Real Estate Crash PANIC as Market Shifts!

Foreign. Welcome to episode 1858. 1858. And today I want to talk about what's on everybody's mind. Yes, I think it's pretty much on everybody's mind. And I've got a good way to illustrate it. Let's talk about where the market is going. This will be a little bit different than the other conversations we've had about this, because as we witness a massive shift in Federal Reserve policy over the last several months and a tightening of the money supply, it is having profound effects, profound effects on the real estate market, on. On all markets, the financial markets, whether it be precious metals, stocks, cryptocurrencies, whatever it is. Now, the interesting thing about this is we thought that cryptocurrencies and precious metals would be the answer in times like this, but they haven't been. They've been the complete opposite of the answer, not the answer at all, unfortunately. So what do we do? Well, the question is, the Grim Reaper has already been to the stock market and has already destroyed the value of stocks. Lots of investors have lost their shirt, and it's been a really rough ride for stock market investors. The Grim Reaper has also visited the cryptocurrency market, and that is just devastating. What is going on in the cryptocurrency market? You know, we haven't talked a lot about it, but you've looked at the fall of whole currencies, stablecoins, that should have been stable, as the name would imply. Exchanges, Lots of trouble. What's interesting also to do is to look at the stock valuation of, say, Coinbase, for example, the biggest, if not, or at least one of the biggest exchanges, and their stock has plummeted. This whole sector, people have just lost faith in it, and I really wonder if it will continue. Now, I do want to separate. When we talk about cryptocurrencies, I want to separate Bitcoin from all the others, because it really is different. But most investors tie the whole asset class to technology, and technology has had a very rough ride, and they sort of lump them all together. So because they do that, and you can argue until you're blue in the face, as the saying goes, it won't matter, right? The market is the market. Like the old saying, the market can be irrational longer than we can remain solvent. So don't argue with the market, don't fight the Fed. Just try to find ways to align your interest. And the next question is, you know, we're looking at real estate, and it is quite literally the last man standing, or I should say to Be politically correct. The last person standing or the last living creature standing, you know, you don't, you don't want to leave out the animals. And I love animals, you know that. Certainly not dogs, especially the best one of the bunch. But is the grim reaper knocking on the door of real estate. And we've got to do another thing, another very important distinction. We've got to distinguish real estate from income property because those are different. Just like bitcoin is different than Ethereum and all the others. Right? Those are very different. And we've also, of course, as I've taught you for many, many years now, about 18 years to be specific, we've got to distinguish the types of real estate markets. Are they linear markets? Are they cyclical markets? Are they hybrid markets? Are they markets with good LTI ratios? No, I did not say LTV ratio. I said LTI ratio. That's the ratio I created, the land to improvement ratio. Are they markets with good LTI ratios? And we've got to do all of these things. But we're not going to get into the weeds on linear cyclical hybrid markets, markets or LTI ratios today. I want to cover some new ground with you. This is stuff I haven't directly covered before. So let's dive into it and take a look at this. Of course, you know that I believe the most important question in life is compared to what that really is life's most important question, in my opinion. And if you think there is a more important question than that, please go to jason hartman.com ask and instead of asking, tell me what the most important question is. You can, you can not only ask there, but you can tell there@jason hartman.com ask. We'd love to hear from you on these ideas. Okay, so when we drill down and look at this, let's take a look at a few things. When we asked the compared to what question. First of all, these stats came from a CNBC video and they're from Black Knight. That's where they source them. Now Black Knight is a consulting group and statistical group that keeps all sorts of great data on real estate and other industries. And what's interesting to note first of all is the strength of the homeowner of the mortgage holder. That is what will tell us whether or not they're likely to face distress. And let's compare that, since everybody else is doing it, to the Great Recession. Now what I don't like about these stats is they don't really compare it to what happened right before the Great Recession, which actually was probably worse than these numbers, if I had to guess. Okay. But they do look at 2010, which was, you know, right into the Great Recession or the global financial crisis, whatever you want to call it. But Really, I think 2007, 2008 would have been better numbers to look at. So let's look at the housing market versus the Great Recession. Today let's look at credit scores of the average mortgage borrower. So today the average mortgage borrower has a credit score of 751 in terms of their FICO score. Now that is a great credit score.751 is phenomenal. In 2010, their credit score was 699 below 700. And you know, below 720 is where it starts to look not so