2359: The 50-Year Mortgage: A Formula for a Massive Win for Investors

This show is produced by the Hartman Media Company. For more information and links to all our great podcasts, visit hartmanmedia.com hey there, Jason. Thanks for reaching out. What can I say? My life has truly been changing here since I joined your network. We just covered so much more, so much more in depth that we did not do in Jacksonville, especially that mortgage side. My wife was really impressed with that. Thanks again and I look forward to continue nurturing this relationship and overall, just awesome experience.

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 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.

Greetings, empowered investors, and welcome to episode 2359. Let's start off today talking about the Trump administration and what they think, they think they're going to do with the housing market. Definitely exciting times. There's some really good news going on. A lot of factors, of course, lengthening mortgages, the massive inflation induced debt destruction coming with that. And the people that are opposing, opposing that idea, they just don't get it. They've got a sixth grade level of education. When it comes to personal finance, they don't understand. I remember two of my friends in high school, Nancy and Jana, they used to always have this famous saying, well, I made it famous, I guess, and it was, you just don't understand. And they would say, jason, you just don't understand. And it was just funny to hear them repeat that a lot. But a lot of people don't understand the impact of all of these positive events just coalescing. It's really great. Let's take a look at this video.

All right, well, so the Fed's decision to keep interest rates steady is breathing some new life into President Trump's feud with Jerome Powell. Writing on Truth Social, quote, Jerome, too late. Powell has done it again. He is too late and actually too angry, too stupid and too political to have the job of Fed Chair. He's a total loser and our country is paying the Price, end quote.

He's never used those words.

No, you got to love Trump. I mean, love him or hate him, he just tells it like it is. It's. He's a, he's a savage. He's a savage.

And the President repeatedly saying that these high rates are pricing out homebuyers and killing the American dream. That's why he's considering ending the capital gains tax on home sales. And we've talked a little bit about this Katrina. He's floated this idea how it could balance out the market a little bit. Jerome Powell holding steady yesterday. I'm not cutting rates, at least not right now. At the end of the day, we've got a problem here. It's a supply demand problem. We don't have enough supply. So that's one of the issues. Regulation could tackle that. But we've got a high interest rate problem and we also have a high price problem.

Yep, we have a lot of problems.

A lot of problems.

We have a lot of problems. But I do believe that eliminating capital gains tax would make a huge difference in the housing market because there's so many people and I experience this on a day to day basis and Jerry covers this too. Sellers want to sell, they want to downgrade, they want to upgrade, but they don't want to pay this capital gains tax. And so, so many people are holding steady as a result of that. And you know, NAR actually reached out to me and they did some original research that they wanted me to share because they know that I cover this topic so much, which I thought was so interesting. Capital gains tax is no longer just about high end properties. People think that, oh, this only, you know, hurts the wealthy, but it doesn't. Nearly 29 million homeowners today, that's 34% can face capital gains tax if they sold. That's one third of the market and.

By 20 richer 1%.

Let's just keep in mind folks, that the capital gains tax on owner occupied homes of the the thresholds, that's what I'm talking about. 250,000 for single people, 500,000 for marrieds. And again, always check with your accountant on tax stuff. I am not a tax profess, but I know enough to be dangerous. That has not been changed since the mid-90s, or maybe it's the late 90s. I want to say it was probably 97, I think I lived in Newport Coast, California. I remember I was agonizing because that rule changed and the limit for me was $250,000. But think of what has happened to home prices since then. I mean, at the very least, if you're not eliminating this capital gains tax, you've got to make inflation adjustments. It's just crazy that it's still the same.

So.

Right. So it's a huge part of the market. And I think that if you eliminate capital gains tax, people would move. You would, you would create more supply in the market, which is one of the problems. I do think that interest rates need to come down and it's about time.

But of course, at the same time, you'd create more demand. It just means people would be trading, you know, they're not going nowhere. They're not saying, hey, I'm going to sell my house and I'm going to be homeless. They've got to buy something or they've got to rent something. So it does create supply, but it also creates demand because those people move to something else. Obviously they do.

Right.

And I think the magic number would even be about 6%. I do believe that the market would start to recover and people would start to move if we saw that happen. But something's got to give with the housing market because. And, and also one other thing I want to mention is property taxes and insurance. This is something that our governor in Florida has addressed. Property taxes are so incredibly outrageous right now, and people are paying more in property taxes and insurance than they are their mortgage. So I know so many working class families that are struggling.

