CW 214: Exploring Demographic Shifts in Texas and the United States with Steve H. Murdock Former U.S. Census Bureau Director

Welcome to Creating wealth with Jason Hartman. During this program, Jason is going to tell you some really exciting things that you probably haven't thought of before. And a new slant on investing fresh new approaches to America's best investment that will enable you to create more wealth and happiness than you ever thought possible. Jason is a genuine, self made multimillionaire who not only talks the talk, but walks the walk. He's been a successful investor for 20 years and currently owns properties in 11 states and 17 cities. This program will help you follow in Jason's footsteps on the road to financial freedom. You really can do it. And now here's your host, Jason Hartman with the complete solution for real estate investors.

Welcome to the Creating wealth show. This is episode number 214 and this is your host, Jason Hartman. Thanks for joining me today. Well, what is going on in the real estate market? All kinds of things. Things. It is so busy. So much money I think has been on the sidelines during the financial crisis. People were afraid to make decisions, didn't want to make decisions, couldn't make decisions potentially for financing reasons and other reasons and so forth. And it is just flying off of the sidelines now. All that money that has been waiting is really, really moving into the marketplace. I personally just made another offer two days ago on a 24 unit little apartment complex in Phoenix and just acquired an 11 unit and I'm almost finished building a 10 unit property in St. Robert, Missouri with a couple of our listeners, Elton and Danson. You're probably out there listening and think that's going to be a great partnership. So I look forward to doing it with you. And by the way, any of you who are interested in partnering, I would love to consider partnering opportunities with you. I have a good amount of cash that I'd like to get invested in the market and let me know if you're interested. And so many articles in the media nowadays about why it is such a good time to Buy. Wall Street Journal, June 4, 202011 why it's time to Buy and just cites in here, so many reasons in this article. Many of you probably saw it and there are so many other articles, but in this one it talks about how mortgage rates fell to 4.55% for the week ending June 2nd according to Freddie Mac and they are near 50 year lows. That's five decades, folks. I mean think about it. If you're listening to this, were you alive 50 years ago? And if you were alive 50 years ago, were you over 18 and in the market to buy a Property. Well, if not, and probably not, I think for most of you, this is literally the best time ever in your life from a financing perspective to be acquiring three decade long fixed rate mortgages. And remember, mortgages are a huge asset in an inflationary environment. And speaking of inflation, there is so much in the media about inflation right now, it is unbelievable. I mean, we are moving folks into pure, unadulterated money printing mode in this country where China and Japan are not wanting to buy our debt. I mean, there are statements by the leadership in Japan that is just frankly scary for many people. But for us listening to the show, employing the strategy that we're talking about, these are really good news bites out there for us. And so as we do this, the only other way to really handle our debt load our ridiculous spending here is to simply print money. Just simple money printing. I mean there's, there's two options, right? You can get other countries or other investors to buy the debt, buy the treasury bills and they don't want to do that anymore. And we knew that this day would come and you can do that, or you can simply print money out of thin air. And nowadays you don't even have to print the money anymore. You just create the money with a couple clicks of the mouse. I sort of imagine what it must be like at the Federal Reserve and at the Treasury Department. Is there a big computer in the corner of a room somewhere where someone like, I don't know, Ben Bernanke walks over to it and logs into the computer, clicks his mouse and there's maybe a drop down menu. This is just funny, like how this must really work. A drop down menu of how much more money do you want to create out of thin air, out of nothing, out of simply a couple of keystrokes on a computer keyboard or a couple clicks of a mouse? I wish I knew the website that they use because maybe I could go to it and create my own money. That would be an awesome, awesome power, wouldn't it? You know, so you look at this article, you look at what's going on, so many articles about really the convergence of three things in the media right now. It's the convergence of the inflationary perspective of so much of the media now saying it's time to buy. They're finally admitting it and you know, they come around slow. And then there's one other part of all of these major stories that I've been seeing lately and it is the part about the rental market being set to explode. If you follow John Burns, I had him on the show several months ago and he talked about markets and prices around the US in different markets. And he's a pretty conservative guy. I mean, I've had lunch with him. He's very sort of understated and conservative and kind of quiet. But he's now talking a lot about how apartment owners, rental housing owners, they have got such a bright future ahead of them. And that really is created by several trends, not the least of which are so many people going into foreclosure and recycling back into the housing market. And then Gen Y, the largest demographic cohort In American history, 80 million people strong. Most of those people are living at home now and they're moving right into their prime household formation years, their prime rental housing years, and then soon after that, hopefully, if they're lucky or if they want to, their home buying years. So all of these things are good for you as an investor, right? All of these things are very good for you as an investor. And just a lot of great trends coming at this. This is kind of the trifecta. Media saying it's time to buy. Media talking about inflation and we know inflation is much worse than anything being reported. And then you look at all of these other sorts of articles to add to that trinity of rental housing and how rental hous is just set to boom. Moody's analytics said that the ratio of home prices to income is now at 20.9% lower than the 15 year average through 2010. And you look at, oh, in this article, I'll just show you another thing here or share with you another thing. It talks about how prices have now fallen to their pre bubble levels. So before the bubble occurred, you know, in most real estate markets you're looking at 2001-2002 prices right now, before the subprime boom, before they were giving loans to anybody who could fog a mirror or record a pulse. It's amazing what's going on out there. If you do not see it, if you are not smart enough and you do not have the vision to move into this market right now. Gosh, I really hope you wake up because this is the time. I have never said that so confidently as I do now. And of course it is not the time in California yet, it is not the time in Las Vegas yet. I just had coffee over at Starbucks with an investment banker friend of mine and he was talking about, well, isn't Las Vegas really primed now? No, it's not. Too early for Las Vegas, still too early for California, still too early for many other Markets. Florida is very spotty. The Northeast is very spotty. But I'm talking, when I talk about this stuff so confidently, I'm talking about the markets we recommend. What markets are really, really booming for us now? Well, Phoenix. We just had our distressed property tour there. Phoenix is booming. Indianapolis is booming. I just purchased a property yesterday in Indianapolis myself. Another one there. Paid all cash for it. I didn't want to. It's