2395: The Scam of Inflation & The Great Alchemy: Debt, AI, and the Future of Wealth

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do you want more real estate in your portfolio? Maybe you just want to get around folks that are really doing the thing. Well, you need to be at Empowered Investor Live with my friend, Jason Hartman. Hi, I'm Robert Helms, host of the Real Estate Guys radio show. And I noticed that people that are successful come to events like this. They meet other people, they get their questions answered and they network like crazy. I'll see you at Empowered Investor Live. You know, people are busy and stuff's expensive and all that. If you're thinking about coming, stop thinking about it and come. You won't regret it. It's been said that we regret the things in life that we don't do a lot more than we regret the things that we do. So check it out and come join us.

Welcome to the Creating wealth show with Jason Hartman. You're about to learn a new slant on investing, some exc 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.

Greetings empowered investors, and welcome to episode 2395. Thank you so much for joining me today. And I've got kind of a big announcement and that is that I am relinquishing my title. Many of you may have heard this. I was interviewed on another podcast on Monday where I announced it. But I am relinquishing. Relinquishing, a title that I have held for nearly two years. Nearly two years. A long time. That's, you know, that's almost like probably about 700 days. And that title that I am relinquishing is I am no longer the richest homeless man in the world or the richest homeless person in the world. I think I held that title. I'm pretty sure, you know, there's a great old book by Al Ries and Jack Trout. We had Al Ries on the show years ago. These guys kind of invented the world of modern advertising and marketing. They Wrote a whole bunch of books. And this one book is called the 22 immutable laws of Marketing. And you may have read it years ago. It's a short book, real quick read, but really good stuff. And they've got a zillion other books. And one of the things they say is if you can't be number one in a category, create a new category and claim leadership. So couldn't be the richest person. Obviously there are many people much richer than me and I couldn't be the only homeless person because there are many homeless people, sadly. So I created a new category, Richest Homeless Person in the World. And I think I held that title. Yeah, I did the nomad thing for almost two years, the longest ever. That's a long time. And I really wasn't completely nomadic because I was renting temporary apartments sometime and kind of kind of settled in some places. But I went around the world two times and did some slow travel. So it was fun, but it wasn't easy and it's nice to have a home again. So I'm much more settled here while getting settled. So that's nice. And I think that will improve my content because I won't be on the go all the time. So that's good too. Anyway, we've got a great show for you today. We are going to share part of a recent meeting I conducted. I think you'll it a lot, lot of powerful content there. But did you see the State of the Union speech? Yes, it was just last night. And you know, there wasn't a lot about housing. It was certainly mentioned. Interest rates were mentioned, affordability was mentioned. But one of the really interesting things they keep harping on and I'm not quite sure why they keep bringing this up, because it is there. It's part of the subtext of housing affordability and that's the idea that they're going to make housing more affordable in a way that doesn't hurt existing homeowners. Because instantly you know one's mind and I guess a lot of people brought this up and that's why it has been addressed this way instantly. When people think housing is going to get more affordable, that means the price is going to go down. That's the sticker price of the house, but that's not what they're doing. Affordability can be engineered in many ways, but the main way is lower interest rates or longer mortgages or portable mortgages. Right. All of these things could create more affordability. But what's the even better way to create more Affordability, have people have more money. Okay, how do you do that? Well, incomes rise and that's been happening, you know, through the last three years of this very boring real estate market we've been in, Incomes have been going up. And even though the labor market has been seeing some signs of distress, although not that bad with artificial intelligence and so forth, you know, we've talked about this ad nauseam and it's all over the news. So I don't really need to go into it now. But amazingly, incomes are increasing, inflation is way down. I mean, inflation is just very mild. And tax breaks, no tax on tips, no tax on overtime, encouraging harder work and industriousness. So this is putting more money in people's pockets. Now granted, some people don't even know there's more money in their pocket because they haven't done their taxes yet. But when they do, they're going to see that there is a wealth effect here. Right? And that wealth effect is making housing and everything else for that matter, more affordable. Now I got to tell you, the past several days, since I've moved into my new pad here, the past several days I have been spending money like it is going out of style. I mean, just ordering things online, shipments coming and you know, trying to get settled. Right. Everybody has been talking about the tariffs, of course. Right. And now we just had that Supreme Court ruling and so on and so forth. I won't go into that. But you know, all the doomers, including friends of mine, I'll say, like George Gammon, Ken McElroy. Right, especially George though they've been saying that these tariffs are going to cause a lot of inflation and the prices of all these consumer goods will go up and it's just so bad for the economy. And that just hasn't happened. I mean, it's just