Yeah, that's not really true. Okay. I mean, if your mortgage balance is super low and you have a very low mortgage, then yes, it's possible your property taxes and insurance could be higher. But for newer homes in Florida, the insurance is not that high. This is a massive overreaction. Everybody loves to, if it leads, it bleeds with the headlines and they love to do that, but that's simply not true. Okay? It's, it's, you know, it's true in a few very small cases. I mean, to be fair, on balance, 42% of the country has no mortgage at all. So for those people, their property taxes and insurance, they are higher than their mortgage because they don't have a mortgage.

Between do I send my kids to private school or do I pay the bills for my home? You know, and they're having to downsize and make those sacrifices. And so something's got to give for people to be able to achieve the.

American dream, even though it is the American dream. Home ownership. If the math doesn't make sense, people have to decide for themselves whether or not that's a dream that they want to try to take, tap it. But it's limiting a little bit too, Charlie.

Lower interest rates. That will mean housing prices will go up.

Right. Which is an argument that a lot of people are making.

That's why you got to watch out. And by the way, the. On the capital gains tax side, we do have a $2.1 trillion budget deficit. I mean, how much, how many more? You know, we're cutting tax on tips. We're doing this, we're doing that. There is. And by the way, if you gap out the budget deficit, the real interest rates that matter, the 10 and the 30 go up and that hurts home mortgage. Remember, this is, this is a dynamic sort of scenario. But I think one of the problems.

And I just want you to remember this video is July 31st, okay? So it's a few months old now, and the housing market has definitely picked up. I mean, there's a very noticeable increase in demand and overall sales activity since that last cut. No question about it. Even before that, in anticipation of the cuts.

As someone who's kind of in the market for housing, and you know, I just did a deal, so I can tell you that I've been dealing with banks and actually I paid cash. I didn't deal with the bank, but you have to deal with all these other people.

See, there you go. Another person that paid cash. I mean, there is so much liquidity out there and people have such giant, giant tranches of equity that they can just sell and pay cash for the next house. We have $34 trillion in equity, the highest ever in. It is mind boggling. The kind of wealth that is stored in the housing market, people.

And you're talking about bidding against other people, is the fact that there's not a lot of supply because of regulations. It's not that easy to build new housing in the Northeast.

Amen.

No, I mean, what's a state?

I don't think it's an interest rate. And make it a little bit easier. Takes a little while for those rollbacks, Jerry, to come into effect, for that supply to come online.

I would say, and I completely agree with Katrina, that getting rid of the capital gains on these gains and the value of your home makes absolute sense. And the beauty of it is that it ends up being really targeted. Because where have we seen the biggest gains in real estate values but in those high end expensive markets where young people cannot get in at all New York City places in California, some cities in Texas, we're already seeing some prices start to come down and ultimately that's going to shift everything going on in higher interest rates. I agree with you that it is a dynamic, dynamic situation.

But so in those markets, yes, we have seen some reductions in prices, but overall, nationally prices are still up and the linear markets are the safest markets. In those cyclical markets, very risky in.

Terms of price declines, this is a marginal change. And if you can't support tax reductions for Americans who've already paid for their, I mean this is a multiple layer.

I never met a tax cut I didn't like.

Yeah, but, but when you have a budget deficit of 2.3 trillion or 2.1, whatever it is, and you start adding to that, you know, the bond market does react to that sort of stuff. And it's quite frankly it's the growth.

Yeah, and Jackie, that Americans pay property taxes, are paying taxes on their income, taxes on renovations and improvements and then you're going to tax them when they actually make money.

And now they're not paying and now they're not paying taxes on tips. So remember, there is an end to this.

Give me.

No, I mean it's going to cost growth. With respect to the big beautiful bill.

The end is stop the spending. This is madness. The amount of money our government spends and the Trump administration is curtailing that a bit and getting some revenue from the tariffs too. So I think it's going to work quite well.

Law now that is going to help us with the deficit, is going to help us eventually with some of these. If the growth is very robust, it could help with this.

I think it could start the housing market.

Thank you, Jerry.

The housing market is falling apart.

But no, how can we start. Hold on, Charlie.

So sales activity has been down by give or take, 2 million or even more in some cases for almost three years. That is a giant deficit of pent up demand. I was just reading an article this morning, maybe I'll share it with you about how young people, I mean, we've talked about this before on the show, how so many young people are just living at home. Those people will eventually get out of their homes as soon as housing gets more affordable through lower rates, longer mortgages or incentives and they are coming into the market and there are a lot, a lot of people in terms of pent up demand. So a lot of housing demand sitting under the surface here.