just a little single family house. And when I say little, I think that one was like 2,700 square feet. So it's not really that little. But listen to this. The list price was $59,000. I ended up paying 62,500 for the property over list price. In many of our markets, things are selling over list. But why wouldn't they? They're 1/3 to 50% of the actual replacement or construction cost. So almost every deal is a multiple offer deal. So I got to pay $3,000 more for that property. In the overall scheme of things, what's the difference? I'm going to profit so much more handsomely than that. I'm more than willing to pay above list price. Phoenix, that little apartment complex I just put in the letter of intent on, I sure hope get it should know by Friday. I'm willing to go over list price on that one too. I mean the deals are just so desirable that it, it just doesn't matter in the overall scheme of things. And I hope I don't sound like that crazy person who in the bubble was talking like that. Because when we were in the bubble and I was doing seminars, I was telling the audience that we are in a bubble. And I was telling the audience about the typical glib cliched saying, there's never been a better time to buy than now. Well, that's not true. Certainly it was a better time to buy 30 years ago. But I'm saying in our lifetime right now, with a combination of interest rates and far below the construction or replacement cost investment opportunities, you would be just crazy to miss the opportunity we have now. Again, it's spotty. It doesn't apply to every market in the country. It doesn't apply to every neighborhood in these markets and it certainly doesn't apply to every deal. Deals are a case by case basis. So that's why you need good advice and a good screener and that's why you need us, my company, Platinum Properties Investor Network Incorporated, to help you with that. And that's what our investment counselors are here to do to help you with that. Any property that you would bring us in our network. You look on the website, go to Jason Hartman dot com. I will be happy to partner with you on anything on our website. I can't imagine turning down any property in our network. So I will put my money where my mouth is and go into deals with you. If you're interested, let me know and talk to our investment counselors and we can ferret out the details there. A couple other things. Maybe this is a good time to talk about a new venture that some of you know about. I recently launched a new company. Yes. Another totally separate business. I've got a few different companies and businesses and I'm pretty excited about this one. I've been working on it for, oh, maybe a year or so now. And I don't think I've ever mentioned it on the show. I'm not sure. But I have mentioned it some of our events and so forth. And it is a real estate auction company and it's called Open Door Auctions. And the tagline is best deal, no hassle. And this is sort of a takeoff on a traditional real estate company. And so far we're just selling properties locally here in Southern California. But it is a very, very unique concept and I think it is a concept whose time has come. I have not really figured out a way that this applies to the investment side of the world. So I'm just kind of talking about it and sharing my new venture with you. If you have a property in Southern California and you're looking to sell it, which may well be a very wise idea, by the way, because Southern California is not really the market to be an investor in yet. If you're a home buyer and you're going to buy something and lock in a long mortgage and stay there and you need a home for your family, I think it's okay. But I certainly wouldn't put it on my radar for investment yet. But Open Door Auctions is a pretty innovative business model. So check it out. You can go to our website for that. Opendoorauctions.com that's opendoorauctions.com and take a look at that. And just kind of sharing my new venture with you. More to come on future shows. Maybe I'll talk about a little more. A couple things coming up before we get to our show today. And our guest today, which by the way is on the topic of demographics, all important demographic topic. And I interviewed a professor with Rice University and we will be playing that interview here for you in just a moment where we talk about demographics. And I really like the study of demographics because it's simple. You can parse financial things 65 different ways. And at the end of the day, I think really simple things are the things that make sense in life. And to me, and why I was interested in Harry Dent so long ago in the mid-90s, was because he just looked at demographics. And I think if you just look at simple demographics, the fact that the population is increasing dramatically and every human being on earth needs a place to live. And even if the population is increasing dramatically around the world, not necessarily in the markets in which you invest, although it is increasing in those markets, but even if it wasn't, it still can be a profitable investment venture. Why do I say that? Because you're really investing in what? You're really investing in packaged commodities. Packaged commodities investing. You are buying the building materials of these houses and apartment buildings and that's what you are buying. And if you can buy them at or below the cost of construction, you have locked in your profit through what we've talked about on the show, regression to replacement cost. Right. But if the population is increasing in other areas, like for example in China or in, well, not Europe, not Russia, we know that, but in South America it's certainly increasing. In Africa it's certainly increasing. More of these construction and building materials are being consumed around the world. And remember, these are commodities. Lumber is a commodity, copper is a commodity. These are traded globally and they are not tied to the dollar per se. They are globally traded commodities. And when demand increases in China or in Africa through more building of infrastructure, or in India or in South America or in North America somewhere else that's not in the city in which you own, it increases replacement cost for someone to come in and fix or build a new property in the market that you invest and that automatically puts upward pressure on prices. Of course there are other factors, but I consider the packaged commodities investment factor to be a major, major part of any investor strategy nowadays. So a couple things. We have another conference call coming up on June 23rd at 5pm Pacific time that is free to members and it's $20 for non members. You can register@jasonhartman.com and the topic of this month's call will be on due diligence and how to manage risk and make sure that you do proper due diligence in screening properties and screening markets and screening the way you structure the deal. So that will be our call this month. And also of course, I want to remind you, and we have a lot of people that have registered for this. I'm so pleased that so many people this time got in on early bird pricing for our Meet the Masters event and that is coming up in October here in Orange County, California. And by the way, we did not select the hotel yet, so don't go making any hotel reservations or anything like that. We'll let you know when we've selected it. And the Meet the Masters event is now $347. Again, the price increases as the event draws near and you can register for that@jasonhartman.com it will ultimately be. Oh, I believe. What's the price of that? I think it's $800. Is will be the final price as it draws closer. So please register early. You can bring two people, so you can bring your spouse, your significant other, a friend, whatever, and register for that. It's only $347 now and the price will increase, so don't miss it. Okay, let's get to our show's topic today, demographics. And we will be right back with our guest from Rice University here in just less than one minute.