been a non starter. I mean still, all of this stuff that I've been spending lots of money on the last several days here, I mean, I just feel like, gosh, you know, I gotta, gotta stop with the spending here. But it's like it still feels very cheap. Now that's of course an anecdotal perception, but it's not completely anecdotal because on Amazon for example, and other online accounts I purchased the same item before. And I would go back being the economist that I am, and I would look at my past order, what did I pay for that item when I ordered it four years ago or six years ago, or even one item 10 years ago, I have another one of those in my shopping Cart. I'm not sure I'm going to buy it, kind of thinking about it, but the prices really aren't that much higher at all. So the tariff thing almost strikes me as you look at the way various actors in the economy conduct themselves. And in a free market economy, thank God we have something called competition now in business. You know, we don't all love competition. We would maybe prefer that there not be competition. But the fact is, even if we don't like, instills discipline, it makes us better. And competition is a good thing in the marketplace. And what you see is that tariffs kind of act like competition. What do I mean by that? I mean, this is my own idea, you know, if I'm out there on a limb with this idea, if it's just too much of a le in logic, you know, comment below if you're watching on a video platform like YouTube, you can comment below and tell me I'm a fool. But tariffs act like competition. Think about it in a free market. And I know you're thinking, well, tariffs are the opposite of a free market. You know, they're not free trade. I'm not talking about that. I'm talking about when your competitor goes and does something and makes their process more efficient and tries to beat your price. That's what tariffs do. They force players. They force all the actors in the environment to become more efficient. And so namely China, they've gotten even more efficient with the tariff threat because they want to keep their prices down so they can keep selling a high volume of products. And I think this tariff stuff instills a whole new level of efficiency and discipline to businesses. It makes them work harder for it. And with the current administration's plan of trying to weaken the dollar to increase exports, I just saw a report on how manufacturing. I mean, this takes time to ramp this stuff up, folks, but manufacturing is coming back to America. There are lots of inputs that are starting to show up in the data now about how we're seeing new manufacturing in the US and again, the reason was in favor at the beginning of some reasonable amount of tariffing is that old biblical principle about how parties have to be equally yoked. Okay? You cannot be in a relationship, in a marriage, or in a business environment where the parties are not equally yoked. So in Scripture, basically, they say that each partner in a marriage needs to be equally yoked. You can't have one that doesn't have something at stake while the other does have something at stake. They've got to be equally yoked. And the same is true in business. It's not fair if China, for example, a Chinese manufacturer, doesn't have minimum wage laws, OSHA requirements, environmental regulations, and they're selling into our market. So we have the right to charge admission to access our market. And by charging that admission, it will make it more possible for manufacturers right here at home to compete on a reasonable level playing field. Part of the government's responsibility is to level the playing field. That is what government is charged with. Even go back to Ayn Rand, okay? I mean, Atlas Shrugged was like a life changing book for me because, you know, some of you, I can see the comments coming now. Well, Jason, aren't you in favor of free trade? Yes, I'm in favor of free trade, but we don't have free trade. We never have free trade, okay? And I'm not in favor of anarcho capitalism. That's just nuts, okay? I like some oversight into things, okay? I certainly don't like big government. Don't write that below. You don't need to tell me. Okay, I get it. I'm generally a libertarian leaning, but these radical libertarians, they just go too far. Even to the point that Ayn Rand called the libertarians, you know, she said the libertarians were the hippies of the right and that was a derogatory slam because she didn't like the hippies of the left, right, the flower children of the 60s and so forth. So anyway, it is what it is, but let's go ahead and get into our content. But I do want to recommend that you join us for Empowered Investor Live and you can come discuss these things with me and our team in person. You can argue with me in person. Empowered Investor Live Orange County, California Middle of May empoweredinvestorlive.com early bird pricing Go and get your tickets and be sure to join us. And by the way, I always love to see when people bring their children to our events. You know, we see 14 year olds, 15 year olds, 16, 17, 18 year olds, college age kids, you know, 20 years old, getting a head start in life, learning about being a direct investor and investing in the most historically proven asset class in the entire world. The most tax favored asset class in America. I so wish I had this kind of thinking even earlier in life. And I was exposed to it at age 16. So that's pretty early. But it's so great to see some of you parents bringing your kids and exposing them to this idea or these ideas even earlier than that. So bring your kids, bring your family. We'd love to have you. We've just got such a good arrangement when we do these events. You know, we're literally five minutes from John Wayne Airport. SNA is the airport code, Santa Ana John Wayne Airport in Orange County. And so you can just take the free shuttle to the hotel. You can grab a Lyft or an Uber and you'd be there in five minutes. Please do not rent a car. You don't need to. And join us. We'll start