2383: America has a SERIOUS real estate problem with Kevin O'Leary Warns

This show is produced by the Hartman Media Company. For more information and links to all our great podcasts, visit hartmanmedia.com hi, I'm David Krantz. I've known Jason Hartman for 15 years now and I wish I came here 15 years ago. This has been a great event. I really appreciate you having me here, Jason, and your crew. It's been a terrific event and I've been so impressed with what you've done. I can't wait to be back here next year. Not just as a vendor, but as hopefully a new client for you. Well, if you're thinking this event is for you and you're not sure if coming here or not, spend the time. A little bit of the investment for yourself is well worth the investment for your time and the money. Thanks, guys.

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.

There is obviously a lot going on in the world with all of the protests and all of the craziness and leftist nut job radicals are just out of control. But with all of this happening, we are focusing and we are focused on the most historically proven asset class in world history and that is income property. And it's just getting better and better and better as we move into this era of easing money supply and incredibly tight inventory. Now, y' all know Kevin o'. Leary. You see him on the news regularly and of course from Shark Tank. This video is really interesting and I want to share a few bits of it with you today. He is talking about something that I have been saying for many years, but of course with his It's a dramatic, it's a dramatic thing. And you know, he's not wrong. Okay? And he says America has a serious real estate problem. And it's interesting because if you are watching me on video, you see the screen graphic of the YouTube thumbnail where this video was and it is showing a down arrow but everything he says is an up arrow. It says sell. Well, you can. I mean, it's just a total contradiction, right? This is a serious opportunity. So let's just dissect some of this video, which is really quite interesting. You've heard a lot of this from me for a very long time, but I thought it would be interesting for you to hear it from somebody else. Here we go.

Listen to me very carefully, because what I'm about to tell you is going to affect every single person watching this video right now. Whether you own a home, whether you're trying to buy a home, whether you're renting. This matters to you. America has a real estate problem. And it's not just serious, it's catastrophic. And before I get into the numbers, before I show you exactly why this is going to hit your wallet harder than anything you've seen in decades, I need you to do something. Hit that subscribe button right now. Smash it. Because if you care about your money, if you care about building wealth, you need to be part of this community. We tell you the truth here. No sugarcoating, no nonsense. Just facts and money. Now, let's get into it. I've been in business for over 40 years. I've built companies. I've invested hundreds of millions of dollars. I've seen markets crash and I've seen markets boom. And I'm telling you right now, what's happening in American real estate is unlike anything I've witnessed in my entire career. We are staring down the barrel of a crisis that most people don't even see coming. But I see it. And by the end of this video, you're going to see it, too. Here's the. The American dream has always been about one. Owning your own home. You work hard, you save your money, you buy a house, you build equity, and you pass something on to your kids. That's how it's supposed to work. That's how my generation did it. That's how your parents probably did it. But for millions of young Americans today, that dream is dead. And it's not because they're lazy. It's not because they're spending too much on coffee. It's because the system is broken. Let me give you some numbers, because numbers don't lie. The median home price in America right now is sitting around seven times the median household income. Seven times. You know what it was in the early 2000s? About four times. You know what it was in the 1970s? About two and a half times.

