2402: The 54-Year Spreadsheet: Real Estate Truths and Economic History with Michael Zuber

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I've actually been learning a lot about trusts and tax benefits to real estate and how to invest with IRAs and those sorts of things. I've been investing actually well over 10 years now, and I learned a lot of new things today. So I was pretty surprised that there's some techniques out there that I'd never heard of with how long I've been doing real estate. So it's really great and I'm getting a lot of good information.

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, a 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 2402. 2,402 episodes and counting. Thanks for sticking with me for the last 21 years. Listeners in 189 countries worldwide, it's great to have you. And with all of the chaos that's going on in the world, it's really not that chaotic. I want to recommend a YouTube channel to you, and that is the channel called Navy Decoded. Really interesting videos on the war effort and all of this stuff. It's just fascinating. And, you know, when you watch what is happening, and I know that war is hell, who wants war? Nobody, right? But sometimes it is called for. I'm not going to go into that. But what I am going to say is that by the end of this administration's term, The most likely outcome is a free and open Venezuela, Cuba, and Iran, and a massive lessening of the power of China, Russia, and North Korea. It's coming. I mean, look, anything can happen, right? Anything can happen. We all know that life is very uncertain, especially in times like this. But the likelihood is, I mean, the like the 85, 90% outcome looks extremely positive. Think of the diaspora of Iranians around the world since 1979, right? Or was it exactly 1979? Yes, it was the Carter disaster, right? And think of how many of those people are highly educated tech leaders, people that have started very successful companies. And think of the economic stimulation that occurs when the rest of those people are free and the sanctions against their absolutely crazy radical government are lifted and things open up. This is just going to be phenomenal for the entire global economy. Same with Venezuela getting control of the oil and open markets and movement. And I know, you know, it's been a whopping 12 days. It's been 12 days and everybody's complaining and saying this, that, the other thing. It's too early to tell. Relax. In the long arc of history, you just can't tell what's going to happen yet. It's just way, way too early. But the overall outcome, you know, don't panic if you went to the gas station a couple of days ago and had to pay $0.80 more. Like, seriously, this is nothing. Get over it. Okay. In the long arc of history, this is all looking incredibly positive. It really is. Okay, enough of that. Today we've got a fantastic show for you. We're going to look at a 54-year history of real estate. And just remember, real estate is not income property. Those are two different things. Two. I should hold up two fingers when I say that. Two different things. And income property is much better, vastly better than real estate. Now, why am I making that distinction? Well, if you've been following my work the last 22 years, you've heard me make that distinction before. But what I mean is that looking at the real estate alone as a non-income-producing asset, you can make a lot of money just in real estate. But when you add income to it, it makes way more money because the characteristics become so much better. And, you know, as I have answered tens of thousands, if not hundreds of thousands of questions over the last 22 years of working with investors, investors only. And remember, I had a whole nother career before that in traditional real estate where I bought a company, sold it to Coldwell Banker, was a traditional real estate agent long before that. It's been a long time that I've been doing this, and I worked with a lot of investors back in the old days before the last 22 years that I've been working exclusively with investors. And every question I get practically can be answered with math. The math of income property, which is so incredible. It is just amazing because it is a multi-dimensional asset class. And I want to just encourage all of you again to do something that is free. Yes, you heard that right. It's free. And it's as simple as 1, 2, 3. Go to propertytracker.com, make a free account. There's no strings attached. It's just free. Is that easy enough? Okay. And take about 15 minutes the first time you do it and make a pro forma on an investment property you're considering. It is the best deal analyzer in the business or a property you already own. And the second time you do this pro forma, it will probably take you 5 minutes. The first time, you know, you got to hunt around, you got to You know, grab a document or two. 15 minutes the first time, maybe less. 5 minutes the second time. The third time and beyond that, it'll take you 3 minutes to do these pro formas. It is literally the best deal analyzer in the business, and it's been upgraded. On the screen, if you're watching on video, you see the upgraded pro forma. Look at all of these things we have added. If you're a co-living investor, we've added metrics for you. If you are a regular investor, we've enhanced the metrics for you. And this is all free. Now we have cost per bedroom. We, in addition to obvious like cost and rent per square foot, we have rent per bedroom, cost per bedroom. We have inflation-induced debt destruction included. We have return on investment with and without inflation-induced debt destruction, rent-to-value ratios in there. Sorry, my dog is bugging me here. You know, she can lay here all day But then when I get here talking to you, she comes and bothers me. Here, let's get her up here on video. Anyway, this pro forma is totally free and it will change your life as an investor. So go get a free account at PropertyTracker.com. In addition to that, other life-changing things. Empowered Investor Live is coming up in May. Empowered Investor Live, our live conference. We do it annually. It's only once a year. Come and join us in Southern California, beautiful Irvine, California, and you'll have a great time, meet lots of investors, learn a lot of things, and you'll meet the guest who's on today. Michael Zuber is one of our speakers there at Empowered Investor Live. So do that. Also, if you're interested in my super exclusive making memories, superyacht events. We have an event coming up in Croatia in June. Go to Mastermind Yacht Adventures for that. So I've given you 3 websites to check out during this short intro. That is propertytracker.com, free account, Empowered Investor Live, our annual conference, early bird pricing, and Mastermind Yacht Adventures. Also my passion project company, that does not make any money. It's simply there to make memories. So check all those things out. And here is our interview with Michael as we discuss the 54 years of real estate history. And you're going to hear a lot of surprises in this segment. So let's get into it.