You know, sometimes I think of Jason Hartman as a walking encyclopedia on the subject of creating wealth.

Well, you're probably not far off from the truth, Penny, because Jason actually has a three book set on creating wealth that comes with 60 digital download audios.

Yes, Jason has that unique ability to make you understand investing the way it should be. It's a world where Anything less than 26% annual return is disappointing.

I love how he actually shows us how we can be excited about these scary times and exploit the incredible opportunities this present economy has afforded us.

We can pick local markets untouched by the economic downturn, exploit packaged commodities investing and achieve exceptional returns safely and securely.

I also like how he teaches you to protect the equity in your home before it disappears and how to outsource your debt obligations to the government.

And the entire set of advanced strategies for wealth creation is being offered at a savings of $94.

That's right. And to get your Creating Wealth Encyclopedia series complete with over 60 hours of audio and three books, just go to jasonhartman.com store if you want to be.

Able to sit back and collect checks every month just like a banker. Jason's Creating Wealth Encyclopedia series is for you.

It's my pleasure to welcome Steve Murdock to the show today. He is with the Hobby center at Rice University, coming to us from Texas and the somewhat booming state of Texas. Not completely, of course, but we'll talk about that. And we're going to talk about demographics. He's a demographer and author of several books and has some interesting things to say about population shifts. So I think you'll really enjoy this segment. Steve, welcome.

How are you?

I'm fine. How are you doing, sir?

Good, thanks. So what is going on with the major, major shifts in pop around the country nowadays?

Well, I think, you know, this is, of course, exciting times for demographers such as myself because we've, we're getting now in increasing amounts the 2010 census data. And these data show some very interesting patterns. One, one is, frankly, is that this has been the second slowest growing period in the history of the Census. Only the 1930s had slower in terms of percentage population growth. But at the same time, we added 27.3 million people to the American population. We added that primarily in the south and the west, with over 85% of the growth being in the south and the West.

And Steve, when you say we added, you're talking about within the last 10 years since the priority.

Within the last 10 years, I'm sorry, looking at that period of time, and you can see whether you look in percentage terms or numerical terms, those increases, where they are. For example, if you take the the 10 largest states in terms of numerical population increase from 2000 to 2010, they were, and I'll just read a list here, Texas, California, Florida, Georgia, North Carolina, Arizona, Virginia, Washington, Colorado and Nevada. So they're all in the west and South. Now, that doesn't mean there aren't significant populations, certainly in New York and other places. Simply says that we've seen this shift in population from the Northeast and Midwest to the south and the west. Basically a shift from the beginning of the 20th century where 62% of the people lived in the northeastern Midwest and 38% lived in the south and West. As of 2010, 40% live in the Northeast and the Midwest and 60% live in the south and West. So one has been this overtime shift from the Northeast and Midwest to the south and the West. So that's been a major pattern. And we see it phenomenal growth, not just to dwell on Texas, but. But Texas added 4.3 million people to its population, a full 900,000 greater than California, which is a state that's 12 million larger.

So let me ask you a question about that. The shift from the Northeast, I mean, is that pretty much as Billy Joel told us, they're closing all the factories down in Allentown? I mean, is it just the shift from for better or worse, and sometimes for worse, in many ways, America shifting its manufacturing base overseas or what. What do you attribute that to?