Okay, let's comment on that for a Moment, really important. That doesn't tell the story, but it is interesting. Now, how does that happen? How does the median home price get so out of sync with median incomes? What causes that? Now, part of it is just simple, good old fashioned supply and demand. True. Right. Shortage of housing, which he's definitely addressing in this video and I have addressed it a zillion times with you. But also, why is it allowed to happen? Well, here's what happens if you look at a chart over time and you look at real estate prices, you look at incomes, and you look at interest rates, mortgage rates specifically. Okay? Now the times when that gets so out of sync is during periods of, of low mortgage rates where the house prices are allowed to get way ahead of the incomes. How does that happen? Well, the mortgage payment goes down and that allows the house price to go way up. So every time, and I haven't really talked about this before, by the way, in the last 22 years that you've been following me, hopefully you've been following me that long. But in the last 22 years that I've been doing this right, I have not talked much about how the that long cycle plays and how those numbers get so out of sync. And what we have is we have these eras of low rates. Like take the COVID era as a great example. Super low interest rates and house prices shoot up. So the price of the house gets way out of sync with incomes. But the affordability of the house during the era of the low rates is very good for the home buyer or the investor. And that's what keeps happening. It's interesting that he talks about like back during the 70s, it was, you know, it was a couple of times and now it's seven times. Well, back during the 70s, we had really high interest rates. And in 1971, on August 15th, that fateful day where Nixon took us off the last vestige of the gold standard and inflation was allowed to really, really just pervade our economy. Okay? So that's why that happens. That's why those numbers get out of sync. But you know what happens on the opposite of that? We are now entering an era of lower rates. Of course, not as low as the COVID rates, but lower than we've had for the last three years and an era of easier money supply. Remember, those things aren't exactly the same. There can be high rates and easy money, not super common, and low rates and hard money, and that's not super common either. But it did happen during and immediately following the Great Recession where it was very hard to obtain the money, the mortgage money, but the rates were coming down. Okay, so you know, this is complicated, right? It's all complicated. So it's not just about rates. It's about credit availability. And I would use the measure of the mcai, the Mortgage Credit Availability Index. So let's keep going here.

Housing has become completely disconnected from what people actually earn. And when you disconnect price from income, you create a bubble and bubbles always, always burst. But here's what makes this different from 2008. Back then we had a subprime mortgage crisis. Banks were giving loans to people who couldn't afford them. The whole system was built on junk. When it collapsed, it was ugly. But at least we knew what the problem was. Bad loans. This time the problem is supply. We don't have enough houses. We're not building enough houses. And the houses we do have are being bought up by people and entities that have no intention of living in them. Let me explain something to you about supply and demand, because this is basic economics, but apparently nobody in Washington understands it. When you have more buyers than you have houses, prices go up. That's just math. And right now in America, we have millions of people who want to buy homes, but we don't have the inventory.

By the way, I'd love to hear. Please comment below and like and subscribe, but comment below. How much of this is AI generated? You know, some of it is for sure, but I'm kind of curious, like how much? I can't tell. What do you think?

We're short by millions of units. Some estimates say we need to build 5 million new homes just to catch up to where we should be.5 million. And we're not even close to building at that pace. Why aren't we building? Great question. Let me tell you first, it's too expensive. The cost of materials went through the roof. Lumber, steel, concrete, everything got more expensive. The bignessly labor got more expensive. And when your input costs go up, your final product gets more expensive. So even if builders want to build affordable housing, they can't because the math doesn't work. They can't make money on it. Second, regulations. I'm not saying we don't need building codes. I'm not saying we don't need safety standards. But in many cities and states, the regulatory burden is so heavy, so slow, so expensive that it adds years and hundreds of thousands of dollars to, to every project. You've got zoning laws that were written 50 years ago that don't make sense anymore. You've got environmental reviews that take forever. You've got local politicians who say they want affordable housing, but then they block every development in their district because they don't want it in their backyard. And third, land in the cities where people actually want to live, where the jobs are, there's no land left. And the land that is available costs a fortune. So developers are stuck. They can't build where people want to live because it's too expensive. And if they build where it's cheap, nobody wants to move there because there are no jobs. So what do we get? We get a market where supply can't keep up with demand. And I see them working hard, doing everything right, and they still can't get ahead. They've got student loans, they've got car payments, they've got credit card debt. And now they're being told that if they want to buy a house, they need to save up $100,000 for a down payment. Where are they supposed to get that? It's not realistic. This is why I'm so fired up about this issue. This isn't just about real estate. This is about the future of this country. If we don't fix this, we're going to have an entire generation that never builds wealth. And when people can't build wealth, they get angry, they get frustrated, they lose faith in the system, and that's dangerous. Now, let me tell you where this gets really ugly, because what I just described to you is bad enough. But there's another layer to this that most people don't understand.

And is it interesting how that doom and gloom contrast with Elon Musk Outlook, where, you know, we talk about universal basic Income. I've had Andrew Yang on the show before talking about that. The presidential candidate who is promoting Universal Basic Income, or ubi. And Elon says, with all of the technology that is changing and shaping the world right now, it's not going to be universal basic income. It's going to be universal high income. And I agree with Elon. I'm very optimistic about the wealth that is going to be generated now. We're going through another giant wave of technological revolution that is going to be like nothing we've ever seen before. You know, I can mention the buzzword AI, okay? But you know what I'm talking about.