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It is my pleasure to welcome a returning guest back to the show, and that is none other than Michael Zuber. He is the author of One Rental at a Time, and he has a fantastic spreadsheet that we showed you a couple of years ago, but Some time has passed, some things have changed, and it deserves an update. And every time we move through history, which is what we're doing, right? We're all moving through history and everything becomes history the moment the time has passed. Things change and we gain new perspectives. So we're going to take a look at what he calls the 54-year spreadsheet. However, next year it will be the 55-year spreadsheet. Michael, welcome back.

I appreciate it, Jason. You're always fun to speak with. We've both been through the trenches. We're both trying to help people. So anytime I get to talk with somebody who knows what they're doing, it's a lot of fun.

Yeah, absolutely. And likewise. Well, so tell us about this spreadsheet. You know, a lot of people listening or watching didn't see or hear you on the last episode when we did this before. So what is the basis of it? Why did you create it? Give us the overview.

Yeah. So, you know, if you step back and ask yourself who I am, so I'm an economist. I went to school to be an economist. I went back, got my master's degree. I worked as an accountant. So to say I'm a numbers guy would likely be an understatement. That's where I'm comfortable. I'm comfortable living in spreadsheets. But as somebody who retired in 2018 because of my real estate portfolio, right, one rental at a time, I had a lot more time to kind of figure out what's trying to go on with the economy. And specifically what caused me to create the 50— it was originally just the 50-year spreadsheet. It's now 54, soon to be 55, as you said, was the Jackson Hole presentation. Well, where Jerome Powell basically threw his prepared speech away and did a 6-minute, basically telling you that pain is coming. It really was that presentation that caused me to step back going, Okay, earthquake. It just changed. People aren't ready. And I, I asked myself one question: have we done this before? And as a historian, as a studier of the economy, you and I both know the legendary Paul Volcker. We both know his predecessor, Arthur Burns. So intuitively, I knew we had been in an environment where rates were raised rapidly, but honestly, I didn't know what else happened. I didn't know what happened to housing. I didn't know what happened to the stock market. I didn't know what happened to the misery index. So what I wanted to do was go try to capture all the way. I started at 1970 and I wanted to capture up until the point 2022 and just ask what happened. Because if, if you appreciate the fact that history doesn't repeat itself, but it rhymes, my supposition was I could learn something. And as you see in this spreadsheet, I think there's a couple of wild things that would have shocked people in retrospect. And it also allowed me to make some, you know, at the time, some bold and correct calls. Yeah, we had a transaction crash. We did not have a price crash, for example. And that was, you know, I was, I was like one of the lone wolves, you know, screaming into the wind, you guys are wrong, right?

And when you're talking about you guys being wrong, you mean the doomers were wrong. And I was one of those people, too. And that's how we became—

Yes.

Affiliated. Yeah, absolutely.

We linked arms and like nobody else was there with us.

We were standing on the hill by ourselves and we were right and they were wrong. You know, the crash that never came, right? They all said it would— there'd be this huge crash there. You know, some of these video thumbnails on YouTube, 50% price correction, you know, total crash. Well, nothing of the sort happened.

There are content creators that are really big in the game that created videos that actually had to delete them because they were so wrong.