Well, I'm not an economist, but I think the shifts certainly lie show very clearly what we're seeing in terms of shifts of industries to the south and to the West. I think some of it has to do as well with the composition of the populations in the south and west versus Northeast and Midwest, for example. One of the things that I tell people is that when you look at states across the country, you can basically say if you are not diverse, you are not. So that when you look at, for example, minority populations in America and you look at that composition, what you'll see is that the vast majority of African Americans, of Asians, of Hispanics are in the Southern and Western states. And if you take some of the Midwestern states, very, very slow population growth. An example of that would be a place like Iowa that has had relatively slow population growth. But the Great Plains of the United States, certainly when we looked at the largest C, for example, we were startled to see that Chicago lost 200,000 people. So it's a combination of factors, but certainly there's a strong economic factor, as we've seen more growth, as you say, in factories, but in all kinds of businesses in many Southern locations. And that coupled with, I think, growth in the population segments that are the fastest growing segments of the US Population.

Very interesting.

So also, I think another thing we might attribute it to is maybe the aging baby boomers, for example. I can't tell you how many people I've spoken with or met or heard about that live in, say, Michigan. Now, of course, economic factors are driving people out of Michigan for sure, but once they retire, they're thinking like, forget this cold weather. I'm going to move to Texas or maybe Florida or a Southern state where it's a much more pleasant place to live in terms of weather.

Yeah, I think we've seen some of that. Certainly we've seen some of that in the very states you talked about, the Arizonas, the Texas, the Floridas and other states, and particularly in the Southwest, there's been certainly some falling of that. I think that the largest phenomena had been economic. I don't think there's any doubt about that. But certainly the aging of the population has had a couple of effects. And one is that in general, when we talk about the Northeast and Midwest, they are older populations than they are in the south and west, and you see a very marked difference. Let me just give you a new Texas example. I was asked by a reporter when Our data for Texas were first coming out to kind of give a mobile Texan. I said, well, I can't do that. I said, because the majority of Texans now are minority group members, although non Hispanic whites are still the largest single proportion. So I said, let's look at two. Let's look at a kind of a modal non Hispanic white. And that turned out to be a woman, 40 to 44 years of age. And the modality, non Anglo or non Hispanic white. The mobile minority group member was an Hispanic male, 25 to 29. So that's a, you know, that's a 10 year, over 10 year difference. And that's a, that's a major different difference demographically. So, you know, you're seeing a combination, a mixture of age, race, ethnicity, economic and other factors all playing roles as we kind of shift our population around from one area to another.

One of the things you mentioned earlier in the talk here was that this is the slowest growth since really the Great Depression in terms of our population.

In terms of percentages.

Yeah, in terms of percentages. So now is that because the immigration, especially from the south, from Mexico, has really slacked off for those anti immigration people, this is maybe one benefit of a bad economy. I mean, they're not coming over as much as they used to because governments aren't flush with cash to give out for entitlement type programs. And there aren't the jobs here either.

Right. Well, I think more of it, frankly was just the general economic slowdown of the latter part of the decade because the growth was going pretty well until that period of time. And then we saw a slowdown. I think sometimes people misunderstand that when you look at, we don't have the final 2010 data on this, but when you look through 2009, you know, basically two of every three new Americans that we had are added through birth. And so immigration is about 35% of our population growth. And that's both legal and undocumented immigration. Undocumented. Now, I think Pew Hispanic center and Homeland Security both have about the same number, somewhere around 10.8 to 11 million nationwide. So that's a force, but I think a good deal of it. We have, for example, the lowest immigration right now that we've had in numerous decades. We've got the, the lowest birth rate we've had for long periods of time. And that's across racial and ethnic groups, across states, across areas. And so there's been a kind of, I think people taking stock of where the economy is and saying, wait A minute. I probably going to stay where I am for right now and I'm going to have to watch my resources, my investments a great deal more carefully than I've had to sometimes in the past.

We look at the ethnic component of populations. If we look at the US and then we look at Europe and I mean, Europe is dying, isn't it? And Russia is just evaporating. I mean, there's just not the fertility rates of the past. Right, Right.

Well, one of the things that you see is if you take Europe as a whole, Europe is the slowest growing region of the world. It is the oldest in terms of. There are some exceptions that Japan, for example, is a very old country. But in general, if you look for the oldest places, you look for the places with the lowest fertility there in Europe. And one of the things that I tell people is when you look at our population and look at the various racial and ethnic groups, one group, the non Hispanic white population, takes its heritage primarily to Europe. And so it's not likely that we're going to have a lot of European immigration simply because the numbers are small and the age structure is old. One of the big differences, and not the only one, but one of the big differences between our population and the European population is the degree to which we have very large minority populations that are younger, particularly in the case of Hispanics, generally have higher fertility rates. And our growth is increasingly dependent on minority populations. For example, in this decade we've just gone through basically 71% of our increase. Seven of every ten new Americans were minority group members. You know, Hispanic, African American, Asian, American Indian, etc. And when you, when you looked at the growth, the growth of the Hispanic white population, for example, it grew by only 4% from 2000, 2010, Hispanics grew by 30%, Asians grew by 47%, etc. So, so our growth and the difference between US and Europe in many ways is increasingly due to our minority populations.