To determine whether America remains the land of opportunity or becomes a country of landlords and tenants. We need to talk about who's making money off this crisis and why the people in charge aren't doing anything to stop it. Let's start with the investors I mentioned, when I say institutional investors are buying up homes, I'm not talking about mom and pop landlords who own a couple of ren properties. I'm talking about massive corporations with billions of dollars. These companies have a strategy, and it's brilliant from a business perspective, but it's terrible for regular Americans. They go into markets, they identify undervalued properties or markets that are about to grow, and they buy everything they can get their hands on. They pay cash, they close fast, and they outbid families every single time. Why can they do this? Because they have access to cheap capital. They can borrow money at rates that you and I could never get. They've got relationships with banks, they've got investors, and they can afford to lose money on individual properties because they're playing the long game. They're building portfolios of thousands of homes. And once they own enough homes in a market, they have pricing power, by the way.

And this benefits us as investors in so many ways. Now, we know Trump made that recent statement about institutional investors, which I find ineffective. Okay? And here's why. Let me just go on to that for a moment, okay? You know, he later clarified the statement about what the administration is going to try and do. And they haven't defined institutional investor, but most people think it's investors that own 1,000 or more homes. Okay, this is not apartment investors. Those are obviously institutional investors, but single family homeowners that own 1,000 or more single family homes. What's interesting about that is he said, well, we just don't want you buying up all the single family home inventory, but it's totally okay if you do build to rent, okay? Like, didn't you connect the dots there, folks? Okay? I hope you did, because Trump didn't. You know, and a lot of what Trump says is hyperbole and window dressing. Like any politician, right? And I'm a fan, okay? But you know, even him, right, he's still a politician. And so what's interesting about that is if Invitation Homes or American Homes for Rent or any of the other big institutional single family landlords, if they go to Dr. Horton or Lennar or KB Homes or any other builder, and they say, hey, we need you to build us 10 tracks of homes, 200 homes each, okay? That's 2,000 homes. Now, what do you think happens to that builder, right? That builder thinks, oh, basically you've sucked up all our capacity to build homes that individual home buyers would buy. So now we can't build as many of those because we're building for institutional accounts, it's the same problem. There's no solution there to the problem of if you think the problem is greedy corporate landlords that are buying up all the housing inventory, that's the same thing. That solves no problem, okay? In terms of the housing shortage, no problem has been solved there, okay? But everything the government does is pretty much always a band aid, right? It's never a real solution.

People who bought homes when rates were low are locked in. They've got mortgages at 3%, three and a half percent. They're not selling because if they sell and buy another house, they're going to get a mortgage at 7 or 8%. So they're staying put. That means even less inventory on the market. So now you've got high prices and low inventory and high interest rates all at the same time. It's the perfect storm. If you're trying to buy a house right now, you're getting crushed from every direction. The house costs more than it should. There are barely any houses available and the cost to borrow the money is astronomical. It's almost impossible. And let me tell you who this hurts the most. It hurts first time buyers, it hurts young families. It hurts people who are trying to move up from a small apartment to a house where they can raise their kids. These are the people who are being locked out of the market. And meanwhile, the investors who already own property, they're sitting pretty, their assets are appreciating, they're collecting rent, they're making money hand over fist. This brings me to the policy side of things, and this is where I really start to lose my mind. Because we have politicians who stand up and say they care about affordable housing. They give speeches, they make promises. But when it comes time to actually do something, they do nothing. Or worse, they do things that make the problem worse. Let me give you some examples. You've got cities that have rent control. Now I understand why people think rent control is a good idea. They see rents going up and they want to protect tenants. But here's what actually happens with rent. Landlords stop investing in their properties because they can't raise the rent to cover their costs. Developers stop building new rental housing because they can't make money on it. So you end up with less housing, not more. It's basic economics, but politicians ignore it because it's not popular to tell people that rent control doesn't work. Then you've got zoning laws. I mentioned this before, but let me dig deeper. In most American cities, the majority of residential land is zoned for single family homes only. You can't build an apartment building, you can't build a duplex. You can't build anything except one house on one lot. That made sense maybe 70 years ago when cities were smaller. But today, when we need density, when we need more housing in the places where people want to live, these laws are killing us. And who fights to keep these zoning laws in place? Homeowners, people who already own property, don't want more housing built near them because they think it will lower their property values or change the character of their neighborhood. So they show up at city council meetings and they block new developments. And the politicians listen to them because they vote. Meanwhile, the people who need housing, the young people, the renters, they're not organized. They're not showing up to these meetings so their voices don't get heard. This is what I mean when I say the system is broken. The incentives are all wrong. The people who have power benefit from keeping housing scarce. The people who need housing don't have power and nothing changes. Let me tell you what needs to happen, and I'm going to be blunt here. We need to build. We need to build millions of homes. We need to make it easier to build, faster, to build, cheaper to build. That means cutting red tape. That means reforming zoning laws. That means investing in infrastructure so that we can develop new areas. That means getting the government out of the way in some places and getting the government more involved in other places.