And that's the way they cheat too. They take down videos when, when they're wrong. They take down podcast episodes when they're wrong. Uh, you can take them down. So that's, that's part of the problem. You, you know, you don't have a real accurate record because it's the same thing they do on Wall Street, by the way. When these different fund managers have funds that don't perform well, they just close them. They close the fund, they return what money is left over, and they don't count them. And as I always say, you can't hear the dogs that don't bark. So if one fund company that maybe has had 50 funds in their history, right, but they closed 10 of them because they sucked, they were terrible, everybody lost their shirts, they close those, they don't count them. And then they'll quote their track record only on the 40 successful funds. That's called survivorship bias. Okay, it's a total scam. So, uh, yeah, it's, it's really true. But let me, let me mention a couple things just to tell people, give some additional context as to what you talked about. So you talked about Arthur Burns, the former Fed chair before Paul Volcker. Okay. So Arthur Burns was a looser money person. Paul Volcker came along and broke the back of inflation in the early '80s by raising interest rates dramatically. And, you know, we all know the history. And he did succeed in doing that philosophically. I kind of agree with Paul Volcker. Okay. However, from a selfish standpoint, I like easy money. You know, as an investor, it's great because it creates inflation. We have the best asset class, income property, when it comes to inflation. You know, that's where we are. But all the other Fed chairs have really been the opposite of Paul Volcker until we had Jerome Powell 2.0. And that speech at Jackson Hole, Wyoming, that he gave at their meeting that they have once a year there. When was that, about 3 years ago?

I think it was '22. Okay.

Yeah. So 4 years ago almost. Okay, great. I just wanted to give some context to that.

That's important. You and I are real estate guys. You and I have most of our wealth in real estate. And frankly, we both lived through the great financial crisis. Right. So we have scars and pain and more importantly, saw people lose everything. So when I created this spreadsheet, I want to be very clear, it was 100% selfish. I wanted to know, based on what happened in the early '80s, am I going to lose my shirt? Am I going to lose everything because rates are going to go higher now? Yeah, I didn't know the answer. You know, that's why you sometimes pose a query and then you're like, all right, well, let's go. Let's go dig through 50 years of history and see what we find. I honestly, Jason, didn't know what the answer was going to be. And that's why, you know, I went on this journey of pulling this spreadsheet together because I had my family's wealth. Light up in real estate.

Yeah, sure. Okay, so you're probably killing everybody with curiosity by now, so why don't you share your screen and let's go through the now 54-year spreadsheet. And remember, some people are listening on audio only, so they don't see the numbers. So let's make sure we highlight things for them. Take us where you want to go on this. This is, uh, we're looking at a lot of numbers here on the page.

Yeah, a lot of numbers. Uh, I'll orient people to this. I have to remember that I've looked at this spreadsheet thousands of times, and for most of your audience, this is the first time. So I'll do my best to orient it. I'll talk about the labels and the tabs because there's a lot here. So down the left-hand or column A are all the variables, right? Homeownership, price, you know, down payment, you know, interest rate, inflation. It's all there down the left side. And then the columns at the top heading are the years, 1970, '71, '72, so on and so forth. And we'll scroll. But the thing that I want to highlight first is there's a tab called Data Sources because these numbers are sourced from government data. So it's as good as you want it. But if you wanted to build your own spreadsheet or you wanted to build another timeframe, I've taken the time to source all of the data. So again, you can argue with me if you want that this is wrong, that's wrong. I don't care. I've sourced the data, I cited the data. That's what I'm using because I have to be consistent. I don't want to cherry-pick stuff. So the data sources are there. Then across the bottom, we've got, you know, recession years, we've got peak. 10-year periods, decades, you know, then a whole bunch of graphs. But let's, let's stick with the 54-year spreadsheet. And again, the first thing I want to do is again go to the early '80s. So I'll just scroll across the screen while I'll make 1980 look as the first year.

Now, why are we paying mostly attention to 1980? So we, you know, we're ending the Jimmy Carter era, we're starting the Reagan era. Iran had regime change, uh, you know, maybe you saw the movie movie about that, or many movies about it, but you know, the famous one, I can't think of the name of it right now. High interest rates. Reagan came into a very bad economy. Under Carter— oh, and you mentioned the misery index before. Under Carter, the concept of the misery index gained prominence. I'm not sure if that's where it was invented, but you know, it certainly became widely known then. And the misery index is basically how bad are things due to a combination of unemployment and inflation, stagflation. Okay. It's just a bad malady. And so that's, that's where the misery index is. And, and we've got in row 25, we've got the misery index here. So this is fantastic.

And it peaked in 1980 at 20.76. That's the, that's the high for the 50 years. It was 1980 was the high.