Well, a couple things on that, Steve. Number one, what you mentioned to me is that a change in that. Now we're talking about the US And I just want to ask you about Europe in a moment. But a change in that in the US Is very unlikely because the average.

What did you say before?

You told me before when we were chatting, the average white female is what, 41 years old now or something?

Yeah, I think the average Anglo female is right around 40, 41 years of age. And when you begin to look at that non Hispanic white population, here's the kind of things that really Mitigate it against coming back to some kind of rapid growth. First of all, fertility for non Hispanic whites has been below replacement for a couple of decades now. Their age structure now is getting to be. So it would be difficult to reverse that in any kind of biological system in terms of immigration to replenish that population. The primary source of that would be Europe. Europe has one of the oldest populations in the world. It is a population that is not as at even lower fertility in many, many areas than the non Hispanic white population in the United States. And hence it's not going to be a likely source of immigration. So if you do away with high natural income because your population is older and your birth rates are low and you're not likely to get immigration, well, then you have a component that's likely to decline as a proportion of the population. And we saw about almost a 10% shift in the proportion of the US population that was non Hispanic white.

That's interesting. So a lot of our listeners here are landlords and certainly everybody that plays a part in the economy in terms of having a job, selling a product, selling a service. If it wasn't for that immigration, America would really have its economy shrink, wouldn't it?

I mean, we're really.

We need that immigration or we need to start having a lot more kids over here, right?

Well, yeah, I mean, if you, you know, if you would have looked at, you know, our approximately change of 20 millions that we talked about in terms of our, of our total, our total population, you know, when you look at that, at that 27 million that we've talked about, when you look at it in terms of who contributed what, what you see very quickly is that, you know, the non Hispanic of the 27.3 million that we added, non Hispanic white accounted for 8.3%, 55% of that growth Hispanic increase. The Hispanic Hispanic amount of growth was 15.2 million. So 2.3 for non Hispanic whites, 15.2 for Hispanics, 3.7 million increase for African Americans, 5.3 million for Asians, and then another 800,000 for a variety of groups. But it's really quite startling when you say that the Hispanic, the African American and the Asian populations all contributed a larger absolute number of persons to our population growth than did non Hispanic whites in this last.

Have the numbers ever. I mean, this is really an amazing time to study demographics, isn't it? I mean, the numbers have never been.

Like this, have they?

Yeah, well, I'm sure there's, I don't know, all the periods of Time, but certainly in my demographic career, last 35 years or so, they haven't been, you know, and we've had this prec. Something we talked about, that shift was in the young population, but we shifted our population by about a decline of about 6% in this non Hispanic white population as a proportion of the total population. And when you looked under, you know, when you looked at under 18, then you had this 10% shift. You know, the under 18 population in the United States is only 54% non Hispanic white now. And so when you go and when you look at that population kind of, you know, with the kids being the future, what you, what you saw in that population in the United States from 2000, 2010 is the number of non Hispanic white kids decreased, decreased by 4.3 million. The number of Hispanic kids by 7.5 million. African American kids decreased. Also about 244,000 Asians increased by about 1.7 million. So it's increasingly, in other words, that our child population, clearly without Hispanic population growth, would have had an absolute numerical decline.

People talk about the graying of America. That certainly is a phenomenon. But when you look at the graying of Europe, I mean, that's nothing compared to the U.S. i mean, Europe is on the road to extinction, isn't it?

Well, they're certainly an old population, and they're going to have to either change some fertility patterns very quickly or they're going to have to allow for some form of immigration.

But when you speak of immigration in Europe, Europe has done that. I mean, there's a lot of Middle Eastern and African, Northern Africa in immigration, immigration through Europe, and that's changing a lot of things over there. But what were you going to say about that?

All I was going to say is that in many ways, I think one of the things that it's important for us to realize in the US Is that if you took the minority population out of America, the population of non Hispanic whites in America would not look terribly different. It would be younger, but it would still be not all that dissimilar from the European population. The difference between us and Europe is increasingly due to our minority populations. And in a very real sense, I think we could say we have kind of two population groups in the United States. We have an older aging, literally dying off the end of the age chart, so to speak, Anglo population, which is pretty fixed in numbers and aging quite rapidly. And then we have a young, very diverse minority population that will increasingly be the future of the country and certainly of states like Texas and California. And others. I mean, California's numbers were, to me, were just. Were just startling. It was the only state in the country that had a larger Hispanic population increase than Texas did. And it gained somewhere around, I think, 3.1 million Hispanics. But what was very telling to me was that in terms of Texas population growth, it had about the second largest increase in the country, 464,000 increase in the number of non Hispanic whites. California had a NET decline of 860,000 non Hispanic whites.

Where are they going?

Well, all over.

They're going to Texas. I know that Texas and Arizona seemed to be the destinations.

One of the things that people aren't as aware of, I think, as they might be, is that for a large number of years, I don't know exactly off the top of my head what the number. But for a large number of years, if you looked at domestic migration, meaning migration within the United States, that component of California's migration has been negative for a large number of years. They've made up for it in terms of population growth by a good deal of immigration and fairly high natural increase rates. But in terms of interchanges with other states, domestic migration, they've been losing more people than they've been gaining now for at least a decade.