I think what Trump's trying to do, I hear your point on capital gains and the hit of the budget, but what he's trying to do is like kickstart something. These might not be the right ideas. But it's what's not like bring rates way down or end capital gains necessarily forever in houses. But you've got this thing that's basically just.

Hold on. He's.

It's seized up. No, I got it. And he's trying to like kickstart it until some of the other. Longer, by the way. No, no, but here's the point.

No question the housing market has been frozen.

It's not going to be okay. You need more supply. You make it sound like the housing market is one big national market. That's not.

It's not.

I'm saying exactly the opposite. What? I can't kick stupid started. Yes, he can. Hard. Okay?

Very hard.

How is he gonna. How is he gonna kickstart all over the country, that Doug? Okay, so he's gonna kick start. He's gonna kick. He's gonna kick start Housing in Long Island. Is that no.

Credits. There's so many things that can talk.

To Kathy Hochul, not Trump.

No.

We also have a price problem. If all of a sudden you told sellers, people who are serious about selling in Long island that want to get a certain amount of money from their nest eggs, if all of a sudden they realize they might not be paying the capital gains tax that they thought they were going to be paying before, they might be willing to lower their price a little bit to move their home. Right now the prices are so high, people put stuff on the market. Buyers come to look, they can't afford it with the high rates.