So again, where's the misery index now? Let's, let's just go up.

I don't, so I don't know what it is for '24. It was in, I mean, we could do the math, right? It's just inflation, which is 2.6% and the unemployment rate, which is 4.6%. So it's okay.

But in '23, it's 7.76%. Yeah. So not bad.

Roughly the same. Yeah. So again, going back to 1980 for the audience that's watching or listening, because that was the question I had, right? And the reason I went back to 1970 is I just wanted to get a baseline of a decade.

Sure.

I wanted to be able to see it. So again, as a real estate guy, my whole question is, okay, interest rates shot higher. That's what I heard Jerome Powell say at Jacksonville. So that's what I heard him say. I don't know that the market really picked on it, but that's what I saw coming. So what happened with Paul Volcker? So in 1979, the interest rate, 30-year mortgage was 11%. Wow. 1980, it was 13%. 1981, it was 16%.

Whoa.

1982, it was 16%. Then it was 13%. Then it was 13%. So again, we had a— was that a 5-year period where the average 30-year mortgage rate— let's just make sure I can get this— was 14.7%. Okay.

Let's, let's just compare that to the inflation rate at the time for those same years.

So the inflation rate I obviously have, I just don't— I need to find CPI inflation rate for the 5 years. Was—

okay, so I'll just shout these out. So 1980, 13.55%, that was the peak CPI inflation. And then '81, 10.3%. Then we got it down under Volcker's high interest rate regime to just over 6%. And then in 1983, came down to just over 3%. '84, a little bit higher, a little over 4%. But breaking the back of inflation with tight money and high interest rates worked, although it was painful.

I don't know if you remember 1981. I remember my family because I do. My dad was unemployed for 11 months.

Wow.

That was the year we almost lost the family home. You know, we packed and we were going to get foreclosed on that Monday. It was a horrible year in much of the country, my family specifically. But again, here's the question. So again, rates are going higher. We've been here before. What happens? So again, most people believed when interest rates went higher that home appreciation would collapse. That was the belief. So if we go from 1980 to, you know, 5-year period nominal, so again, not real, but nominal in average inflation, home prices was 5%, 5.1% to be exact. So again, interest rates went up, interest rates averaged 14.7%, Jason, and prices were up 5%.

Yeah.

I'm still okay.

So let me comment on that. So everybody said when we had these massive interest rate increases just over 3 years ago now, that the real estate market would crash. You and I did not say that. We were right. They were all wrong. All of those doomers. And they were saying that. And it was logical, but it was incomplete logic because less housing affordability will plummet, which it did. Okay. But you have to remember that all of the people with their mortgage lock-in effect, with their super cheap COVID-era rates, were sitting pretty. They were totally comfortable. So you have that. They wouldn't add to the supply because they wouldn't sell their COVID-era cheap mortgage homes because the rates were so good. They just— the deal was too good to let it go. And they were not in any distress. And so we didn't have any meaningful increase in inventory. Now, of course, it did increase, but it didn't even get to normal. We're still way below normal inventory levels. In terms of properties for sale. So you can't have a crash without lots of inventory. You have to have that first.

Yeah. And again, these were— this was eye-opening. Again, I did not know what I was going to find when I looked at this. So again, the first answer to this, and again, you got to remember, Paul Volcker took interest rates from 11 to 16 for multiple years. That's 500 basis points. Yeah, 500.

And when you say 11 to 16, you're talking about mortgage rates, which the Fed does not directly impact, right? You know, he took the Fed rates, Fed funds rate. Yeah.

Yeah. But again, mortgage rates under Paul Volcker's era.

Yeah.

Went from 11 to 16. And that was what I was trying to figure out. That's a 500 basis point move. And again, if you rewind the clock and again, a lot of these videos are deleted, how many experts were saying stupid shit like for every 1% rise in interest rates, prices would fall 10%?

Yeah, right.

So, and so again, that's the thing.

The opposite happened. The opposite happened. Prices kept rising.

But that was the thesis, right? So I'm like, okay, these guys are saying cute things.

Yeah.

And the masses are gullible and don't understand. But if I'm now looking at an era where I have actual facts and evidence where rates went up 500 basis points and did not fall 50%, shoot, did not fall 10%, averaged 5%, went up, up 5%. I was like, I'm going to call bullshit. And you and I were right. But there's a, there's a flip side to this coin, which I'm also happy to say we got right. But I only got right because of this spreadsheet, because we did have a housing crash. We did have a residential housing crash in terms of sales volume.

