2377: Small Vs. Institutional Investors, the Road to Wealth, Real Estate Markets and Macro Trends

This show is produced by the Hartman Media Company. For more information and links to all our great podcasts, visit hartmanmedia.com Number one, I love your show. I love, you know, the way that you go deep into business and then go, you know, on some of these other tangents of experiences that as business people we all have. So thank you for putting out such good content because it's, it's impactful. It is really impactful.

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.

So much going on in the world. First of all, Happy New Year. I know we've played a couple of sort of replay shows the past week, so I didn't really get to personally say Happy New Year. They didn't have intros to them. There is so much good stuff going on in the world and in the markets right now. Now it is truly awesome, you know, awesome. Volume is good, inventory is down. So let's start with this. Probably not a surprise to many, but I saw this clip in one of my newsletters and I thought I would share it with you. What makes 90% of millionaires? Well, this is an AI overview. So if you just, you know, Google this, you would get this. Probably the same result. Well, the exact percentage is debated. The common statistic claims 90% of millionaires became wealthy through, guess what? Real estate. Yes. That is the most historically proven asset class in the entire world. A concept popularized by Andrew Carne. So that was a long time ago. Leveraging appreciation, rental income, tax benefits. However, many sources clarify this often means that they own real estate. It is not their sole source. So, you know, that goes back to the thing like with all of my masterminds, all of our clients, the thousands of investors that I interact with literally every year and my company interacts with, they all are in the real estate investment game, everybody. It's pretty much just universal for every wealthy person to be in that business, in the real estate business. And I do want to think. I want you to think of this as a business, not just as an investment, because it is really a side business, kind of a side hustle in a way. So think of it that way. Okay? The money supply is easing. Trump is trying to lower rate out the Fed. Of course, you know, he's in this big war with the Fed there. There's an investigation going on into Jerome Powell which may or may not be justified. I really don't know. But I do like it, because anything that weakens the power of the Fed is good news, in my opinion, because the Fed is a scam. It is private banksters. It is a secretive organization. Why isn't it audited? Why can't we know what is going on at the Fed? And then I got into a debate with one of my friends who's been on the show before, actually a couple of days ago about this, and he was sticking up for the Fed, and I couldn't believe it. You know, our central bank, the Federal Reserve, is about as federal as Federal Express. And I happen to be sitting in a FedEx office right now. You can probably almost tell by the gray scenery. So what is the alternative? Right. Well, I think that ultimately the market should set the price of money, and the market forces should act as the buyer of last resort and the lender of last resort. But we're unlikely to ever get that. So what is the interim step that I think is logical? I think that the government should take over the role of the Fed. And listen, you know, I'm no fan of big government. I lean very much libertarian most of the time. However, at least the government would be accountable, at least in theory, right to the people. There would be audits, there would be. You know, we had open the books on the show years ago, and the founder of Open the Books passed away, unfortunately. But that's a great organization that holds government accountable. And then, you know, many years later, just last year, we started with doge. Now, sadly, DOGE didn't quite succeed the way we wanted it to. But we are becoming aware of so much fraud that has been going on for so many decades in this country. It's just staggering. You know, I wanted to say today's show, welcome to the United States of Fraud, whether it be the leering centers for the Somali daycare, that's just a total fraud. Usaid, total fraud. I mean, everybody has just been on the take. And some estimates say that the fraud amounts to over $2 trillion annually. Can you imagine we would have a balanced budget if we just clean up the fraud? And can you imagine how much of that Contributed to our $38 trillion national debt? How much of that would just disappear if we eliminated the fraud problems? The country isn't as bad off as people think. So a lot of opportunities there and a lot of good, good stuff is happening in the news and the political environment also, love him or hate him, but Donald Trump and the Don Row doctrine, not the Monroe Doctrine, the Don Road Doctrine, as in Donald Trump, he is securing a lot of very important strategic plays. Venezuela most recently, right. Iran is falling apart. Cuba is going to fall apart. The US Will probably annex one way or another part of Greenland. Either it'll buy it or just take it. So we'll see what happens here. But the fact is, whether you agree with this, whether you like him, whether you hate him, it's another empire, right? The U.S. empire is expanding and growing and we are locking our enemies out of these resources. Venezuela, we lock China out, right? We lock Cuba out. And that is going to cause a domino effect that is going to be very good for the United States. So if you're a real estate investor in US Real estate, very good for you. Also Trump, in terms of this two billion dollar