Very interesting time. Let's talk a little bit about aid segmentation a little more, if we can drill down on some of that a little bit. Because I think what's really interesting, and we were talking about this off the air, but I live here in Orange County, California, and first of all, I think real estate drives almost everything else in life because it's such a large portion of people's expenses, their housing expense and then also their cost of doing business and the prices they pay at businesses. If you go to a restaurant in Newport Beach, California, they have to charge a lot more for the food than they do in Phoenix, Arizona, because of the cost of the real estate and everything else that's integrated in there. And so when an area gets expensive, I say the population starts to age. But there are some exceptions to that which are kind of interesting to me. And we talked about that, but kind of speak on that if you would, a little bit.

Well, I think part of what we have happening is that due to a variety of historical, discriminatory and other reasons, there are vast differences in the socioeconomic characteristics of different segments of our population. You know, just to give you an example, I was looking at some national data today. And, you know, if you look at 2009 data, which is the most recent, we have on this from the census at least. The average non Hispanic white in America was making almost 60,000. The average Hispanic was making about 35.6 thousand. The average African American about 35.4 thousand. The average Asian about 63.7 thousand. So that there's very large differences. And so, so partly what happens with that difference in real estate is that you sort people other ways as well. But in addition to that, you have underlying that pretty vast differences and differences that we certainly need to address as a country through education and other factors if we want to maintain our competitiveness. But those are very substantial differences and not differences that haven't. I mean, they're differences that have been there for.

And so people are self selecting, right?

Well, self selecting in the sense that to some extent. Yeah. In other words, or another way to say it is, people probably go where they can afford to go, Right?

Sure.

Now, you'll find, of course, the support structure, the people doing lots of the work in those restaurants you talked about won't be living in the condos on the beach, but they'll be there because there's jobs there. So we have kind of that dual labor market that we. We.

That dual culture.

Dual culture. They've been there. But I think that you're right in the sense that I think when you, for example, when you look at retirement areas, I think you've seen some in the south at least initially grow because they were cheaper places to retire than there were some were in some other parts of the country. And so people who were more middle class couldn't look at retiring in some place in the south or Southwest, and more likely to be able to do it and afford it for the rest of their lives than was true in some of the places on the two coasts. So I think people have certainly, I mean, one of the major, major determinants of migration is incoming economics.

We'll be back in just a minute.

What's great about the shows you'll find on jasonhartman.com is that if you want to learn more about investing in real estate in different markets, there's a show for that. If you want to learn 17 ways rich people Think and Act differently, there's a show for that. If you want to know how to get paid to borrow, there's a show for that. And if you'd like to know why Amsterdam doesn't take dollars or why pools are for fools, there are even shows for that. Yep, there's a show for just about anything only from jasonhartman.com or type in Jason Hartman in the iTunes store.

What.

Is the trend in America in terms of living style? I mean, I like to talk about household makeup and household formation, but that really actually wasn't this question, this question. I wanted to talk about suburbia and urban areas and what are people doing now? I mean, certainly suburbia really became a factor after World War II, I guess, and Levittown and all that famous sort of suburbanization. Is that still the trend?

Absolutely. One of the things that you probably saw in the last couple weeks was a, was a press release. I think it came out of Brookings where they analyzed the census data and showed that the major cities of America, many of the large cities, had relatively slow population growth. We talked about Chicago only, you know, gaining about, I mean, losing population in absolute terms. But when you look at the growth, remember that the overall population in the United States grew by about 9.7%. So if we look at that relative to the, you know, the cities, America, New York grew by 2.1%, LA by 2.6%. Chicago went down. Houston grew by 7.5%, Philadelphia by 0.6, Phoenix by 9.4. The only one of the top 10 that grew by a larger percentage than that, 9.7, was San Antonio at 16%. But what you've got in many of these places is very dramatic increases and very, in some cases very multi ethnic increases in suburban areas. There's a county, for example, right outside of Houston, Fort Bend county, that one of the interesting things is if you look at their growth, they had, you know, 40, 50,000 people each from the non Hispanic white, the Hispanic, the Asian and the African American groups. So a very diverse and very multi ethnic growth and diversification. So suburban continue in Fort Bend County. And this is an area right west of a county, right west of Harris county where Houston's located. And so what you're seeing is that suburban areas are still growing more rapidly than are the large old central cities.

There's some argument, you know, a lot of people argue against suburbia because it uses a lot of gasoline. You have to drive places, people are in their cars. And there's one person that I follow, I haven't had him on the show or anything before, but you know, he's an author and he's got a show that he does. And he's really saying that suburbia is in danger because of oil prices. But it doesn't appear to be the case so far.

Well, I mean, you know, I don't know what that might be in the long run, but I Think, think the differences are really a number. One of those is, of course, as you talked about, the cost of land and the cost of real estate. And if you look at what you can afford in a suburban area versus what you can in downtown LA or downtown New York or downtown perhaps Houston, you're going to be able to get more for less in most suburban areas. And I think certainly transportation costs as they go up will affect that. But you know, those differences have been the difference between housing costs in central cities versus suburbs have been a big factor for a number of decades and at least through 2010 continue to be.