Right. Is that what you're going to say?

Transactions?

Yeah.

Trends. And again, as an economist, Transactions are important because real estate, the bubble of real estate, makes up 13% of our economy.

Right. So they have a huge ripple effect. So when transaction volume goes down, which did happen, so we had a crash in quotes in transaction volume as prices continued to rise even after tripling the cost of money, basically. It's an odd era. That we've been through, huh?

Yeah. But again, this, this is, this is what led me to some wonderful calls in hindsight. Look at the total transactions of existing home sales in 1979. But Paul Volcker, 3.8 million. If you fast forward just to 1982, 1.9.

Wow. That's another crash in volume. Yeah.

Yeah. That's what led me to say we are going to have a crash, but not in price, in transactions. You know, hindsight, we, we crashed 40%. But here now, now fast forward. Okay, so what? Okay, Zuber, Jason, you got these right. Who cares? That's old data. Tell me what's coming. Well, again, I will tell you to look at this spreadsheet here. I mean, just look at this. The peak in 1979 was 3.8. Look at how many years it took for us to get back to 3.8.

Just in terms of sales volume.

Correct. Because again, I don't think people realize how This is why I called for a flat real estate market. Look at how many years I'm going through. Yeah, we're not even close yet.

Yeah, well, you're getting pretty close. I mean, 5 years later you got pretty close. Okay. You didn't quite get there to the same volume, but you got close.

That's 30% less. Oh, I guess it's 86 is close.

Okay.

That's 10%.

Yeah.

Yeah. But we don't, we don't cross 3.8 million again until 1994.

Interesting.

So that's a 14-year period, it's a lower volume. Yeah. And again, you think the population was bigger in 1994?

Let's, let's look at something. Let's look at the homeownership rate. I'm sure you have that on here, right?

I do. Row number 2.

Because so then it was more people renting, right? The homeownership rate should be going down, okay, over that time, which it did. Yeah, yeah, definitely did. Okay, we went in 1980 1980, we were just over 65% homeownership rate. And even by 1991, we were still below that at 64.1. Yeah. Yep.

Yeah. We don't get back to 65. Gosh, this is going to be a long time. Yeah, I don't even know. So don't get back to 65 until 1996. Think about that. Yeah, the world was different.

Yeah.

You know, 14 years later. So this is why I'm on the record saying that the housing market, you know, we're not going to get back to 6 million, which is what we did in 2022 before transaction volume. For a transaction. Exactly. Oh, by the way, again, as a real estate guy, I also looked at new home construction. What happened to new home sales? Right. So in 1980, we did 545,000 new homes, 500 new home sales. So it went down, but it came back in 1983. So it came back faster than existing home sales. Why? Probably because of the same things we're seeing now— mortgage rate buydowns, They're building smaller product, right? This basically tells me new builds, they will change to the market faster, which makes sense, right? They're brand new construction than existing home sales. So again, there's, there's great information here for new home sales as well.

Okay. We've looked at some history. Let's move up to more current day here if we can, and let's kind of see what's going on more recently and what Michael might predict for the future.

Yeah. So again, we've got the data in this spreadsheet out to 2023. It's being updated to 2024 to put all the data in there. 2025 will be the middle of the year. It's basically where I'm at today. Again, because of this spreadsheet is, and I called this in 2023, we're going to be flat on home prices. Most people want to talk price, price, price, price, price, price. So I said, okay, so for 8 years we're going to be up plus or minus 2% for that period of time. 'Cause I believe what happened in 2020, '21, and '22 is we got the full decade of appreciation. So the next 8 years are going to be basically flat. And these are nominal, not real. I'm not adjusting for inflation on a real basis.

But when you put inventory into that equation though, or lack of inventory, I should say, the housing shortage equation, I don't know, man. I don't agree. I think prices are going up.

I, you know, again, I—

we're moving into easy, easy money era, right? Potentially with our new Fed chair and with Trump's pressure and trying to make homes more affordable, which actually ultimately makes them less affordable.

Exactly.

That's an irony of life. Yeah. Yeah.

Yeah. So the other thing, again, as a real estate person, as economist, I think the important thing to realize is, okay, so what if you take the entire nominal appreciation? Actually, let's do— we'll do nominal first. I think people need to realize the average for the 53 years in this spreadsheet is 6% a year. That should probably shock people.

Yeah, it's 6.09% to be exact for 54 years. That's the average home price appreciation year in, year out.