Friday evening with a reception and then go all day Saturday and Sunday. EmpoweredInvestorLive.com we look forward to seeing you there. And remember, our monthly Masterclasses are the second Wednesday of every month. Jasonhartman.com Wednesday to register for those free classes. And now, without further ado, let's get to today's main content part, and I think you'll enjoy it. Here we go. Let's just look at an example here of what it really cost to basically rent money, because that's what you're doing when you get a mortgage. You're just renting the money and you got to pay to rent the money. So say you think you're paying 6% to rent the money. We're almost there. As rates are coming down, if you have a 40% tax bracket, you're going to deduct interest of 2.4 of that 6% is going to be tax deductible. The government's your partner. And then the Consumer Price index might tell you at the time, right now it's a little higher. But say it's 3%, which is a fair round number. You're really paying 0.6% to borrow this money. You're paying much less than you think. That's the cost of actually borrowing the money after your tax deduction and after inflation. Because remember, the cost of borrowing is the net cost after tax deduction and inflation. But wait, there's more. It gets better because the real inflation rate is always much higher than they'll tell us. In the cpi, which I also call the CP lie, the Consumer Price Index is manipulated downward in three major ways, weighting, substitution and hedonic indexing. And the government has a very vested interest in making us think inflation is lower than it really is, number one, to win elections and to stay in power and to keep us happy. But number two, the government programs, the payroll to government employees and all these government benefit programs are indexed to inflation. So if they told us inflation was really 5% when they're reporting that it's 2 1/2% they would have to pay more. Okay, they want us to believe that inflation is lower. And here your real rate is negative 1.4%. You're literally getting paid to borrow the money. That's only on one dimension. It doesn't include all the other dimensions of income, property. So this is inflation induced debt destruction, and it's truly a miracle. So you might be thinking, well, Jason, this is all just a big theory. Show us some facts, show us a case study. Show us some people that it really happened to. Sure, it happened to millions of people. And this is why the homeowners got so much richer than everybody else over the last decades. In 1972, the median house price was just over $18,000. If you bought that house and to live in, okay? Now it's infinitely better as a rental property because living in it doesn't produce income, but it's still pretty good just living in it. 80% loan to value. You get an 80% mortgage, you put 20% down, you borrow just over $14,000. The mortgage rate back then, by the way, in 1972 was 7.37%. So comparatively, rates aren't that high today, but prices are much higher. So it does make a difference. The monthly payment on this house was $101 per month. You borrow this money for 30 years, and I'm going to assume your tax rate or tax bracket was 33%. Just for simplicity, here's what happened. In 1972, the inflation rate was 3.2% and a dollar was worth a dollar because no time had passed yet. You just bought the house. Your monthly payment on this house, you're writing a check for $101 per month. That's 1211 per year. Okay, you don't need to really pay attention to that one. But here, you see this payment as you're writing this check for $101 over the years, you're still writing it 12 years later. It's the same amount on the check every month, $101. But by 1984, it's only worth $41. It just feels lighter, this money you're paying. It feels like nothing 12 years later. Okay, your inflation adjusted real payments are 487 per year, even though you think you're paying 1211. And then after tax plus inflation, you're only paying 371 annually rather than 1211 that you think you're paying. Now, this is 1984, and there's a famous book written about this that you must read. And if you've read it, you should read it again because you need to move it from the fiction to the non fiction section of your books. It's really happened in 1984, the surveillance society. We are now living in it. Everything George Orwell predicted back in, by the way, 1948, when he wrote the book has come true. It's just, it's super scary. So read that book, buy a few copies for other people and give it to them. Let's fast forward to the end of this mortgage. It's now 2001, the last year we're making payments. The 1972 dollar that we borrowed is now only worth 24 cents. We're still writing checks for $101 a month, but they only feel like $24. That's the real value of them. And the summary of what happened is this. We averaged 5.1% inflation over that time. In nominal dollars, the name of them in name only, we paid back just over $36,000 in real dollars. After inflation debased the value of them, we paid back just over $16,000. And after tax benefits end inflation, we only paid back just over $12,000. So how's that look? This is how that looks on a graph. Okay, not going to go into that. Let me just get to the summary. So we thought we were paying 7.37%. After inflation we were really paying 1.06%. And after inflation and tax benefits, we were paying negative, negative interest of 1.16%. We literally got paid to borrow the money and we got to live in the house for free for 30 years. So that is nothing short of amazing, folks. And this is why people that just buy and hold real estate for long term rental just win the game over and over and over again. You know, they don't agonize over is the market up or down this year. They're just following a boring long term strategy. It's like if Warren Buffett were a real estate investor, this would be what he would do anyway. Questions? Anybody? A skeptic? Let's talk to some skeptics. You know, what do you think? Hey, Jason, this is Anthony, right? Hi Anthony.