So very good point. And you know, what I think is driving a lot of that is this gentleman, it's James Kunstler, by the way, who I'm talking about. And his argument is that fuel prices will make suburbia expensive. But I would argue that fuel prices impact the construction cost of urban properties much more significantly than they do driving to the grocery store in suburbia. Because when you build up, those construction costs just soar in high rise condos and so forth like that.

Well, yeah, I think the other part of that, and again, I'm not a construction person, but I think the other part of that is that if you look particularly at suburban households, we're talking a little bit about households, but suburban households are much more likely to be married couples with children than is true in large urban areas where you have lots of single, you have older persons, etc. And I think what you see is not only the desire to spend less on housing, but also to have that housing that has a little land with it for your kids to play out in the backyard, et cetera, which isn't necessarily provided by an urban condo. And I live in one, so I'm not meaning to be critical of one, but I'm simply saying that I think there are factors that are pretty part and parcel of family life in America that favor suburban living. Obviously, substantial increases in the cost of fuel and so forth might get people to rethink that, but I think it's economic plus other factors that are creating this growth. The phenomena that happened that is yet another aspect of distribution is that we clearly seen many, many rural areas in the United States suffering this last decade, meaning continued population loss. So if you go through the Great Plains in the United States, really from the Canadian border down through the Texas Panhandle, or you go over in the Midwest, see a number of states that have had lots of declining counties, so lots of rural areas have continued to decline, both as a result of Natural decrease, that is more people dying than being born, but also because of continued migration to suburban and metropolitan areas.

Right.

And, you know, speaking of suburbia, there's an old saying in real estate that people drive until they qualify. You know, so they gotta drive as far as they can qualify, right?

Yes, yes. Well, I think, you know, we've been looking at some of the growth in Texas counties, in the Hobby center here at Rice, and one of the things that is clear is that the suburbanization has gone farther and farther out as that drive in terms paid for you to qualify. Paid for you to drive in order to qualify. And so as you look at cities across the country, that has been a pattern. And again, yes, yes, massive changes in oil prices and so forth may impact that. But, you know, what we can say is, to date and through this decade, suburbanization still had a pretty good hold on America.

Let me ask you about household makeup for a moment and try and wrap up here. I heard that in the last few presidential elections, many people didn't really realize what the largest voting block was. A lot of times you hear these reports, they try to divide up the voting block blocks by age or ethnicity, or they talk about the AARP or trade groups or unions or whatever. But actually, what I had read a couple of places and also heard is that the largest voting bloc in the last few presidential elections was singles, because people are waiting so long or divorcing or whatever. And nobody really sort of viewed that as a voting bloc or a constituency the same way they viewed these other groups.

Well, we've got a number of things, of course, going on. We have the oldest age at first marriage since the 1930s. And so many, many young adults remain single until the latter part of their 20s. And this is a new phenomena. We have fairly high divorce rate. We have also people who are living longer, but because of the differential that exists between males and females, which is still the there, women live longer than men. And so longevity still, although men have done better the last decade or so than they did two or three decades ago, we're still seeing a growing number of widows out there who outlive men. So we have a number of factors that are going together to decrease household size and to diversify the form of households that we have out there. There. We have more single parents. We have more diverse household compositions than any time, at least in recent history. So households have become very important patterns, not only politically, but certainly for the private sector in terms of marketing. All you have to do is watch television and see the number of things where convenience is the. A major factor being stressed in terms of the food product that's being provided. Get something quick and get something that, you know, is appropriate for someone who is a single person. So they certainly have impacted lots of things as well.

One of the things that I was talking to my mother about this just yesterday actually is I recently purchased a small apartment complex in Scottsdale, Arizona and she asked me what the unit unit mix was she being in real estate as well. And she said, you know, what's the mix of units? And I said, they're all one bedrooms. And she said, well, I don't know if that's so good because you'll get that transient tenant. And I said that was true 20, 25 years ago. But nowadays the one bedrooms actually do, or I mean can do all other things being equal quite well. And that's why Ike was kind of leading that into my question on the singles as being such a large demographic cohort. So it's really different than it used to be though. I mean, one bedrooms used to be a bunch of like transients that wouldn't stay in your property very long and you couldn't find a renter for a one bedroom. But that's really changed nowadays, hasn't it?

Yeah, well, composition certainly household size has gone down. And as I said, the diversity of household forms, you know, the married couple with two children, one male, one female, the male preferably two years older than the female, which is kind of the stereotypical 1950s or 60s, probably 60 or 70's now, because we used to think of three or four children, those are increasingly a decreasing proportion of the total. And so we have just a variety of household groups out there that, as you say, are driving a variety of housing choices. And so that's certainly a factor that I think is critical. I think overlying this, although I'm not an economist, I think is that is to see where we're going economically in terms of our recovery. Those sorts of things are going to affect not only economic, but they're going to affect demographic factors going forward.

Yeah, yeah, no question about it.

Well, I know we need to wrap up here and let you go, but I want to just ask you one more thing and talk about Gen Y for a moment. Gen Y is such a large demographic cohort and they are moving into their prime household formation years and their prime renting years. And in terms of the housing market, I guess the one thing about Gen. Yeah. That doesn't bode well for landlords, real estate investors is that they like their parents and they tend to stay living there a long time.