And if like this is where you and I talk about, think about that as leverage.

Yeah.

So if you put 20% down, wow, you can multiply this by 5.

You're over 30% return just on appreciation only.

If you put 10% down, it's 60%. That's a year, folks. That's not your lifetime. That's a year.

And it doesn't include mortgage paydown, inflation-induced debt destruction, tax benefits, positive cash flow, 1031 exchange tax benefits, nothing. That's simply a super simple equation of leveraged appreciation. That's it, period. And just move the mouse off of that cell, though. So 6.09% and you leverage that and you already heard the answer. It's amazing. It's the most amazing—

the stock guys get wrong. This is why stock guys get wrong.

They'll tell you wrong intentionally. They don't want you to know. They don't want you to move your money away from the modern version of organized crime, Wall Street, to the most historically proven asset class in world history, income property.

Well, let's blow your mind even one step further. Let's pretend you are an FHA first-time home buyer and you put 5% down. Yeah, folks, you get to multiply this number by 20. Yeah, that's a 120% return every single year.

Incredible.

Yeah, you get to double your money every year. That's not a bad thing.

And let's just assume— I always like to say, because income property is a multi-dimensional asset class and you earn your return from at least 6 directions Okay. Most people will scoff at this. They'll say, I don't believe that. How can you earn 30%, 60%, 120% as an FHA owner occupant? And remember, you can just occupy that house for a year, move out, turn it into a rental. Okay. And then, and then someone else is paying the debt for you. It's a multi-dimensional asset class. So I'd like to just say cut any number in half.

Okay.

Cut the lowest number in half. 15% return annually. Cut the next number in half, it's 30% return annually. It's 60% return annually. It is the most historically proven asset class in the entire world. There is nothing like this.

Yeah, and again, I mean, just to tie this out, because again, I get a lot of stock guys, if you go down to row 27, we have the S&P 500 growth. It is 5.6% non-leveraged. You can't lever that 10 to 1, 20 to 1.

That's not the return for the insiders. Believe me, they're making much higher rates than the regular investors are.

Yeah, I unfortunately don't know the secret handshake, so I'm never—

Right. Yeah.

Yeah.

Yeah.

So again, lots of stuff in this data. It's always fun to think about. Again, the power of this spreadsheet was the question I asked myself. Okay, Jerome Powell said pain is coming, rates are going higher. Have we been here before? Yes. Historically, I knew we'd been here before with Paul Volcker. but I had no idea what happened across the economy. So we've got income here, we've got down payments, we got stock, we got misery index, all kinds of stuff here. You can go to my website, one-rental-at-a-time.com and get it. It's free. I don't charge anything. Just go download it.

Fantastic. Anything else you want to say? Consumer sentiment. I see that on row 29. Yep. That, that's the Michigan study, probably the University of Michigan. That's been talked about a lot lately. You know, it's on and off. You know, any thoughts on that one or just any other metrics you want to pick out? You know, GDP, whatever it is.

Again, I'm somebody who's been reading the consumer sentiment for 30 years, so I have a history with it. I've read it every month for 30 years. I now believe it is a completely irrelevant report.

Yeah, it's a soft index, right? It's not based on real data, it's just based on sentiment.

So yeah, the reason I say it's irrelevant now, because for the longest time— and again, I have 30-year history with it— it was a great leading indicator for retail sales. That's why you study economies or economics, so you can see what's a leading indicator to what's coming in the future, because that way you can prepare yourself. For the longest time, consumer sentiment, when it was rising or falling, was a very good indicator for consumer spending. It is just not for the last 3 years. The consumer sentiment— you can see it on the screen here— in 2022 was nearly the lowest on record, actually was the lowest if you look at the minimum column. So 2022 was the low. What happened to GDP? Up.

Yeah.

What happened to retail sales? Up. What happened to asset prices? Up. So again, I now believe the consumer sentiment has been— it relies on a model of phone calls, like 8,000 phone calls.

Yeah.

And I don't know about you, I don't even have a line in my house. I don't have a phone in my house.

I don't even answer those surveys when, you know, I mean, but that's the point.

Who is answering them? Because that's, that's exactly the point.

Right.

These surveys now have become so myopic on a set of folks who will pick up the phone and answer the questions that they're irrelevant. They don't represent the masses of the economy.

The likelihood is the people who are answering that call and doing the survey with the call center person are people who are sitting at home watching daytime TV. Okay. Not engaged in the economy.