Thank you so much for doing this. This is very informative. I'm wondering, like with the rise of AI, what your thoughts are on the number of renters that are out there. Is that going to increase or is that going to cause some kind of destruction in the overall market for buying and selling and how many renters are out there and what that's going to do for that? What did you Call it shadow.

Shadow demand.

Yeah, the shadow demand. What's your thought on that?

Yeah, that's a very good question. And I have spent a lot of time pondering AI's effect on the future. We haven't had a technology like this before. Okay, we all know that. It's pretty amazing, for sure. But I'll just tell you that every technology makes everything cheaper, better and faster, right? And when something is cheaper, better and faster, people just want more of it. They don't want less of it. There was an economist I was just reading about who 160 years ago, he was evaluating the steam engine. You know, the steam engine at the time was a big revolution, right? He thought that because the steam engine is so efficient and it can do so much more work than the prior technology we had, which was ox and people and, you know, animals and people. Muscle power, basically, right? Because the steam engine is so powerful, the cost of coal will actually decline because we won't need so much of it because so much output can be created from so little fuel. But he was wrong. It was the complete opposite that happened when everything got better, faster and cheaper. People just wanted more of it, right? You know, if you think of, like, you have wants and needs right now that you can't even imagine what they are. There's this great book I read in, like, 1990 or something, okay? It's called Unlimited wealth the Theory and Practice of Economic Alchemy by Paul Zane Pilzer. Brilliant guy. In that book, he shared this example. I remember it well. He said the old model of business used to be that you had to find a need and fill it. And the new model of business, he's writing this in 1990 or so, give or take, is imagine a need, create the need and fill the need. Okay? And here's the example he used. You might remember, you remember those old cordless phones with a little antenna that you popped out, right? You know, you picked up the phone on the thing, you pulled out the antenna and you talked on it.