Well, yeah, you know, I sometimes kiddingly say in my presentations that we're looking at the baby boom generation and we're looking at the numbers that will be. And, you know, this number will be. Hopefully they will be, you know, elderly people without children, meaning without children living with them.

Right.

But, you know, I think we're yet really. No, and I'm not an expert in this area, so there may be people who do know, but I think to see how these household forms will play out, because there is deep rooted, I think, in American culture and American society the idea of, you know, bonding together of pairs which and which leads to offshore offspring or at least can. And so it'll be interesting to see if we really do get generations where intentionally end up with what appears to be possible, very large proportions of persons who never have any children. That would be quite different than anything in the history of the US and quite different, I think, than we see ourselves socially and culturally. I think it's a, you know, there's certainly lots of economics that would support that as not being an illogical set of circumstances. You know, you talked about real estate. Again, I'm not a real estate expert, but a friend of mine who does a lot of work in this area, and I don't know whether he's right or not, but he said he believes there are segments now of American society in which people are beginning to look at housing more like they look at automobiles as something that you purchased, you used, sold it. When you sold it, you got as much out of it as you could, but you didn't see it as much of an investment as maybe your parents did. And if that shifts, that would be a major shift in the way that all of us have looked at real estate and certainly the bubble that we've had. And in fact, that continues to be bothersome to our company. If we start looking at housing in the way that he's suggesting, it would be a very different real estate market and real estate reality, if you will.

I think for many reasons, we are going to see the homeownership rate continue to decline pretty dramatically. And that is why the apartment developers are really, really looking at an incredible slew of demographic good news for them as the renter market increases. And I think you're right. I think we're going to see many, many millions of new renters enter the market. Many reasons Fannie Mae and Freddie Mac possibly going away. So financing being even tougher to get than it is now people that have destroyed their credit the last few years and letting their houses go. They're going to be renting and then Gen Y, moving into their prime, renting years and staying single longer. You know, if you're married, you're more likely to buy and own. If you're single, you're more likely to rent. And that's just my anecdotal interpretation.

Yeah, there's better people than me, at least to talk about this. But I think, I do think that we've got patterns and trends that may be, you know, we may have had a period here because of the economics of it, too, that will, that will substantially change our view on housing and our view on housing composition going forward. I think it's just, I was, I'm one of those people who owns a house in another city he doesn't live in.

I own many of those.

And, you know, I can say that my grandson says, well, why did you do that? You know, why didn't you just rent? And, you know, my explanation seems to him kind of quaint. You know, it used to be a good idea to buy. And he kind of looks at me like, goodness, I hold on ideas that not realizing it's not all that old. You know, five or six years ago, you'd have been being told that still, I think. And so it could be a substantial shift going forward. But that's what makes demographics so exciting. And when we look at it in a place here like Texas, at Rice University and our Hobby center, one of the things that we find exciting is seeing how it changes out, how it changes by geography, how it changes by area, how it changes for population groups. And one of the things that we spend a lot of time looking at is the need to ensure through education, other factors that these rapidly growing components of our population are competitive as we go forward in time. Because in a very real sense, as we look at America today, the future of America, the future of states like Texas and California is increasingly tied to their minority populations. And in a very real sense, how well they do is how well the US Is going to do in the future.

Yeah, very good points. Well, Steve Murdoch, thank you so much.

Give out your website, if you would.

And tell us a little bit about your books, too.

Okay, well, our website, you just go HTTP hobbycenterice.edu and you can get the data not only for Texas, but for the US on our website, learn about our center, which is looking at the issues not only for Texas, but across the country. We will be, with some support from the Meadows foundation, we are redoing two works that have been, we think, consequential both nationally and in the state of Texas. One of those is the America Challenged, which is a work that looks at the demographic implications of the socioeconomic implications, really a demographic change, a similar one that has done that for Texas. Both of them looking, for example, at what does it mean for education for for the state and Texas case and the country. What does it mean to have the changing racial ethnic composition? What does it mean to have the changing age composition that we have as we go forward in time, really? What does it mean, for example, that our population is going to have one in five Americans that's 65 years of age or older by about 20, 30? What does that mean not only in Social Security, those kind of issues that we've heard a lot about. What's it mean in terms of marketing? What's it mean in terms of tax revenues? What's it mean in terms of consumer expenditures across the country and in states like Texas?

Excellent.

Very good points. Well, Steve Murdoch, Rice University thank you so much for your insights today. Really appreciate hearing about this.

Well, thank you. Appreciate it. Enjoyed talking to you.

Did you know that we offer one on one coaching? This includes six months of one on one coaching. For more information, go to Jason hartman.com this show is produced by the Hartman Media Company. All rights reserved. For distribution or publication rights and media interviews. Please visit www.hartmanmedia.com or email mediaartmanmedia.com Nothing on this show should be considered specific personal or professional advice. Please consult an appropriate tax, legal, real estate or business professional for individualized advice. Opinions of guests are their own and the host is acting on behalf of Platinum Properties Investor Network, Inc. Exclusively.