They're not getting—

they're not productive. Years ago, they would have been watching Jerry Springer. Today, I guess it's still soap operas, or probably a thing still, whatever. That's not the person that is, you know, it's kind of like saying, you know, look who you get on a jury pool, okay? Those are not people that are out there knocking it dead, you know. They're, they're people that have time to be on a jury, okay?

Well, there's one last thing I want to talk about, and this is a chart that you will see Reventure Consulting put out all the time, which is—

oh yeah, the Doomer of Doomers who's always wrong.

Yes, it's always wrong, but he has gotten people to believe that there's some value in price and income.

Yep.

So we have that on the spreadsheet if you want to look it up. It's row 15.

So this is the median price home to the median income and the ratio of those two things.

It's just division. Exactly.

Yeah. So here is the reason, or one reason, that that is a flawed indicator. Because the price of the house doesn't matter. People buy it on a payment, okay? And every time there's an easy money era, meaning lower rates, more supply of credit availability— there's two components to that, not just one, okay? It's not just rates, it's ease of availability of credit. MCAI index, Mortgage Credit Availability Index, for, for the mortgage world. But there's other indexes for other things like auto loans, etc. That means that that always gets pushed out of whack because everybody's buying on a payment, not a price. But when you talk about Nick the ultimate doomer reventurer, who's the always wrong guy, what do you want to show us here? Okay, so the average is 3.48, right?

I want to show people why it's wrong. So again, I've given you Nick's pretty chart. So what I want to do is call your attention to '21, '22, because right above it in row 14, I actually have the correctly calculated affordability index, which includes interest rates, because he does not include— the affordability index is on payment. So again, what I want you to realize is if we start in 2020, we can see based on Nick's chart that it gets worse in '21 and worse in '22.

Nick, when it really, when it really got better because the COVID era rates were so low.

Exactly. This is the moron who caused people not to buy. He told you that it got worse by 50%, near 50%. He's screaming crash, crash, crash, where in reality it got way better. It got better. It was the record low, right? It's damn near best time to buy was 2022. And Nick is screaming don't buy. So again, Nick's an idiot. Nick's a moron. Nick is great at creating pretty charts that mean absolutely nothing.

Move your mouse off of the cell, though. So here's the thing, folks. You've got to just realize that these doomers are only cherry-picking data to show you part of the picture. That's what gets the most clicks. It gets the most views. The cost of housing got cheaper and cheaper during the COVID era. By Michael's indicator, which is accurate, versus the doomer's indicator, which showed you it was getting worse because he was only comparing income to house price. He was not comparing income to mortgage payment and people buying a payment.

Yeah. The only way Nick's chart means anything is if everybody paid cash for homes.

Yeah.

Then I would agree with you. But that's not what we do. Again, what really drives me crazy is Nick was telling people in 2022 not to buy, and that was one of the best times to buy. And again, if you did buy, you have an unfair advantage in the new economy. Your shelter cost is fixed remarkably low, and you are going to benefit from that for the next 30 years. Okay, and so Nick told you not to—

yeah, you're absolutely right. No, you're— it's a life-changing thing. And I've said this before many times, I've said it to you, when someone promotes an investment, and if the investment doesn't work out— say it's a syndicator or a fund manager or whatever, the promoter of the deal, right? And the deal doesn't work out, you can sue them for making false claims, right? Or defrauding you. Okay, people sued Bernie Madoff, right? Same idea. So here's the problem with that. The problem is Nobody sues the doomer that talked you out of the investment. The person who probably caused the largest amount of losses was the doomer that talked you out of the deal that would have been great. That's the person you need to go sue. But nobody does that because that's just not the way our minds work. It's not the way the system works. Like, try bringing that case in front of a jury. They have to evaluate how you can't hear the dogs that don't bark. Like, what would have happened if this person didn't talk you out of it? Okay. And so let's talk about the value of that for a moment. And don't quote me on this because I don't have the numbers in front of me, but I think that the amount of equity in US real estate, residential real estate now is like $34 trillion, something like that.

The record high.

Yeah, it's a record high. Okay. People have more equity, a bigger cushion than than ever in human history. And the value of all the real estate is about just over $50 trillion. These are with a T, trillion dollars. OK, so almost double the GDP of the entire country, almost half of the GDP of the entire planet. OK, is the value of residential real estate. Here's the thing. If these doomers, whether it be Nick or any of the other many others, it could be Melody Wright, OK, it could be whoever, OK, all of the doomers that talk people out of stuff. Think of the trillions of dollars people have lost because of that. Trillions of dollars. If the market is over $50 trillion, the equity is over $34 trillion, literally trillions of dollars have been lost by people who decided not to do it, who could have had a life-changing experience that would have changed their whole financial life for the rest of their life. They have lost that opportunity. It's just evil. Like you say, these doomers are evil.