You used your teeth.

So funny, right? Oh, you use your teeth to pull the antenna. Yes, I've done that. Well, nobody realized that they needed a cordless, waterproof phone until Sony made one. And then everybody with a pool or a Jacuzzi in the backyard had to have it, right? You can't even imagine what you need or want right now that is going to be delivered to you in the future. It's so amazing. The story of the sewing machine is a good one, too. Elias Howe invented the sewing machine and There were literally people that were outraged. Like, people were outraged about this invention. Okay? Just look it up. Read about it. Okay? Women were particularly upset because they were doing all the sewing back then, and they said, what will we do with all our spare time if we don't have to sew by hand? I think, ladies, you figured it out. You know, I mean, it's just like every. Every invention just creates more demand for more output. Okay? We just want more. I mean, go into an old house and look at how small the closet is compared to the closet in a newly built house. Right? That just shows you right there, that people just expect to have larger wardrobes. Right? People just want more stuff. So I think AI is going to be incredibly positive. I think we're moving into an era of massive abundance. You know, you can certainly consume all the doomers out there, and there's always been reasons to be negative about everything throughout history. But you should follow people like Peter Diamandis and, you know, read his book Abundance the Future Is Better Than youn Think, which was written about 12 years ago when I read it. And, you know, it just outlines how this. This massive prosperity is going to be created. So what does that mean to real estate? It means higher prices in nominal dollars. And, yeah, so, yeah, so, I mean, I think it's really good for real estate, but there are, you know, there are disruptions in between in terms of getting to the promised land. Right. There's, you know, layoffs. I mean, companies are already laying off people like crazy. It's like, why do we need you? AI can do your job, right? And, you know, that's part of it. But look, we'll figure our way out through it. Think about it, you know, at the end of the day, what is the point of all this technology? It's actually. The point is to work less. Right. Maybe we get to the point where we all, like, have a life again and we're not so busy. Right. That's a possibility, too, you know, So I don't know. You know, it's. It's hard to tell, but I have spent a lot of time thinking about it, and I'm extremely optimistic about artificial intelligence and all the great things it's going to do. All right, Braden, I think you were next. Or Brandon. Sorry.

Yeah. Awesome presentation. Thank you. I love the math. I'm a math nerd, so a lot of that made a lot of great sense. It makes me want to just put as little down as possible, bar as much as I can, and acquire as many assets as I can.

Hey, just to comment on that. Look, just realize this, people that don't get it, like Dave Ramsey. Okay, he doesn't get it. Okay, Dave Ramsey, by the way, I'll just say Dave Ramsey is great for the audience he serves. Most Americans are stupid, right? They're massively in debt. They've got tons of credit card debt. They just keep spending money like drunken sailors, you know, they don't get it. Okay? Those people need to listen to him and get their act together, right? But that's basically like sixth grade. Once you move to seventh grade, you've got to start thinking like an investor, like a finance person and then, you know, do all this stuff, right? So, you know, he, he makes sense for those people. But most people will say, well, Jason, but having leverage and using debt like that, isn't that risky? No, it's less risky. I mean, just, just ask yourself the question, who's taking the biggest risk in any investment? The person who has the most money in the deal. Okay. Like the. If the bank has the most money in the deal, they're taking the risk. If you have the most money in the deal, you're taking the risk.

That's a good segue into like where I was going with the question. So even stuff like VA loans or other types of programs where you can do zero down, you have basically an infinite return on investment. Leverage is what allows this whole thing to work. My question is how do you maximize your leverage without over leveraging yourself for situations like 2008 or the dot com bubble, the 90s or other times when the market took a little bit of a pause.