buying spree, right, to buy mortgage backed securities and basically loosen the money supply. We're going to have lower interest rates. I mean, we've already had the lowest interest rates in, in three years. Just recently we hit a new low, but they're going lower and we'll see what happens in a couple of months when Powell is out. All of this means upward pressure on real estate prices. All of it means stimulation to the economy. All of that means good news for all of us as investors. So be ready. Don't miss the opportunity because it is upon us. So this comment on the screen, Ken Griffin of realtor.com writes, the core tension in Trump's housing agenda is political and economic. In a Dec. 18 Oval Office remark, Trump openly said, boosting affordability for buyers can conflict. This is interesting. Can conflict with the goal of keeping homeowners wealthy and happy by avoiding any meaningful drop in home values. Right? Trump wants to make things more affordable. Isn't that contrary to what we want as investors, making things less affordable? Right. Well, you've got to weigh this, right? With it being good for society overall and immediate greed satisfaction for us as investors. And I think all of this is moving in a very good macro trend. Of course there will be bumps and things along the way. But all of this I think is just a very, very positive trend. Also, if you are not using Property Tracker, our free software, go to propertytracker.com get a free account. Because we have enhanced the performance and shopping for investment properties, we have enhanced the performance on jason.com in properties section. They are phenomenal because now they include inflation induced debt destruction, they include rent to value ratios. So check out the performance. I am so happy about what we've done because now you can see the real expanded and enhanced return on investment on these properties. It is phenomenal. Okay, let's move on. This is interesting. A chart showing that Memphis is number one. And it's just talking about the different markets and what's going on. Right? Investor volume in these markets. Memphis has over 31% investor volume followed by Baltimore, St. Louis, Cleveland, Dallas, San Antonio, Kansas City, Houston. These are all markets we've been in. Every one of these markets we've been in, Oklahoma City is right up there at 20.5%. Now, do you necessarily want to be in the market with the highest volume or the lowest volume of investor activity, investor purchases? Well, the answer is it depends. Okay. And that's why you have our resources and our investment counselors available to you. So just book an appointment with any one of our investment counselors. They will help you. They will do a portfolio makeover and they will refer you to the right properties that you can buy that will make sense for your goals, your investment, your time horizon, your investment goals, etc. Etc. So get with the investment counselors and let them help you on that. But this basically comes to the point of the pattern is clear, affordable Midwest and Sun Belt markets with median values under $400,000 attract the highest concentration of investors. These markets still pencil for cash flow and offer plenty of redevelopment opportunities for older housing stocks. So remodel opportunities. Right? And I know that's not what most of you do. You don't get involved in all that hassle of doing remodels. But we have turnkey properties, but mostly brand new properties that just make a lot of sense for your portfolio. So meet with our investment counselors, fill out any web form@jason hartman.com or just pick up the phone and call 714-820-4200 or toll free 1-800-hartman 1-800-hartman either one. Okay, moving on. This is from Zero Hedge, Tyler Durden from the movie Fight Club, which by the way is a fantastic movie. I thought it was some going to be some brutal, terrible movie. The first time I saw it and I've seen it a few times. But it is a very clever, clever movie with a lot of deep multifaceted messages, multi dimensional messages. So be sure to check out Fight Club. Really interesting movie and do you know, a bit of trivia here. The person who wrote Fight Club sold the movie rights for only $10,000. That incredibly successful movie and I hear they're making a sequel. So we'll see how that goes. But here from Zero Hedge lenders and home builders jump, meaning their valuations jump after Trump unveils q E style 200 billion dollar mortgage bond buying plan to unfreeze the housing market which has been pretty boring for about three years now. So just so many factors moving in the absolute right direction. The big take. The White House goes all in on housing. You know, a lot of stuff was on their agenda over the last year but now this is the focus, it's the housing market. So we're going to see a lot of very, very good things. Mortgage Backed securities rally okay. With this bond buying program midterms approaching, the White House is intensifying its focus on housing affordability. Now many ways to tap into housing affordability and I'll discuss that on future shows. We're going to discuss it on our master class today. A little bit. You can either make the money cheaper which means a larger tidal wave of money flows at the housing market which pushes prices up. That's what they did during COVID right? They made the money cheaper and housing got more expensive in price. But everybody buys on a payment, not a price. So it's very interesting to see how that dynamic plays out. The strategy is multi pronged. We previously covered how the Fed balance sheet actions could lower long term rates in 2026. That's definitely happening. Like you know, look at the prediction markets which are really interesting