They're evil. Absolutely right.

Well, you must have more comments on that, Michael.

No, I mean, it's just, um, I, I really do. I, I don't hold back anymore. Doomers are evil because, again, I think these doomers have PTSD from the last crisis. I mean, the biggest flaw I see in these doomers is they don't have timeline that goes past 2007. Right, right.

They can only go back to the worst economy in over 7 decades. It would, it would be like, it would be like if we were sitting here in 1948 when the economy is about to boom, when all the baby boomers came back from World War II 2 years earlier. Things are booming. Like, this is when America won the Industrial Revolution for the second time, okay? And the economy is just about about to boom, the prosperity of the '50s, etc. They're all saying, oh my God, don't you remember the Great Depression in the '30s? You know, they're all focused on that. They have PTSD. It's the same thing now.

Yeah, well, it's funny, one of my— I don't have very many memories of my grandmother on my dad's side, but I remember going to her house for a Thanksgiving dinner and she was recycling aluminum foil. So this was probably in the early '80s, right? I asked her, why are you doing that? And she said That's what depression babies do. Yeah. I'm like 11 or 12 years old. I didn't even know what the Great Depression was yet. So I had to go look it up. I'm like, oh my gosh. I mean, that's like the '20s and '30s are still thinking that way. So yeah, people, people have it. They just, they don't let it go.

My grandparents who have now passed were so conservative. They lived on a farm in upstate New York on a dirt road. I would visit them most every summer when I was a little kid and my grandfather grandfather would save every piece of paper that was sent to him. He would save the envelopes. He would write notes on the envelopes. That's what he would use to write things on because, you know, why would you buy a pad of paper? You know, you just didn't think that way. They had a phone line that was a party line. So like the neighbors up and down, you know, I mean, they weren't very close by because it was a rural area, but, you know, the neighbor might be phone. Oh, Lucille, are, are you going to be off the phone soon? I got to call someone. You know, you'd pick it up, they'd be having another conversation. I mean, it was just a different world, and, and people don't realize how much better things keep getting.

Yeah, so, so to wrap this up again, you can't listen to doomers who are stuck in the worst crisis ever. If they're trying to paint every crisis like the GFC, they just don't— they fundamentally don't understand what built that. We've had plenty of housing environments that are, are nasty, like this, the savings and loan crisis. We've had other regional, you know, catastrophes.

Sure. Yeah.

So again, you got to, you got to look to the people giving you advice and just ask logical questions. And the first one needs to be, is their timeline bigger than the GFC? Most of these doomers, the answer is no. Second, are they doing anything that you want? Most of these doomers are renters and they're paying their rent creating fear.

Thank you.

Pure evil.

Yeah.

So again, if you want to, if you want to get wealthy, You need to really watch your feed. I tell people to block doomers because even a little drop of poison can kill you. And they've already stolen trillions of dollars from you. Stop watching them.

Yeah, that's, that's a, that's a good point. And when you say trillions of dollars, you mean from the economy in general and people's investments that could have been, that might have been. And Michael, I'm glad you mentioned, you alluded to it, but the thing most people have to understand is that most doomers doomers are losers, okay? The reason they are doomers is not only because they have post-traumatic stress disorder from like the Great Recession 2007-08, but also because they missed out. They're jealous of other people who have the confidence and the courage to actually make decisions and do things. Look at the old saying is misery loves company, okay? They want to bring everybody down because they missed out. They want to justify their lack of productivity and their lack of success by bringing everybody down into it. And not only that, they benefit from it because they get more clicks and more views, because the human mind is programmed to seek out negativity as a survival mechanism, which was very valid for most of human history, but it's not valid anymore, and our brains have not evolved that yet. They have not evolved to the abundance that the Industrial Revolution created. So great points, Michael. Thank you so much for sharing this. Again, tell people about the book or where they can reach you.

Yeah, I've done one thing right in life, and that is everything I do is one rental at a time. Book, channel, Twitter, whatever you want, one rental at a time. Thanks, Jason.

Excellent. Michael, thanks for joining us, and happy investing. Thank you so 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 guests' 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. 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.