Now, here's the interesting thing about this statement because you might be thinking, well, if people actually listen to this and they allow the building, the building happens. Which, by the way, one of the most important things to understand in the way dynamics work, especially in the political arena, is the iron triangle. Okay? The iron triangle, and we've talked about this on prior episodes, but the iron triangle is where everybody is benefiting from the way the system is now. So nobody really wants to change it. They talk about it, they say it's a problem, they acknowledge the problem, but they don't actually change it because they're benefiting from it. Okay? I mean, we know we now live in the United States of fraud with the Minnesota Leering centers and all these epic scams, right? I just, I just read an article about how a homeless group CEO in Los Angeles has now been caught or is accused of embezzling all this money from the organization. Charities are a total scam, folks. I mean, almost every charity is at one level, another, a scam. Think about it. Think about what a charity is. It's just Like a syndication or a fund or a stock, okay? You've got all of these elites who are running the thing, okay? And they're skimming the money off the top. They don't care about the cause, okay? They're just lining their own pockets. And then, you know, the crumbs go to the cause. Syndication, a fund, a stock, you know, the people that set it up, the people in the C suite, the general partner, whatever it is, the fund manager, they're the ones that line their pockets. And some crumbs go to the investors, okay? You have got to be, to whatever extent possible, a direct investor until you get wealthy. And once you're wealthy, then you can cruise, you know, as Dave Ramsey says, you put it in neutral and, you know, stick your money in some mediocre crappy investments and just cruise along and get, you know, get your meager returns. But if you want to make money and create wealth, you've got to be a direct investor, okay? That's just. Just absolutely critical. Because commandment number three, you might be investing with a crook, you might be investing with an idiot, but assuming they're honest and competent, they take a huge management fee off the top for managing the deal. So be a direct investor. The same is true of a charity, okay? You want to do charity work, do direct charity work, right? Philanthropy, rather than putting it into some organization, you just know only a little bit of that will actually trickle down. So we've got these iron triangles, and all of the interested parties with all the wealth and power are benefiting from the way it is. Now. The other interesting thing is, say, for. I mean, some of the zoning reform has happened, and I'll give them credit. I mean, scumbag Gavin Nuisance in California actually, you know, allowed the ADUs to happen and all of that stuff, the accessory dwelling units, that's great. Maybe that will relieve a little bit of the pressure. It won't do much but a little bit. But here's why this problem does not go away. Even if we reform zoning nationwide tomorrow, okay? If we said any lot in America now, you could build three houses on it instead of just one, okay? We'll triple the housing supply, they all think, or, you know, we'll add all this new housing. Won't happen, at least, and specifically not at the entry level. Why go back to the Hartman risk evaluator, okay? You know that the main cost of that house consists of the materials and the construction cost. Those are hard costs. And unless you can lower the cost of those inputs because the land value isn't much at all in the entry level. The land value is much more significant in high end homes. Sure. You know, if you've got a multi million dollar property, a lot of that is land value as a percentage. Okay, but the Hartman Risk Evaluator taught you about the LTI ratio, the land to improvement ratio, kind of like LTV on mortgages and loans, right? This is the lti. It's not the loan to value ratio, that's the ltv. This is the land to improvement ratio. And you know that in entry level housing, most of that cost is in the improvement. So unless those input costs can go way, way down and all of those materials get cheaper when they happen to be getting more expensive, nothing's changing in the entry level housing market in any significant real way. It's just not. The math is just unassailable. You can't change that math unless you can do what I said before. Okay, let's continue.

