or improvements to attract quality tenants. So folks, this game is, it's cycling right now. It's an early sign that it is cycling. Now if you're watching on video, I just put a chart up on the screen. 2025 apartment rent growth forecast. Only two market are negative in this forecast. Okay, so we've got all the major cities. Kansas City, Richmond, Boston. I'm skipping around Washington, D.C. even as positive. And you know, we've heard about that with the new administration and the firings and so forth. Inland Empire of Orange county, wherever you want to talk about. Sacramento, Miami, Orange county, where I'm from and where our upcoming Empowered Investor Live will be held in Orange County, California, Louisiana, where I grew up as a kid, Salt Lake, all of the major cities, right? Fort Lauderdale, you know, Tampa, Palm beach, everything, right? Nashville, Phoenix, all of them show positive rent growth this year. And that positive rent growth in some markets exceeds 6%. It exceeds 6%. So pretty darn good. Only two markets negative. Guess what they are. Austin, that I just mentioned. That is the most negative. And is it really that Bad even in Austin. Like take a look. The negative projection in rent growth or rent decline in Austin is only 1.7%. In San Antonio, the only other negative market in the entire country that is less than 1%. They're saying they'll have about, if I'm reading the chart right, about a.6% decline in rents, a softening in rents. Everybody else is up. So it's just simple supply and demand, folks. And this study is from costar.

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Okay, here is one of the big things I wanted to tell you about. This is pretty big, big news. Big news. Now you know, we have been recommending northwest Indiana and we've been recommending Indianapolis Indiana for many, many years. We love those markets. I've owned property there and it is great, really, really good market, business friendly, very reasonable prices, a very good ratio of incomes to housing costs. So very attractive market. But wait, there's more. As they say. This article I just read the other day says Indiana toys with the idea of annexing some Illinois counties. Now this is a bill in the house, this is a real bill. This is in the government and it is early, but it's worth looking at. Okay? The standout quote to all our neighbors in the West. We hear your frustrations and invite you to join us in low cost, low tax Indiana instead of seceding and creating a 51st state. I think they're kind of talking, well, they're talking about a few things but you know, they're talking about Illinois, but you know, you could really say they're talking about California, too, because there's been a lot of talk about that in California, right? Instead, you should join us, said GOP Rep. Tom Huston, who is Indiana's House speaker and introduced the bill. The desire in Illinois at least 33 Illinois counties have passed advisory referenda to explore the idea of forming their own state. Can you believe this? Those in favor of the move fault high taxes and say Chicago and Cook county voters hold too much political power and have the interests that don't sync with those rural voters. Now, you know, that's exactly why the founding fathers in our country set up such a great system to balance that power between the highly densely populated areas areas and the less densely populated areas. And I'm speaking of states. And you look at, you know, the way the federal government is set up. So, you know, just, just brilliant here. But it's the same thing that's happening here. So they're saying taxation without representation. You know, we want to go to a lower tax environment. Talk to your investment counselor to see how you might benefit from this kind of thing, because it is a pretty big deal. Again, early stages, but we shall see. And the article starts out and says, every once in a while, US Counties toy with the idea of secess, either to form their own state or to join another state. Now, you know what would be really interesting about this? As I've been saying for what, 15, 16 years now, geography is less meaningful than it's ever been in world history. It still matters. Geography matters, but it is less meaningful than it's ever been in world history. Why not have states that could be distributed around where they wouldn't have to be geographically, geographically connected? See here they're talking about, you know, let's annex these neighboring counties. But what if, for example, Orange County, California was fed up with the state of California and the way the state is governing so poorly? Okay, and what if they said, well, we think Orange County, California should join Nevada or Arizona or Indiana, Right. Why do they have to be connected? Why can't they just be dispersed? Wouldn't that be great? We would have a free market of states and governance choices if they didn't have to be geographically connected. And I really question why do they have to be geographically connected? It's an interesting question. I'd love your comments below and if you're listening on the podcast, just go to jasonhartman.com ask and give me your comments there. And if not, just comment below on the video because I'd love to hear your comments about that. Okay, what's the other thing? Here's the other big thing. I don't have a visual about this, but this is mind blowing. Are you ready? Are you ready? Okay, here it is. You may have heard or read that the state of Florida. Yes. Their great governor Ron DeSantis. They are talking about and seriously looking at ways to eliminate property taxes. Whoa. This is already a no income tax state state. And I've been a resident of Florida for like seven years. Great state, no income tax. If they were to eliminate property tax, can you imagine what that would do for real estate values? They would shoot through the roof. That would absolutely be mind boggling. And I know you probably heard President Trump talk about eliminating property taxes as well, but he doesn't really have the power to do that, at least not any way that I know of. Right. This is all state and local stuff. But that would be absolutely incred if property taxes were eliminated. I mean, if they were eliminated in one state and not the others, the mass migration to Florida would be absolutely incredible. It would be incredible. So what are your comments about that? Please comment below jasonhartman.com Ask on the Web. Go ahead and ask your questions there. Make your