great. Above 720, hey, that's pretty good credit score. And certainly 751 like we have today is an excellent credit score. So these borrowers have good credit. This is not looking like a subprime crisis. Okay, going on the tappable. In other words, what people can borrow out of their homes, how much can they borrow and still leave 20% equity in the house? Now, I shared some other stats on this just recently on the show showing that the average homeowner had like $211,000 in equity. And I think that the tappable equity of the average homeowner was like 170, something,000 dollars. Again, I shared that maybe two weeks ago on the show. Okay, so go, go back and listen to the old episodes. Look at the old YouTube videos for more on that. But in the aggregate, what does it look like? It's $11 trillion. $11 trillion. Now that's about half the GDP of the entire country. So the GDP of the US is a little over $20 trillion a year. $11 trillion is available or tappable home equity. That's not the total home equity. The total home equity is eating up that additional 20% that's left in there and after it's tapped. Because a lender will not loan you 100% LTV on a home equity loan or on a refinance. They will only loan you as much as 80 20. So what's available to homeowners is $11 trillion and that's up 34% year over year. And the average homeowner has leverage of. I mean, look at this folks. This is amazing. Amazing. This is an amazing number. 43% is the leverage used by the average homeowner. In other words, their loan to value ratio is only 43%. They've got 67% equity. Right? Or no, wait, sorry, 57%. It's. It's early. I still need one more cup of coffee. Okay. You know, I can do it with the coffee I've had, but if I have one more cup, I'll be better off. I'll be a lot smarter. I need that one more cup. Should have had it before the this, this intro today. Okay, so 57% equity, 43% leverage. These are not leveraged homeowners. They have lots and lots of equity. Okay, what else? Nearly 40% of the homes in the US are free and clear. They have no mortgage at all. Now look, in order to have a real estate crash, you got to have several things that have to line up. You have to have distressed borrowers. Those are people with low credit scores. Those are people with unemployment, bad job prospects. And yes, the unemployment rate we're going to. The next time it comes out, we're going to see an increase in unemployment, but still we have tons of unfilled jobs. Okay? Now these are different things. And of course, you know, the labor participation rate is different than the unemployment rate. I've gone into this in past episodes in Depth, but we are going to see that tick up just a little bit because we have had some recent hiring freezes announced and some layoffs from big tech companies that were way too fat anyway and they should lean down. Okay? But nearly 40% of homes in the country are free and clear. Now, guess what? People with no mortgage balance are very unlikely to go into foreclosure. Now. They can, they can go into foreclosure for back taxes, right? You know, they don't pay their property taxes, right? That could happen, but it's extremely unlikely because when someone has 100% equity and 40% of the homeowners in the country do, they're very unlikely to let that house go. Okay? They will borrow against it. They will sell it. Rather than lose all that equity, they're going to protect that equity. Okay, so 40% are free and clear. 28%. Now, this is from the Wall Street Journal. 28%. This was March, okay? In March, the percentage of home sales that were paid for in cash, according to the national association of Realtors, were was the near the highest level since 2014. Americans on the hunt for housing are teaming up with family members, taking advantage of sudden windfalls or finding companies that will make a cash offer on their behalf. 28% of the purchasers in March bought with all cash. This is not showing us a highly leveraged world Folks. Okay, now here's another stat for you. According to Black Knight, as of now, and this was maybe two weeks ago, I clipped this from an article. 24% of all first lien mortgages in the country, 24% of them have an interest rate below 3%. This is according to Black Knight. Now, the interest rates currently are, you know, give or take 6%. They're really high. But guess what? A quarter of the homeowners in the country have a rate below 3%. That mortgage should be looked at like a bond, because in the bond market, when rates go up or rates go down, it has an inverse relationship to the value of the bond. And that's exactly what's happening to homeowners that have a mortgage rate anywhere below the current mortgage rate. The value of their mortgage or their property basically has increased. Now, it doesn't have to increase in market value. It's increasing in the value relative to them. Because that mortgage can no longer be replicated. It cannot be replaced. Remember, according to yours truly, the two primary value drivers for anything. Anything. It could be currency units, the value of the dollar, the yen, the euro, precious metals, houses, cars, loved ones. Yeah. Literally, the value of your kids, your spouse, your girlfriend, your boyfriend. Right. Your family members. Right. The value of anything is related to the difficulty to replace. Right. The replacement value. Right. Or the utility. Right. So utility and scarcity. You can't replace these mortgages. You can't replace your loved ones. And the mortgage has utility to you. Your loved ones have utility to you. Okay. Precious metals have a certain value because of their scarcity and utility. Those are the two primary