2394: The Great Inventory Spread: Capitalizing on the Gap Between Rising Populations and Shrinking Housing Supply

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My name is Brandon Cook.

This is my fourth Meet the Masters seminar. All these markets that Jason and his network endorses are great markets. We're getting better. Higher rents, prices are going up right now. But with financing terms as good as they are, they're still real great deals and all have been through Jason's network.

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 whose own 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.

Alrighty, folks, we got the one and only Mr. Jason Hartman. We are going to talk about AI, we're going to talk about job losses. We are going to talk about the housing closing market and what might the ripple effects be. But before we do that, Jason has a little funny announcement that I actually don't know what it is. So let's figure out what it is. What's going on, buddy?

Well, I must tell you, I have relinquished my title. I had to about four days ago. I have to relinquish my title that I held for almost two years as the richest homeless man in the world. Oh, no, I am no longer the richest homeless man in the world. Not because I got poor, it's because I got a house.

Nice. Nice. So you found something in the Scottsdale area or did you land somewhere else?

Yeah, yeah. So it's amazing, Michael. I mean, moving is such a nightmare. Everybody hates it. It's like universally hated. Right. And I moved partially out of storage and I literally had 400% more than the stuff I actually moved. Right. That, like, still in storage.

Understood.

You know, I have really struggled with this whole idea, I've kind of studied it, of minimalism. I just can't even come close. Like I every time I move and I'm sure other people feel this way. That's why I'm sharing this story. Right. I feel like I have so much junk. Like, what do I need all this stuff for? It would be so nice to have a lighter weight life. And for almost two years I've done the kind of like nomad thing a little bit here and there over, over the years, but I really did it this time. For almost two years. I sold my house in Palm beach one year and ten months ago.

Oh, wow.

So I have been kind of roaming around. I went around the world twice. I did, I did some slow travel, you know, I spent much more time in places than, you know, I've traveled extensively before this, but. And I only hit a few new countries actually. I'm up to 99. Is my country count now. Uniques. But some of them I've been many times over. And I couldn't believe I accomplished living out of a suitcase and a backpack that whole time.

It can't happen. It can happen.

The lesson is how little we actually need.

Right?

And there were so many lessons from that, but just another one of them that amazed me. And I think people should really appreciate this. You gotta appreciate and be grateful for your ancestors because they made this incredible world for us and especially our capitalist ancestors. And here's, here's what I want to share. That so has amazed me over the last two years. Now I have money and resources, of course, right. Everybody listening does too. Right? But I can't believe it. How I could just show up in a foreign country and pull out my phone when the wheels hit the tarmac and book a hotel and they got everything I need there. They've got food, they've got drinks, they've got fresh bedding and cleaning services and anything I want, you know, transportation services, it's all just on demand. Capitalism is so fricking efficient at distributing resources to where they're needed. And what I also learned from that extensive travel this is that the less capitalistic the country, the more inefficient it is.

Oh, for sure.

Resources, right? But the more capitalistic it is, the more it distributes resources just really well, really quickly, really efficiently and really inexpensively. It's just kind of an amazing world that, you know, anywhere you go, as long as you have a few bucks, everything's taken care of, all your needs are met everywhere you go.

Yeah. One of the things, you know, I hope all the listeners get to do, you know, when it's right for them, is travel the world. You know, a lot of folks, you know, never leave the city or state they're in, but you don't really appreciate you have until you See the rest of the world. And, you know, that's something I wish, you know, everyone gets. Well, congratulations on getting your home. Congrats on not being homeless. We may talk about lessons from that in another episode. But I want to jump into AI

One more thing I want to say about the minimalism thing on that thread. Okay, so some of these minimalists, okay, literally, they were doing this challenge that I read about, and the challenge was this. Can you only own 100 things?

I've heard of this, yes.

Yeah, I mean, like, I don't know how you could possibly live with 100 things only. I mean, I have like thousands of things is. I'm unpacking. I'm like, I forgot I owned this. I forgot I owned that. You know, and it's. And, And I've still got a lot more in storage that I haven't seen for two years. So. Yeah, it's really just kind of an amazing revelation. It really is. I just wanted to share that.