I know that sounds contradictory, but here's what I mean. The government needs to stop blocking development with unnecessary regulations. But the government also needs to invest in things like roads, water systems, public transportation. The kind of infrastructure that makes it possible to build new communities. Private developers can't do that on their own. It requires public investment. We also need to have an honest conversation about who gets to buy residential real estate in this country. I'm not saying we should ban foreign investment. I'm not saying we should ban institutional investors. But maybe we need some guardrails. Maybe there should be limits on how much of a neighborhood can be owned by investors. Maybe there should be tax incentives for first time home buyers and tax penalties for entities that are buying up homes just to flip them or leave them empty. I know some people are going to call that government overreach.

By the way, I wanted to address the buy the house and leave it empty concept for a moment because you know that we recently updated all the Performas for Property tracker and on our website on jasonhartman.com all those performas have been updated so beautifully. If you haven't looked, you need to drop everything and look now. Okay, go to jasonhartman.com, click on the properties page and go to propertytracker.com and get yourself a free, free, no strings attached account. Yes, you can get an upgraded account if you want, but you don't need one. Just get a free account. It's totally free. Okay. And do the first year Performa and I highly recommend. I was talking to one of our investors, Elena, the other day. She's in our empowered investor pro group. I was talking to her and I was saying, you know what I want you to take out of your portfolio, Take your worst property and look at that in Property Tracker. Look at the pro forma okay. Of your ugly stepchild property, the worst one you've got. And amazingly, that property is performing much better than you think because of inflation induced debt destruction. So why would these big institutional investors, as Kevin o' Leary was just saying, or his AI bot was just saying, I don't know which one. Comment below, tell me what you think. Okay. Maybe it's just the AI background. I'm not sure. I always wonder about this. You just can't tell anymore. It's amazing how good it is. So why would they buy these homes and leave them vacant? Because you can actually make money doing that. You know our standard assumption on our performance because we're not one of these sleazy groups out there like so many others that basically say there's never going to be any vacancy or they don't perform at any vacancy rate. We perform a one month per year, 8%. 8% vacancy is our standard assumption. But I want you to take the vacancy rate and make it 30%. Make it 50% even. I dare you, make it a 100% vacancy. In other words, the property produces zero income. Nothing, nada, zilch. Okay, do that. And depending on the deal and the other factors, you could actually be make money, make money with a property that is no longer an income property, it's just a property you're holding. Kind of like the way investors do land banking. If you know, we've talked on the show before about land banking. Right. But the problem with land is it just doesn't have the multidimensional characteristics that you do with the properties. Okay. And now that you can see all of the math, including the inflation induced debt destruction, my trademark strategy that I've been teaching for 22 years. It is mind boggling how much of the return on investment is like the iceberg, most of it being below the surface of the water. It's incredible. Just do that. Go get yourself a free account@propertytracker.com or just look at the properties. The static performance@jasonhartman.com in the properties page.

They'Re going to say the market should decide. But let me tell you something. The market is deciding. And what it's deciding is that regular people lo. So maybe we need to tip the scales back a little bit in favor of the people who actually want to live in These homes, here's the bottom. We are at a crossroads. We can continue down this path where housing becomes more and more expensive, where ownership becomes something only the wealthy can achieve, where an entire generation is locked out of building wealth. Or we can make some hard choices. We can change policies, we can prioritize housing the way we prioritize other critical issues. But it requires leadership. And right now I don't see that leadership. So what happens if we don't?