comments there. We always love to hear them and read them. Okay. The income needed to Purchase A typical US home has increased by, by 79% in just five years. Wow. Wow. That's just mind boggling. This is a Resi Club study. You know, we've had Lance on the show before. The founder problem is that incomes haven't kept up with housing costs. Well, think about how this might be fixed tariffs. Yeah, because the tariff thing is so multifaceted. Right. Mostly in the last month it's been used as a negotiating gambit. But really the real core idea of a tariff is to bring that manufacturing or that business back to the home country. Right. And so how could we increase incomes? Well, pretty darn easy. Right? We'll increase them through inflation. But that's not really an increase. That's just treading water. Although, you know, the water's moving faster. Big deal. Who cares? You're still just treading water. But if we were to bring this manufacturing back to the country through a tariff policy, American jobs and more made in America products. Now Apple has already agreed they were about to do a big expansion in Mexico. They already agreed to bring it to the United States. Tariffs are already working. Just the threat of tariffs are working. You know, we are making the system equally yoked. We are making the playing field more level. And that's what the Trump tariff policy is doing. We'll see where it goes. It's way too early to tell, but, but there's a lot of positivity from it already. So that's what would increase incomes and it would increase income significantly. Let's take a look at some charts here because this is really important and really. Well, it's really kind of mind boggling. So household income needed to afford the finance purchase of a typically valued home. So here, January of 2016, you only needed to make about $43,000. And as of January of this year you need to make 92,000. Well, $93,000 if I'm rounding. So it has massively, massively increased. And you know what's interesting is that From January of 2016, go four years later and go to January of 2020, right before the COVID or right at about the time the COVID era was upon us, you went from 43,000 to $52,000 needed to buy that house. And now since then, it has almost doubled. A 79% increase. Just mind boggling. Now where has that happened? Okay, so if we look at this map, we are seeing, you know, nothing that's terribly surprising, right? Because this just shows you around the country. It shows you the markets that are the expensive markets and the less expensive markets. And it shows you, you know, basically who can afford to buy in those various markets. None of this will surprise you that the expensive west coast cities are expensive. The expensive Northeastern cities are also so expensive. Duh. Right. But when we take this map further in time and we go to 2025, it does start to change. And you can see how people are just being priced out of the market. They are just priced out, priced out, priced out. And you know, they're waiting for rates to come down. And boy, I, I thought rates would come down by now. You know that. But you also know my disclaimer that I've been saying for 20 years, I suck at predicting interest rates, so don't hold me to the fire on that one. All my other predictions have pretty much come true. But the interest rates, hey, I told you I'm not good at predicting them. And you know, why am I not good at predicting them? Because nobody can predict them. You know, it's really, the Fed's influence is so outsized here. It's, it's a centrally planned phenomenon. Not completely, of course. You've got bond vigilantes and you know, the Fed doesn't directly control mortgage rates. Right. But you know, it's indirect control, but largely it's a centrally planned operation. Okay. And so. So I can't predict their response to various events in the economy. But what do you think is going to happen when so many people are priced out of the market? Well, it's the only thing that can happen. Higher and higher rents. Now, this will be true until the population declines or the supply of housing inventory is oversupplied. And we are not near either of those things for many, many years. I was going to share with you something that I was reading recently about the 2055 housing market. Yeah. 30 years from now. Right. And the 2055 housing market. You know, I'm gonna say that probably real estate is not going to be very good after about 2045 or 2048, because we've got a demographic cliff coming up. And it's not as significant as say, you know, China's demographic cliff or Japan's demographic cliff, but it's still there. And the housing market is going to shift a bit. I mean, it'll depend on how much supply there is. By that time, you know, maybe there will be a new fangled style everybody has to have. Homes will be much more modern. Of course they will. And a lot of the existing housing inventory will become obsolete. There are just too many variables to predict 30 years out. But the overall trend is that population decline. Unless we have a whole bunch of immigration or everybody starts suddenly having babies, which. Which they haven't been willing to do for many years. So we'll see how that fares. All right, Empowered Investor Live. Coming up, we're going to talk about these topics and a whole bunch more things. We're going to have a lot of fun, too. Our events are really fun, so be sure to join us for that. Go toempowered Investor Live.com. come and meet me in person. Meet our investment counselors in person, our staff, our team, our local market specialists, property managers, asset protection specialists, et cetera, et cetera, et cetera. Come and meet, meet everybody at Empowered Investor Live. We haven't done this event in just over two years. Remember last year we didn't have a conference, we had a cruise instead. So this event is getting rare. You know, it's just a lot of work to put these events on, but we love doing it and we definitely want to see there. So come meet me, meet Michael Maloney, meet Sharon Lecter, meet Tom Wheelwright and whole bunch of other investors so you can hear firsthand what they're doing, how they're doing it, and what their real firsthand experiences are in the most historically proven asset class in the entire world that is Income property and the most tax favored asset class in America, income property. All right, we'll look forward to seeing you there and until then, happy investing.

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