You get as much as you can because they're not going to give you that much anymore. Like the banks aren't letting that happen again. Okay. I mean, I don't say they never will, right? But they just over lent to people. Look at. I owned a traditional real estate company. I sold it to Coldwell Banker in 2005. That was in Southern California where I spent most of my life. And then I got into the investment business after or slightly before that deal closed. Actually, what was happening in the early 2000s is literally no one was in the system was putting the brakes on anything. If you fog a mirror, you could get a loan. Everybody was paid to give more loans. Nobody was paid to stop or question or audit or anything. Right? And all the appraisers, that was a big part of it. The appraisers were basically schmoozing all the lenders to give them business since, since then that's illegal. You, the lenders do not control the appraisers the way they used to. So the appraisers won't just, you know, willy nilly bring in the, the appraisal to match whatever price they stick on it. Okay. So underwriting has become very conservative since the Great Depression or Great Recession in 2007, 2008, Great Depression, last follow up, I promise. So, so yeah, no, it's no problem. But, but just know at this moment I would say take as much money as they'll give you because they're going to underwrite you like crazy. Okay.

Yeah. Do you have a hard and fast rule in your asset portfolio for, you know, once you get to like 80% loan to value, you kind of, you know, don't go above a certain cap so that you don't end up over leveraged. Or do you just compartmentalize your portfolio so that maybe you have different LLCs and other corporations that own stuff so if one does get into trouble, you can dump that asset or file bankruptcy without harming the rest of your asset portfolio?

Yeah, look, I'm not a lawyer, first of all, but you know, I do have like over 40 entities myself, LLC, corporations trust. I have lots of complicated asset protection vehicles. So I do understand them pretty well. And you, you can't do that, okay? You can't just set up an llc, borrow money in it, file bankruptcy and not pay, okay? They're, they're not, they're wise to that. That doesn't work. Okay? So, you know, you do want to compartmentalize things for other reasons though, for liability reasons. And one of the common things that people don't understand about asset protection and you know, you can go to Jason hartman.com protect and we've got like a webinar on that and stuff like that. You know, get involved with us. We invite these speakers in all the time. Probably like Chris does too. I don't know the other speakers he has. Anyway, there's two kinds of threats to your assets, okay? Say you own a house, right? Say this is the house you own, okay? And most people think, well, if the tenant slips and falls and they sue me, well, if the tenant is renting the, the house from the LLC that owns it, they can get the house. That's an internal threat, okay? That's different from an external threat. So here's the external threat. I got another house over here or I got a business or I, you know, ran someone over with my car, right? Or some external thing happens and they get a judgment against you. And, and they attack this house that you own, right. So that you can protect by having these LLC separate. Okay. So when you set up asset protection plans, you've got to always set it up so you're protecting from the internal threat and the external threat. It took me a long time to get my head around that and I just explained it to you. So just know that when you think about asset protection, okay. By the way, if you're just like starting out on your journey, don't get too mired in asset protection, okay? I've seen a lot of people, like, they want to set everything up beforehand. You just do this stuff as you go. Okay. You know, you're never going to figure anything out, everything out before you dive in. You got to just dive in. More important to just buy some properties and start making some money. Okay. And set up your asset protection plan later. Okay. And just get good insurance and, you know, be smart, be a good manager. Okay.

I'll be quick with my question.

The Treasury Secretary's goal is to increase the federal government's revenue such that the debt to GDP ratio goes from 6% to 3%. Heard him talk a lot about that.

If that comes to pass in the

next three years, how do you think that would impact inflation and home values? Well, that's a good question, but debt to GDP ratio is like 130%, isn't it? We have 38 trillion. Talk about some percentage that is 6% now that he wants to bring down to 3%.

Maybe it's.

Maybe I inverted it.

Perhaps.