What other critical issue, by the way, Kevin, are we prioritizing or what problem have we solved in college tuition, K through 12 education, health care cost? None of these problems have been solved. And supposedly they're priorities, but they just never get solved. Why? Because so many people are benefiting from the system the way it is. There's an iron triangle. There are iron triangles everywhere you look and they just can't be broken. So that's probably not going to change much. I mean, there will be some nibbling around the edges, right? It's kind of like, you know, those who argue that the US dollar is going to lose its reserve currency status, that's another iron triangle, okay, that the US is massively benefiting from. But, but say it did happen. Well, what would happen to us as investors if the US dollar lost reserve currency status and say the BRICS took over, which is like a fantasy, okay? Just not going to happen. I mean the brics, some of these countries hate each other. Like the brics are like a much worse example of the eu, which is also a disaster. Okay? So not going to happen. That's just a fantasy. But say it did say tomorrow the dollar wasn't the reserve currency. Well, what would happen? The US would suffer from much, much more inflation, but that inflation would benefit every investor following my plan, my inflation induced debt destruction strategy. So that would actually be great news personally for you. I don't think it would be good for the country, but individually you would benefit in a huge, huge way.

What does America look like in 10 years, 20 years if we continue on this trajectory? Let me paint you a picture and I promise you you're not going to like it. But you need to hear it because this is where we're headed if we don't change course right now. Imagine an America where home ownership is something only the upper class can afford, where the middle class, the background backbone of this country, has been reduced to permanent renters, where your kids and grandkids will never own a home no matter how hard they work. That's not some dystopian fan they'll be.

Renting it from you. So congratulations.

That's the reality we're creating right now with the choices we're making today. When homeownership rates decline, wealth inequality explodes. And I'm not talking about some abstract economic concept. I'm talking about real wealth that determines whether your kids can go to college, whether you can retire with dignity, whether you have something to pass.

And why should college cost 50, 100, $200,000? That's completely absurd. That is an iron triangle scam of epic proportions. There is absolutely no reason college should cost that much. There is absolutely no reason that Harvard should have this giant endowment that, like, why does it need that money? These colleges are nothing more than hedge funds. That's what they are. They're hedge funds and real estate investors. They're institutional real estate investors. Every college town in America, guess who owns the vast majority of the real estate. In most cases, the college. Okay, you look around here in Arizona, asu, they own real estate. Everywhere you look, you turn your head north campus, the main campus. There's all kinds of satellite campuses. There's one downtown. They own buildings, land, all kinds of stuff everywhere, you know? And I mean, it's unbelievable, you know, like, it's just ridiculous. But I digress.

So on to the next generation. For most Americans, their home is their biggest asset. It's how they build wealth. Take that away and you've got nothing. You've got people working their entire lives and ending up with zero net worth. Let me break down the math for you, because math doesn't lie. Let's say you're renting and you're paying $2,000.

And by the way, if you look at the stats on renter net worth versus homeowner net worth, it is not pretty. But. But that's like saying, okay. I mean, I just want to. It's generally true. And what Kevin is saying is true, okay? But it's not quite as simple as they make it out to be. I love the example of Colin, right? You've heard the studies and the reports that say, well, the typical kid that finishes college during their career, they will make over $1 million more than their peers who only finished high school. Okay, wow. Better go to college. People say, no, that is so flawed, that logic. Why is it flawed? Because you can't hear the dogs that don't bark. And compared to what? Those kids that are going to college already had a head start in life. They were already ahead of the kid like me who grew up poor in Los Angeles, and You know, didn't finish college. Okay? Although things worked out pretty well for me financially, that's for sure. But you know what I mean, right? Those kids were already from better families that had more resources, that had more connections, whose parents pushed them harder, okay? Rather than the kids who didn't finish college. Now, it's nice to see that people are realizing that this is a lie. These statistics are just a lie. And it's also nice to see that the power is starting to shift to the trades and the blue collar people. You know, a gal meeting a guy in a bar nowadays, she always wants to know what he does because, hey, women like money, okay? And you know, it used to be, oh, I'm a lawyer. That's a big deal. That's great. You know, lots of lawyers are broke, okay? I'm a plumber. That might be the better catch for you, you know? That might be the better catch.