Well, they won't necessarily have to lower the price on their home. Because think about it. The person who sold another house or maybe another asset, if complete capital gains are eliminated, which would be the best thing. I mean, think about it. We already paid taxes many times before we bought whatever this asset was that we're selling. So capital gains is stupid. Right? It should be totally eliminated. But they will save that money and have more to reinvest. It's just amazing to me how overly simplified the media is. They just don't have deep knowledge of any of these important financial things. Anyway, let's move on. All right, Dinks. D I N K S. You've heard the acronym dual income. No kids are on the rise in America. The Pew Research study says that 12% of married couples are not now child free, making up dual income no kids demographic. And this is terrible news. More US couples are skipping kids. Unfortunately, the number of married couples choosing to be child free is on the rise. These are the dinks. 12% of married couples with at least one partner in their 30s or 40s. That's a jump from 8% in 2013. So that's pretty significant. I mean, that is up 50%. Right? Because the comparison is not. It's not up 4%. It's up 50%. 8 to 12. Okay. That's the amount it's up to. Okay. A lot of people know kids. This is not good for society. Right. In my opinion, I think you've got to have children. I would like to have children, but finding it pretty hard to do that. So, you know, but people that are married should certainly be having kids, you know, creating the future Einstein's and the future Jonas Salk's and the future Thomas Edison's and Nikola Tesla's and all of these incredible people, they will be born from someone. So have some kids. All right? And then here we go. Americans are saying kids cost too much. The majority cite finances as the top reason for limiting family size. And this study talks about basically the same thing. These are two different articles, but this is LendingTree that did the study earlier this year. LendingTree estimated it cost nearly $300,000 to raise a child from infancy to age 18. And it'll probably cost you more after that. Okay. For the first time in this survey's 11 year history, finances topped the list. As responses, people are limiting or intending to cap the size of their families cited two times as often as the main factor. This is a 3,000 person study, so pretty decent size, right? Okay. Jeremy Siegel, you know, I've talked to you many times over the years about this article that I saw circa 2006. Okay. From Jeremy Siegel, Wharton magazine here. I did not find the exact article, but I used Grok to try and find this quote. And basically what Jeremy Siegel, who's pretty brilliant, okay. You know, he's got some good books and has a lot of media attention out there. He talks about the asset shortage that is looming. This is back in 2006, so we're talking many years ago now. He predicted this and I think he was right on. It's very hard to have statistics on this kind of thing. Why is that? Because what he was saying is that due to the rising middle class around the world, and really not even middle class, but just people being lifted out of poverty due to globalization, supply chains that are super complex and global, a lot of people have really gained from that. And I would argue that the US has lost from that in terms of jobs, of course, but in terms of lifestyle, they've gained from it because we got less expensive goods. We hid our real inflation rates for literally decades. And I think that that's the reason Nixon went to China in the early 70s, right? I mean, just think about back then, what Richard Nixon was thinking. He cut the last tether to gold in the dollar. He totally closed the gold window and said, sorry, you cannot redeem your dollars for gold anymore. They're just paper. World's best salesman. And he actually sold this to the world. It's amazing. It's amazing that he was able to sell that. But he did, and it worked. And it's still working actually very well. And now with Trump's genius act, it's going to work even better. That's breathing new life into the dollar for maybe the next, you know, 30 years or so. I don't know. Nobody knows. Without, with the stable coins being tied to Treasuries and dollars. Wow, that is going to allow the US to get away with a lot of shenanigans for a very long time. Not saying it's right. I'm just saying it's the way it is. So Siegel, let's go back to him. He talks about this looming asset shortage because as people get into the middle class all around the world, they start becoming investors, right? They buy a home. Well, what's the home made of? It's made of petroleum products, copper wire, glass, steel, lumber, concrete. All of these products that make up a home, right? And they will be investing in those. They will be packaged commodities investors, as I always say, or assembled commodities investors. Been talking about that for 21 years now. And then they will buy stocks, they will buy precious metals, they will buy cryptocurrencies. And there is literally all of these new buyers, all of these new investors in the global marketplace. And there's a shortage of assets. You know, people kind of keep saying, oh, we're in the everything bubble. Everything's overinflated. And there are certainly periods in time where they'll be right about that and asset prices might fall in certain periods, but the overall macro Trend is undeniable. May 14, 2012 Jeremy Siegel. It says Siegel sees far reaches of growth from the middle class. Optimism is the key takeaway from Wharton's eminent investment researcher, Jeremy Siegel. And then he's talking about the gray world in this Wall Street Journal article. This is September 20, 2006. The United States and the rest of the developed world stand at a precipice. Over the next two decades, tens of millions of Americans, Europeans and Japanese, members of the prosperous baby boom generation that were born following the second World War will leave the labor force. Many are expecting a long comfortable retirement by relying on government and private pension plans as well as tax supported medical services. Now we know there's a giant pension problem, no question about it. But there is definitely an asset shortage. Okay, and then look at this. This is about the weak dollar regime. Okay? Marco Polo and the return of global trade leadership. The US weakening the dollar. So US exports look cheap to the rest of the world. Right? In their currency. They just got a boost. Right? They had essentially a deflationary situation while US consumers have an inflationary situation. And then there's the whole tariff battle which super complicates all of this. Okay, what happens in a weak dollar cycle? A weak dollar isn't just about Americans needing more dollars to buy goods abroad. It reshapes the entire investment landscape. Historically, when the dollar enters a downtrend. Now I just want you to notice what they're missing in this article. It's so interesting. Remember, you can't hear the dogs that don't bark. The most important thing sometime is the things that are not said. The profound impact of what is not said or not seen. Let's continue. Historically, when the dollar enters a downtrend commodities surge because they are priced in dollars. They get cheaper for the rest of the world. What are all your rental properties made of? Commodities? Because you are a packaged commodities investor. So good for you. Emerging markets outperform. This is interesting. They allude to it, but they don't say it. Their debt burdens, often dollar denominated, ease and their exports become more competitive. Isn't that interesting? Their debt burdens, in other words, if they're dollar denominated and the dollar is weaker, they ease. Well, isn't