by the way, poly market etc and you know, see what people think. Right? Because that's the wisdom of the crowds, if you believe it's true. Directing Fannie and Freddie, the big mortgage buyers, Fannie Mae, Freddie Mac to purchase hundreds of billions of dollars in mortgage backed securities. President Trump also indicated plans to rest buyers. And I've got a lot to talk to you about there. From acquiring single family homes. Now I'm going to get to some charts on that in a minute if we have time today. Okay. The administration is clearly pulling every available lever before the election cycle heats up. We've got midterms this year that we're only what, 11 months away from that the strategy could add tailwinds to non tech housing related parts of the market in 2026. So most homeowners, the lock in effect is still with us. There are a few people that kind of don't believe in the lock in effect. I don't know why, that doesn't really make much sense to me. I mean it's just sort of obvious. If people have great mortgage deals and their house is cheap to them, they're going to keep it. They're not going to sell it. They're going to withhold that inventory from the market and they have huge cushions of equity. Just take a look at this. This goes way back to what, 1952. This is a long chart way back to 1952. Okay. Household real estate value as a percentage of GDP. So in terms of its value versus the overall economy and then mortgage debt as a percentage of gdp. So compare the amount of mortgage debt to the whole economy and you can see that the debt is down and the values are up. Okay. Meaning people have a bigger and bigger cushion. They have a huge cushion of equity. So I grabbed a couple charts for you over the weekend about inventory, looking at it from some different perspectives. So here is the estimated renter occupied housing inventory in the US that's about 46 million units. And then the owner occupied housing inventory in the US that's about 87 million units. And you can see the historical path of it over time. And then the overall household inventory, about 148 million units. Okay, so that's really good to just understand the. Compared to what equation? Right. Okay. And then estimated single family home sales. Okay, this is housing inventory. Now remember, this is the NAR numbers National association of Realtors. And I like to refer to the ALTOS numbers or housing wire numbers commonly because I think those numbers are really more accurate. About 1 1.25 million. And you get a comparison going back. But again, this does not compare it to the overall population which has grown over that time. But during COVID obviously inventory super, super low. This chart can't go back very long because NAR is really stingy with their statistics. You have to be a subscriber and pay for this data, which I don't mind doing. But Fred, the St. Louis Federal Reserve website where all of this data is from, they don't pay for that subscription, obviously. So they only have the data going back to sort of the end of the COVID era. Right. Or even after the end of the COVID era. But here, totality, we've had them on the show before. They're a data firm and they research the market and so forth and provide a lot of data. Data from Totality shows that investors accounted for 30% of all home purchases as of September of last year. Small investors, defined as those owning fewer than 10 properties, made up 14.2% compared with the mega investors. These are the institutional investors. We want to get to this topic because Trump is attacking it and he, he's doing the same thing RFK was when he was running independently on the Democratic side before he joined forces with Trump is attacking these institutional investors. So we'll talk and look into it. But institutional or mega investors own more than 1,000 properties. They account for about 2.5% of purchase activity. What is the dog that's not barking here? I always say you can't hear the dogs that don't bark. So what is this clip not telling us? So it's definitely not telling us how the institutional investors compare to the overall market. And again, even though they own a lot of homes, some of these institutional investors, and I'm going to show you something on that in a moment, own, you know, tens of thousands of homes. 80,000 homes, right? It's big. It sounds big. But compared to the overall market, it's really a drop in the bucket, at least now. But they have been very active in the market. So here we go. Here's some real numbers on the investors. Invitation Homes, their inventory is 87, 211 homes. Talk about an exact number for you. Progress Residential, 84, 724. American Homes for Rent, 54,061. And then chart, you can see what their rent growth is.3.8% for invitation homes. Progress residential, only 0.01. But American homes for rent, 5.7% rent growth. That's pretty phenomenal. So, and then you can see some other big institutional investors down here. But again, in terms of the overall market, they're really not that big a deal. But in terms of what they have been since coming out of the Great Recession, you know what, 17, 18 years ago, now, they're a much bigger player than they've ever been. I'm going to wrap it up with that for today, folks. We've got to do our masterclass. Make sure you're joining us for those every single month. Those are totally free. Be sure to join us for those. We'd love to have you today. We are talking about co living and these fantastic co living opportunities that we have in many, many markets. Reach out to one of our investment counselors for help on that. We will see you next time. Until then, 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. 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