Thousand dollars a month. Over 30 years, you're going to pay $720,000 in rent. And at the end of those 30 years, you own nothing. Zero. Now, let's say you buy a house with a mortgage. You're paying roughly the same amount every month, maybe a little more when you factor in property taxes and maintenance. But at the end of 30 years, you own an asset and that asset has likely appreciated in value, even if we assume modest appreciation, you're looking at hundreds of thousands of dollars in equity. That's the difference between wealth and poverty and retirement. But here's what's even more insidious about this crisis. When people can't afford to buy homes, they can't afford to have families. I'm serious about this. Go look at the data. Birth rates are declining in America. People are getting married later. They're having fewer kids. And when you ask them why, one of the top reasons is financial insecurity. They can't afford a house, so they can't afford to have children. They're living in one bedroom apartments or with roommates well into their 30s. This has massive implications for our economy, for our society, for our future. Who's going to pay into Social Security when there aren't enough young workers? Who's going to buy all the goods and services that keep our economy running? Who's going to take care of the.

And you know what all of that means? He's talking, basically he's addressing the dependency ratio, right, of not enough young workers supporting the system, paying into Social Security. Well, you know what all of this means. And you add it to the longevity boom where People, hopefully through tech, through the new technology that's just, you know, it's just coming out every day, right? Are extending their lifespans. This means inflationary pressure. That's what it means. And inflation benefits us so much as income. Property investors. It's funny, like how two people could consume the same piece of content and one views it as, oh, everything's collapsing. And one views it is, there's a huge opportunity here, yet it's the same circumstances, right? It's just amazing. That's the difference between the winners and losers right there.

Aging population. We're creating a demographic time bomb and nobody wants to talk about it. Now let me tell you about the social consequences because this isn't just about money. When you have a society where a small number of people own everything and everyone else is just scraping by, you breed resentment, you breed anger. People lose faith in the system. They start to believe that the game is rigged. And honestly, they're not wrong. The game is rigged, right? Now, I've been to countries where this is the reality, where there's a small.

I've been to many countries like that and it is not good. And you've got to read that book that I always talk about and I've quoted many times, War on the Middle Class by Lou Dobbs. It's maybe. That book's maybe 22 years old now. I think I read it about 22 years ago and it's so good. Especially chapter two, War on the Middle Class by the late Lou Dobbs.

Wealthy elite. And everyone else struggles. And let me tell you, those are not stable societies. Those are places where crime is high, where trust is low, where people don't believe in their institutions. Is that what we want for America? Because that's where we're going if we don't wake up. And here's the thing that really gets.

Me, and there's a name for that. It's called the Banana Republic. And that's what California has become. That is the poster child for the Banana Republic state. And I'm not talking about the clothing brand, okay? Where you've got these ultra rich oligarchs and you've got everybody else, and California is probably the best example in the US of that. But around the world, I mean, that's the way most countries are. You go to, you know, Costa Rica, you go to any, you go to anywhere south of the US border and even you go north, you go to Canada. Canada's become a Banana Republic. I mean, talk about a government that has basically destroyed so many of its own people. Canada is a great example. Europe, Banana republic. Right. So it is what it is.

This is all preventable. This isn't like a natural disaster where we have no control. This is a man made crisis. We created this through bad policies, through regulatory capture, through putting the interests of the few ahead of the interests of the many. And that means we can fix it.

Well, not just regulatory capture, but also rent seeking. And you know, rent seeking is kind of a difficult concept to get your head around. It has nothing to do with rent seeking, you know, renting out houses or anything like that. But just look up rent seeking and you see all of these corporations and I think the most disgusting of them all in this rent seeking example is big tech. They are the biggest rent seekers of all of them. But the health care industry, the legal industry, I mean, you know, everything has become an iron triangle, okay? Rent seeking, big part of it, only.