Yeah, that's funny.

Your audience is the first person to hear I gave up the title.

Very, very cool. Well, well, let's jump into AI because, you know, I think there's a lot of people out there that think AI is going to be this utopian world where, you know, suddenly money doesn't mean anything. We've heard Elon Musk say things like that. We've heard about deflation, right? The cost of a car being, you know, pennies or dollars. It's just all of these things. But I think most people's initial concern is it's going to come out and just wreck the job market. We even had Fed President Christopher Waller this morning say that it's really under. Easy to understand the jobs that AI will replace and replace quickly. But it's hard, at least currently to see what jobs AI will create. So when you. When you think about AI, step one, do you see it as a job destroyer or a job creator?

I think overall it's a wealth creator, and that's more important than it being a job creator.

Well, let's. Let me poke. Well, let me poke at that because again, I think it's. I think it's easy to say that when you look in total, but I think the greatest fear of AI, at least in my perspective around wealth, is it will be concentrated in the tippity top of the sphere, right? So the. The oligarchs of the world will become trillionaires and the rest of us mere mortals will suffer. So I agree with you. In total, it'll be wealth Creator. But I don't think it'll be dispersed anywhere close to evenly.

Here's where I disagree with that. I think you're right. The oligarchs will become multi trillionaires like Elon. If Elon lives his full natural life, which, God, I hope he does. I hope he lives longer. He's so brilliant, right? You know, he's just contributing incredible things to humanity. He will be a multi, multi trillionaire with, with Mars and, you know, moon and everything.

He could be there as soon as SpaceX pops. I mean, he could be.

You know, the funny thing is I, I had a dream last night. You just made me remember it. You know, you usually forget your dreams. And my dream last night is that the moon base opened and it was called Moon Base X. Elon loves the letter X for some reason.

Yeah, that's, that's that. I would put money on that. That's a. Probably a pretty good.

Pretty good. Yeah, yeah, yeah, There you go. I do believe the wealth gap will increase and it has increased dramatically. But that doesn't mean that the people at the lower end of the spectrum are worse off. They're better off.

No, yeah, the gap bigger, but the

people at the bottom can still be pulled up more. Okay, but the gap can be bigger because we will see untold amounts of wealth created from this revolution. So it's.

Yeah, so, so to put some numbers on that just, just to make, just to, you know, make sure I'm hearing you correctly, if we assume the wealthy is 2 today and the in the poor is 1, we could see the wealthy go to 16, so they go up 8x where the poor, you know, go to 3, so they go up 300%. So everybody's better off. But the gap is also wider. So both, both true.

Both things can be true at the same time. Absolutely. You know, there's the old saying of the rising tide raises all the ships. And I think it, it mostly does. Okay. I mean, you know, look, as I always say on my podcast and my YouTube channel, you must watch old movies, watch old TV shows.

You've said that before.

Read old books and listen to old music. You know, just watch a movie from the. I was recently watching, oh, some black and white movie from the 40s, I think, and it was like, you know, it sort of profiled the 30s depression, but I think the movie was made 40s, you know, that the way people live, like hopping on train cars and you know, the idea of a hobo or a bum, they, they had a stick with a, like A pillowcase wrapped around it with their stuff in it. That's all they owned, is they. The stuff they hold on that stick. And, you know, it was there. That was. They didn't even have a backpack. Right. I mean, think about it. Think about just backpacks, okay. For a second. That's not a new invention, obviously, but when I went to school, I remember when I was in junior high school in Los Angele, I would walk to school and walk home every day. Okay. And it was uphill both ways in the snow. Just kidding. You know, your, your ancestors always say that, right? And, and I didn't have a backpack and I had to carry these books and carry my musical instrument from music class. And it was dreadful. You know, like, if I just had a backpack, it would have been great. And nobody carried backpacks then, right? I mean, they obviously were invented, but it just wasn't a thing. Okay. And so AI will make everybody wealthier, but of course it will make the wealth gap bigger at the same time, and it will be painful during transition periods.