that called inflation induced debt destruction right there? Absolutely, that's exactly what it is. So these foreign companies get to take advantage of lower debt and foreign countries too. Right? Because their debt burden gets easier. Just like yours. As I've shown you many times about inflation induced debt destruction, international equities need capital rotates out of the US to regions with stronger relative growth. This is exactly what we saw in the 2000s. From 2002 to 2008, the dollar fell sharply and emerging markets trounced. US equities, Latin America, Asia, commodity linked economies delivered generational outperformance while the S and P chopped sideways. And that's what we're seeing now. Right? So I don't know about all the stock stuff, but I do know that it's a good bet to Take on the longest term cheapest debt you can attach to commodities, packaged commodities, and get that double inflation arbitrage that I'm always talking about. Half of it being inflation induced debt destruction. Okay, let's look at some inventory. Inventory is about 842,000 homes for sale in the US still lower than in 2019 pre Covid. So inventory up higher than it certainly has been over the last few years in the COVID era, but much, much lower than pre Covid. And it's about half of what should be considered normal. We're up about almost 17% over last year, but about half of normal. Okay, the big short. I thought this was interesting. Is Michael Burry, the worst investor of all time. Here are his top 20 public predictions. Fact checked. It gets to your head when you made so much money and a movie was made about you. Of course you know he was in the big short, right? That's his claim to fame. He made one giant correct call. But what have you done for me lately? Right? And economic studies show that experts in the media actually get it wrong more than the average expert. The reason is that to be on TV and get attention, you have to take extreme positions. And extreme positions are entertaining, but the probability of it happening is much lower. Okay, so here's some predictions. Right? 2008, the housing crash, the subprime short. He was right about that. He made the call directly and made over $100 million. 2013, wrong. Fed policy will create extreme bubbles. Asset froth rose crash was delayed for years. Impact contextual warning partial. Like I mean, I'd say he was just wrong about that. It's been 12 years, really almost 13 years now. And the bubble just keeps inflating. If it is a bubble at all. Okay, 2015, water is the next big trade. Water ETFs modestly outpaced spy. You know, no crisis or windfall didn't pay off. Okay, But I do agree that overall water is going to be an in demand asset. However, a lot of desalinization, a lot of new energy coming online. Desalinization takes a lot of energy. So that's really the only reason it's so expensive. But humans tend to solve these problems, folks. Okay, 2017, he predicted a global financial collapse and World War III was imminent. Didn't happen. 2019, index funds are the next collateralized debt obligations, the CDOs. But the funds grew. There was no implosion, no unwind. He was wrong. Value will beat growth in 2020. Growth modestly outperformed, but again not really right about that. Early 2020 got this right. Pandemic will devastate supply chains and markets. That was true. But they pumped so much money in the system that they hid the whole problem, at least for investors, not for consumers. Because you know what a hassle it was to get a lot of things during the COVID era. December 2020, Tesla crash inevitable. He shorted it. Okay? Tesla doubled, tripled into 2021. And that was a painful short. You know, there's an old saying, never bet against the Fed, maybe never bet against Elon, because he seems to win anyway. There's a whole bunch of others where, you know, he was either mixed or it's still undetermined, or he got it wrong. He only got a couple of things right. So, you know, that's Michael Burry for you. Okay, so the 50 year mortgage folks, this is going to be a great deal. Do not listen to the skeptics that talk about how people are going to pay more interest. They almost never keep the property long enough to pay that interest. But remember that interest, you have to deduct the deductibility portion, whatever your tax bracket is, and then deduct inflation at the consumer price index rate. And then go back and redo the math and deduct inflation at the real rate. And add to that, if you're an investor, rental income that is pretty darn well indexed to inflation. So your rent keeps going up, your mortgage burden keeps getting lower due to inflation induced debt destruction and tax deductibility. This is a formula for a massive win. The 50 year mortgage is going to be awesome and I would encourage you if you don't get it. Okay, Please go back and check out my videos and my podcast episodes where I talk about inflation induced debt destruction and read the contrarian viewpoints. I'm sharing some in our newsletter and these articles would be very good for you to see. There are some very bright people who have come at this from many different angles on this debate over the possibility of a 50 year mortgage. We already have 40 year mortgages today, but the rates on the 40 year mortgages are quite a bit higher. About half a point higher, which is is really not right. Why is that the case? Because these are not sanctioned by the government sponsored entities. Okay? They don't have the blessing the 50 year mortgage may have. And that means that the delta between the rate on a 50 year mortgage and a 30 year mortgage if this happens, will probably be much, much lower and it won't be that much more expensive for a 50 year mortgage. But just think of the beautiful opportunity to not make the last payment on this mortgage until 2076. Okay, yes, I do know it's 2025 today, but the year is almost over and by the time you would close it would be 50 years from 2000 2026. So 2076, I gotta redo all these charts on inflation induced debt destruction. The hidden wealth creator that makes real estate investors so, so rich. And speaking of being in the money, I got something great for you. Join us for our next masterclass coming up in just a few weeks. Go to jasonhartman.com Wednesday because there are some new new new new new you have not heard about. Fantastic opportunities in the interest free business credit field that we are going to be presenting on this masterclass the second Wednesday of December. Go to Jason hartman.com Wednesday higher limits, more ability to borrow and not pay any interest for between 18 months and two years. And I think there's one program that even goes on longer than that. You can use this money to buy properties. You can use it for whatever you want. You can expand your business with it. You can do whatever. There's no dedicated use for the money that you have to comply with. So it's a phenomenal opportunity. Maybe an opportunity to just buy a property and get a cash discount. We've got some builders we're working with that will give very big cash discounts as an incentive and then you can refinance them later or just do a delayed purchase money mortgage, which is a fantastic deal. So there's a lot of opportunities and you want to have this extra liquidity on call for whatever opportunities come up. So Jason hartman.com Wednesday do not miss this one for the end of the year. It'll be our last masterclass of the year and it's going to be a really, really good one. You're going to like it. All right, we'll see you then. Until next time. Happy investing. Thank you so much for listening. Please be sure to subscribe so that you don't miss any episodes. Be sure to check out the 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 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.