Yeah, I don't. I'm not sure. But you know, the point is the same. The point is the same. So Scott Besset, our Treasury Secretary, he wants to reduce spending. Right. And make the government more fiscally sound. The Trump administration's been talking about doing that with tariffs, and tariffs can't do that. Okay, they can do a little bit, but they can't solve the problem. But broadly, to answer your question, like from a macroeconomic point of view, if the debt is lower and the government is more fiscally sound, unlike it is now, then that would generally put less inflationary pressure on the markets. Okay. And inflation would subside. So you would have less benefit from inflation induced debt destruction as an investor, but the country would be better off. So philosophically, I hate inflation. I think it's a scam. It's a total scam. But what am I going to do? Personally, I'm going to align my interest. Look, governments and central banks are the two most powerful entities. The world has ever known. I'm going to align my interests with them and they are practicing inflation induced debt destruction. You should too. Right. And the likelihood of the government getting it together is extremely low in my opinion. So I wouldn't worry about it. If it's a worry, just use the leverage. Get the inflation induced debt destruction is my advice.

So yeah, my question, I mean what you're saying I think makes a lot of sense. My first mentor, I remember him telling me, he's like, do you want to know how to get rich? And I was like, yeah. He said, be born in America. And that worked for a long time. What I'm concerned with right now is the concentration of wealth because I think for this to work you have to have a bunch of people that can continue to buy those houses or pay the rent even. And the question about AI and the question about the concentration of wealth I think are very similar. As people lose their jobs to AI, as more and more wealth gets concentrated. That's what I'm worried about. Long term for American real estate. What are your thoughts on that? And then also, do you invest overseas at all? Because I think there's other parts of the world that are rising now in relation. Do you do the same strategy overseas?

No, because you can't overseas. So I just spent the last about 14 months traveling around the world. A couple times before that I, I've traveled extensively. I've been to 99 countries, but some of, I've been to a dozen times. You know, the last year and two months I, I sold my house in Palm Beach, Florida and I just traveled. I've been homeless. Right. I did it more slowly. And in a lot of these countries that I visit, I look at real estate there, I go meet with brokers and you know, I learn all about it. And let me tell you something, the American real estate market is very special. I would love to be offering international real estate and I mentioned that earlier. Maybe you didn't hear me talking about it earlier. I don't know if you were on then. I would love to offer that to our clients, but we just can't find anything that's very compelling at all. America has a very special real estate market for numerous reasons. One of them being the 30 year mortgage is unique in all the world. Okay. I mean there are some dabblings with it here and there. I get it. You know, in Canada they have to renegotiate their mortgage rate every five years. The US mortgages are the best. Okay. Bar none. They're, they're subsidized by the government, okay? They're government sponsored mortgages. It's a welfare program for investors. Number two, data transparency. In other countries, they don't have what we take for granted. They don't have an MLS system, which I can't believe that that, okay, like you go to one broker and you're going to see completely different properties from another broker, right? And that's kind of might be an opportunity because just always remember, the less perfect any marketplace, the more opportunity. If you're like super ambitious and you're super knowledgeable and you know what you're doing, right? Because you can exploit those imperfections. The more perfect a market, the less you can exploit imperfections. So the stock market's a great example. The stock market is about the closest thing to a perfect market you can get. Now, I don't like the stock market. I think, you know, I always say Wall street is the modern version of organized crime, okay? I hate Wall Street. I think they're all crooks, okay? Sorry if anybody's on Wall street here, you know, I mean, listen, I have friends that work on Wall street, but, you know, I just think the whole thing's a scam. But the market is perfect in the sense that, you know, if I say I own this stock and it's trading at $100, I can't go to you and say, hey, you know, work a little harder, do a little more marketing, you know, put some paint on it, do a creative deal and sell it for 110. It's impossible. The stock is only going to trade for what it trades for. It's a perfect market. Okay? So in the US the real estate market is more perfect because we have really good transparent data here. It's not opaque like it is in other countries. We have the MLS system, we have Zillow, we have public records where prices are published. Everything's quite transparent. In the US I've tried. In other countries, I've tried to buy properties and I just gave up. Honestly, it's just too hard. And, you know, you just don't have good rule of law in most other countries and. And you're just gonna get ripped off. So be really careful. You know, as far as the other countries coming up, and you know, the US definitely has been in decline. I mean, there's no question about that. But compared to what? Like, the US is so far ahead of every other country. And then I know, you know, I got my friend over in China, he's always sending me messages on WhatsApp about what an idiot I am. And China's so great. Yeah, just wait till 2030. China has a demographic cliff that is going to beat the shit out of it. Okay, so China is not the future, folks. My opinion, okay? I mean, it's. They've done amazing things, but I don't think it's the future. I think the US Is just got. It's just so far ahead in so many ways. And I'm not saying that like, I wasn't born in the US I was born in Europe. Okay. You know, I'm a consider myself to be kind of an international person. Okay. I don't have any ax to grind about it. I would easily be a complete trader and go somewhere else or invest somewhere else if it was a better deal. I just haven't found anything that even comes close. The international thing so far has not been for me. I hope that helps. Alex, I wanted to see what your