That's the part I want to get to. Yeah, of course. I think I, I will agree with you now that everybody will be better off once it is, you know, kind of in the system and it's what we know. I think that's, I think that's extremely fair. But times of disruption are hard, of course, and they seemingly come out of nowhere and people are caught flat footed and surprised. And I do agree with Christopher Waller. I, I think unfortunately, AI is moving at such a rate that layoffs will come first and probably larger than expected before. You know, human beings just do what we always do is find new things to do. You know, I mean, I, I love putting numbers on things. If you, if you think unemployment today is 4, 5, which I think was the last number reported, you know, AI by 2027, it. It might take us to seven and a half. I mean, it could be that. It could be a solid jump.

I think one thing to think about is, you know, when you go to poorer countries than the U.S. and that's. Almost every country is poor.

Almost everyone, Yeah.

I mean, except for those Middle Eastern oil sheiks and a little bit of Asia. Right. You realize that no matter how much money you have there in like Medellin, Colombia, right? No matter how much money you have, there are services that just aren't offered because the other people don't have enough money to support an economy that would demand those services. And it's the example I think I shared with you a couple of weeks ago, you know, I was going to get my dog groomed. And you know, when I was a kid, there were no dog groomers. Like, you just. You just watched.

Got out of hose. Yeah.

You know, you know, you just. You just gave the dog a bath with a hose. Okay. The point of that is that people do not know what they will want in the future. And that's why it's hard to imagine as more prosperity is created, more demand for new services and new products are created. I'll tell you something. I just. I've been spending money like crazy, you know, buying stuff for the house here, right? And this morning on Amazon, I just ordered two wireless, battery operated, USB chargeable, touchless foaming soap dispensers.

Okay?

So now I can just put my hand under this.

Now you're bougie. I knew you were bougie, but I didn't know you were that.

But two of them cost. The two of them.

I'm teasing.

29. Okay. 15 bucks a piece for those things. And think, think about it. When I was a kid and I went into public bathrooms. Yeah. Okay, you know what they would have? A bar of soap, a disgusting bar of soap that everybody was using. And you know what else they had, they didn't have? I hate those stupid hand dryers. They didn't even have paper towels. They had one of those things. You know what I'm going to say, right? Yeah. It's just gross. And you know why that's gross? Because you might be using a new piece of fabric, but the roller that all the prior fabric was on is the same roller. That's disgusting. Right? So, folks, read the Rational Optimist. Someone at your conference recently, Michael, told me they read that book and really liked it. The book, Basically, the premise is everything just keeps getting better and nobody appreciates it.

Yeah.

Okay. Like the WI fi connections keep getting better, faster, more reliable, and just. It just keeps getting better. And like, you just don't even notice. We all just take it for granted, you know? So AI is going to be the same way. It's just everything is going to get better. Everybody's going to get richer. I mean, as long as it's not the Terminator scenario, as Elon likes to say, you know, that could happen, too.

There's a non zero chance that that will be the outcome.

That's above my pay grade. I. I don't know. You know, it's possible. But if that doesn't happen and it's just used for good, it's all going to Create more wealth. And you know what that's going to do. It's going to drive real estate prices higher and that's going to make you money as an investor.

Yeah. Where, where I kind of lead this to, and it's all about real estate for me is okay. I do think job disruption will be negative in the short term, but positive in the long term. You can argue what short and long

term mean, but where I really like negative jobs versus positive jobs. So the short term pain and in the long term benefit gain.

Yeah, absolutely. But where I really step back and think about real estate is, you know, I think we have some very highly concentrated markets like Seattle, San Francisco, San Jose, Austin that are very tech heavy. You know, they have a disproportionate amount of engineers and computer scientists and all of those things. And my gut reaction is that job type gets disrupted a lot quicker and a lot more dramatic than people are expecting. Which again, if you carry that forward, could have a disproportionate impact on those local real estate markets. Right. The fact that the Silicon Valley's median home price is like 1.1 million in a world where maybe you, you lose 10 or 15% of engineers and computer scientists in the Bay Area, that's going to hurt home prices in very. So that's where I think the big risk is, is tech centric real estate markets. But I don't know, that's just where my brain took it. I don't know about you.