If we have the will. So let me tell you what you need to do and I'm talking to you, the person watching this video right now. First, educate yourself. Don't just take my word for it. Go look at the data. Understand what's happening in your local market. Knowledge is power and you need to know what you're up against. Second, if you're in a position to buy, do it. I know it's expensive, I know it feels overwhelming, but if you can find a way to get into the market, even if it's a small condo or a house in a less desirable neighborhood, do it. Because the alternative is renting forever and that's financial suicide. Build equity while you can. Even if you have to make sacrifices in the short term, it will pay off in the long term. Third, if you're locked out of the market, don't give up. Start saving aggressively. Cut your expenses, Get a side hustle. Do whatever it takes to build up a down payment. I know it feels impossible, but I've seen people do it. It requires discipline and sacrifice, but it's possible. And look into programs for first time home buyers. There are grants, there are low interest loans, there are programs that can help. You have to do your homework, but the resources are out there. Fourth, and this is critical, get involved politically. I don't care if you're Republican, Democrat, independent, whatever. This issue should unite all of us because it affects all of us. Start showing up to to your city council meetings. Start asking your representatives what they're doing about housing. Vote for candidates who have real plans to increase housing supply. Hold them accountable. Politicians respond to pressure, but only if we apply it. We need to demand that our leaders reform zoning laws. We need to demand that they streamline the permitting process. We need to demand that they invest in infrastructure. We need to demand that they create incentives for building affordable housing. And we need to demand that they put guardrails on the institution, institutional investors who are distorting the market. I'm not naive. I know that changing policy is hard. I know there are entrenched interests that benefit from the status quo. But we have numbers on our side. There are millions of Americans who are being hurt by this crisis. If we organize, if we speak with one voice, we can force change. But it starts with you. It starts with people deciding that they're not going to accept this anymore. Now, let me talk to the homeowners watching this video. I know some of you might be thinking, well, my house has gone up in value, so this is good for me. And yes, on paper you're wealthier. But let me ask you something. Do you have kids? Do you have grandkids? Because they're the ones getting screwed by this. Your home equity doesn't mean much if your children can never afford to buy their own homes. Think about what kind of world you're leaving for them. And think about your community. Do you want to live in a neighborhood where everyone is a renter, where people are constantly moving in and out, where nobody has a stake in making the community better? That's what happens when homeownership becomes unaffordable. Your property value might go up in the short term, but the quality of life goes down. We need homeowners to be part of the solution, not part of the problem. That means supporting new housing development, even if it's in your backyard. That means recognizing that we need density, we need more units, and that's not a threat to your lifestyle. It's how we make sure the next generation has a shot. Let me wrap this up, because I know I've thrown a lot at you. Here's what you need to America is facing a real estate crisis that threatens the very foundation of middle class prosperity. Prices are too high, supply is too low, and the people in charge aren't doing enough to fix it. If we don't act now, we're going to create a permanent renter class. We're going to hollow out the middle class, and we're going to fundamentally change what it means to be American. But it doesn't have to be this way. We can fix this. We can build more housing. We can make it more affordable. We can make sure that the American dream of home ownership is still achievable for the next generation, but it requires all of us to get involved. It requires us to demand change.

So nothing he said makes entry level housing more affordable. Not the zoning. I mean, you know, not in any significant way. Not the zoning changes that he's talking about. None of that. Okay? The only thing that makes in any significant way, I don't want to say all or nothing statements. That's just not accurate. Okay? But the only thing that makes any real change for entry level housing affordability is you must massively reduce the cost of construction materials. That's it. Okay? The land is not the issue in the entry level market. It is the issue in the higher end market. Land is a big part of that equation. But in the entry level market, it is not the issue. Okay? You've got to focus on the construction cost because of those two components, the land versus the improvement. The house is the improvement. Sitting on land is the improvement. Right. The big cost is the construction materials. All right. We've gone long today. There's a million other things I could have brought up about that video, but I really wanted you to see it and I wanted to make some comments on it. I hope it was helpful to you. Remember, we've got our Wednesday master classes every single month for, for free. Jasonhartman.com Wednesday we had a fantastic one on Co Living last month that was really good. I hope you were there and hope you're checking out those opportunities. We've got Empowered Investor Live coming up and that is coming up in May in Irvine, California. Not the same hotel as last time, but very close to it. Literally five minutes from Orange County Airport. So really easy to get to that one in May. Empowered Investor Live. We'll have information for that soon. You can go to empoweredinvestorlive.com by the way. Also, I've got a couple of my Mastermind yacht adventures coming up. One around St. Barts and surrounding islands and then one in Croatia. Mastermindyachtadventures.com for that. And that is it for today. 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.