crystal ball says or what you think might happen with all the people who are sitting on the sidelines with cheap mortgages.

What do you think it would take

to break that loose? Or what do you think will happen? Homes just going to be off the market for decades?

Well, no, they. They will. They already are breaking loose a little bit. You know, I talk. I got to show you one more really important chart that I didn't show you folks, by the way, so stick around for a minute because I got to show you this. It's maybe the most important one of all. I talked about that during the COVID era, when the mortgages were cheap. I just said on my podcast, you can just go, listen, all the episodes are date stamped. I can't change them. They're there. You know, it's out there. I said, these people are never going to sell their houses. Their deal is too good. And I didn't name that. And then, you know, everybody kind of decided Covid was over at some point, right? Isn't it funny how everybody just decided that it wasn't the disease that decided it. People just decided it was over. We're sick of being at home, you know, and we're gonna get out and live. Then they. They gave it a name. They called it the lock in effect. And that lock in effect is very significant. But it is crumbling a little bit, right? Like, as rates come down and the delta between the rate they have and the rate they're going to pay on a new house, you know, and that delta shrinks a little bit, even though they're going to pay a higher rate for the new house. At some point, people, they've got to move because like of a life change or they're just sick of the old house or, you know, there's a job opportunity or whatever. You know, some of it peels off. Okay. And it has been a little bit, but it's just a very slow process. But if we get rates down at five and a half, a lot more will peel off and so those properties will come on the market, creating more inventory. And by the way, I didn't say this earlier. There's about 830,000 homes for sale in the United States right now out of a housing stock of 140 million properties. In 2015 or 16, all the experts kind of decided that a normal market was 1.4 to 1.5 million homes for sale, but the population was lower then. So when you consider the population growth, I'd say that right now a normal market should be about 1.6 to 1.8 million homes for sale. Now we just have like half the. Of, of 1% of the inventory for sale. So the inventory is very low because nobody's desperate. Right. As we talked about earlier. But this is a good time. Maybe. Alex, I'll just go to show this chart right now. Okay. Because I think it's ties into what your question is. We took a baseline of a 7% mortgage, 30 year fixed and we said, okay, based on 7% interest rates. And this was about a year and a half ago we did this chart. How many people can afford to buy the median price house? And the answer is 55 million people can afford the median price house at 7%. I mean, we know what incomes are. The government publishes all this information. It's not a secret. If rates come down by half a point, 50 basis points, 57.9 million people can afford the median price house. An additional 2.8 million qualified buyers goes to 6%. 5.4 million goes to 5 and a half percent. 7.7 million more people can afford the median price house. Well, what I tell you a minute ago, we have only 830,000 homes for sale. What do you think is going to happen if even a third of those people that can now qualify for the median price house move into the market? I mean, not all of them will buy even if they can qualify, obviously. Right. But you know, maybe a third of them will go into the housing market and start making offers. And it's just going to put a lot of upward pressure on prices unless we can just create a lot of new supply and housing supply is very hard to create. You know, it takes a long time. It's very expensive. So that's even better about being a real estate investor. 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.