Yeah, I think that is certainly going to get disrupted very quickly because. And I think that also is an issue of wealth concentration because, you know, you remember just not too long ago, Zuckerberg was offering 100 million dollar pay packages.

Yeah.

And of course that was a scam. All he wanted to do is his competitors, which he successfully did. And you know, basically the whole thing's falling apart and he's not really paying people that you know in real life in any real way. But you know, he just, that was just to cause disruption, basically. So that happens too. The people at the top end who are really like creating these products are making fortunes, but all the people doing the grunt work are being replaced by the AI itself. Right. So. Yeah, that's true. Yeah.

Yeah. So again, I think when I look at the markets, I see the most and it's probably 10 markets or less. I mean it's most, it's easiest to say Seattle, San Jose, Austin, and there's probably others. But when I think about most of the market, I actually see AI being a benefit because you're going to be able to, you know, you're going to be able to frankly live farther away, live anywhere. And we're going to see a lot more migration, which I think in total, it's a net positive to housing. But again, if you are concentration with your, your holdings in the Silicon Valley, I feel for you maybe time to diversify.

Yeah, right, right. I, I would agree with that. And you know what? I, Interestingly, I think Covid did that to some extent.

I think it was the first. Yeah, it was the first attempt at. Exactly.

And that was the, you know, the rise of the, what they call zoom towns. Right. Using zoom to work remotely. And so that gave people a lot more freedom to do that. You know, I mean, listen, we've been remote since 2012, and my companies, it's, it's interesting. I do have one chart I want to make sure I share with you today.

I love your.

I wish I would have shared this chart event because it is one of the most important charts. It's on real estate, not AI but when you're ready.

Yeah, yeah, let's do it. Share it. And again, folks, as Jason's bringing this up, I do want to give Jason a special shout out on camera. Over a hundred of you wanted me to say thank you to Jason because he was the big name that stuck around for both days of our event. So my, my audience, my community saw it, they recognized it, and Jason, they wanted to say thank you very much. So appreciate that.

Well, that's wonderful to hear and I'm glad that my content was valuable to your audience. You got a great group of people there, great community. Michael. Ye.

And the slide is up.

This is mind blowing. I mean, it's the same stuff we've been speaking to all along, but here it is in a chart. If you look at the Great Recession, okay? And I hope you can see my mouse here. And remember, housing inventory depends on what study you're using. Okay? So, you know, we all, all know that it's, you know, whether you're using NAR or altos or whatever. Right. It all depends. But in this version, this data is 4 million during the Great Recession. Okay?

4 million active listings.

Yep, yep. That's a lot. Okay. The population at the time, 301 million in 2007. Okay. And then we see what happened to inventory, and we see what happened to the population.

So would you call both of those trends? Would that be a trend? Inventory is down and population is up.

I mean, this gap, okay, here, this spread is everybody's opportunity. Who's listening to or watching this? Okay. Housing inventory is extremely low and population is dramatically higher. I mean, we've added 39 million people since the Great Recession.

And, yeah, let me say that another way. So we're up roughly 13% population, and we're down 75% in inventory.

Yeah, that's great. Yeah. Great way to look at it. Yeah.

This is what's going on, and it's not getting any better. Right. The population is going to be increasing. And, oh, by the way, we're seeing, you know, housing starts fall and permits fall. And. Yeah, I think that is. That is the opportunity.

This is a huge opportunity, folks. All of you listening and watching this are the same people I was referring to when I talked about my travels. You are the capitalist who can help distribute these resources to people who need housing. Let them rent this housing from you, buy some more rentals so you can serve this needy population. Right. They do need to be served. So Empowered Investor Live, our annual conference coming up in May in Irvine, California, go to empowered investor live.com and one of our keynote speakers is none other than Michael Zuber, who, by the way, Michael, I gotta say, at your event, you didn't say much.

Nope.

You just let everybody else talk. Well, at my event, you're gonna talk.

I like it.

Because you're gonna have the stage all to yourself.

Okay, I. I appreciate that. I appreciate the opportunity. Jason, you're amazing. Thanks for coming out. Look forward to having you back next year.

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