value drivers for anything. And as these mortgages are now irreplaceable, their value has dramatically increased. I've been saying it for years, folks. Most people think of the property as the asset and the mortgage is the liability. But that's not really true. When the mortgage is below the current mortgage rate and way below the inflation rate, the value skyrockets because it is irreplaceable. Let's look at some more stuff. Okay, here's more Black Knight statistics. The housing market now versus the Great Recession. Today, 2.5 million people have adjustable rate mortgages. In 2007, 13 million people had adjustable rate mortgages. Okay, adjustable rate mortgage resets. How many of those adjustable rate mortgages are coming due for a reset? In other words, how many are adjusting as the name would imply? Well, this year, 1.4 million adjustable rate mortgages will reset to a higher rate. Most likely. I mean, almost in every case, maybe not every case, actually, but in almost every case they will reset to a higher interest rate. That's bad. Okay, we don't like that because that's going to put more pressure on those borrowers, on those homeowners. Right, but compared to what? In 2007 there were 10 million resets. But wait, there's more. This is a misleading thing. And that's why you need someone like me, with my vast experience. Hey, I've been doing this all my life. Real estate has really been my only career since I was 19 years old. And let me tell you something else. I have seen a lot of recessions. I have seen a lot of mortgage lending environments. I've owned a few mortgage businesses over the years. Not currently in the mortgage business, but I have a lot of experience in the mortgage business directly, not only being in the real estate brokerage side, but in the actual mortgage business owner side as well. So I know the mortgage industry. And I will tell you something, this is misleading. Now you might think I'm saying this looks pretty good, and it does, but it's even better than this. And when I say better, I mean saying that the market is much more solid than this would even imply. I mean, look, there were 10 million adjustable rate mortgage resets in 2007. There's only 1.4 million scheduled for this year. Some have already happened, by the way, but throughout the year, 1.4 million is the number. But wait, there's more, more understanding is needed here because these adjustable rate mortgages are not the same irresponsible adjustable rate mortgages we had in 2007. These adjustable rate mortgages are, are far more responsible than the adjustable rate mortgages of old. These are a completely different breed of adjustable rate mortgages. They are not likely to give these borrowers payment shock like they did in 2007. These adjustments are going to be much more tolerable. And of course the mortgage underwriting needs to be questioned as well because the mortgage underwriting coming out of the Great Recession over the last 12 to 14 years has been insane. Look at any of you who've applied for a mortgage, or maybe you've talked to a friend or family member that has applied for a mortgage anywhere in the last 14 years. You know, it is ridiculous beyond comprehension the type of, the type of hoops a borrower has to jump through nowadays. I financed a few properties over the last few months and folks, I have excellent credit. I have really good tax returns. I mean, my tax returns like show income. I pay taxes. Yeah, I don't like it. Okay, But I do it. By the way, a little. Little tangent alert here. Isn't it interesting that when the Federal Reserve came about at that secret meeting right around Christmas time, I think it was Christmas Eve, actually, on Jekyll Island, Georgia, where I took our Venture alliance mastermind members years ago, and we had our meeting in the Federal Reserve room where the Federal Reserve was created in this. At this time when nobody was really paying attention. Right after the Federal Reserve was created, the IRS was created. That's not a coinky dink, folks. Those two go together like crossing your fingers, okay? They go together like vanilla ice cream and pumpkin pie. Warm pumpkin pie. That's one of my favorites, folks. But last season I learned that pumpkin pie had like 28 grams of sugar in one slice. Oh, lest I digress. Okay, Jason, let's get back on track here. You know, pumpkin pie, ginger ale, soda pop. These things should come with a warning label, folks. I mean, they're. They're literally poison. But I gotta say, I love pumpkin pie. So pumpkin pie and vanilla ice cream. Yeah, they go together really well. Or maybe whipped cream, too. And the Federal Reserve and the IRS go together really, really well. Not for us, but for them, for the powers that be. They go together really, really well. And isn't it interesting that if you don't play the game and pay a lot of tax, you can't qualify for a Fannie Mae or Freddie Mac mortgage. They tied those two together, didn't they? Really, really well. Anyway, so I'm like a good borrower, right? I've got a good package. I provided massive amounts of documents to my lender on these last few financing deals I did, and it was unbelievable. I had to provide explanation letters on this, on that. Where'd that deposit come from? I had to provide documentation as to where the money came from. You know, I had to get my CPA to sign all kinds of letters verifying certain things. I mean, it was insane. I'm surprised they did not ask me to go to 23andMe or Ancestry.com and give them my DNA test. Right? I mean, it was ridiculous. I owned mortgage companies before the Great Recession and I saw the irresponsible underwriting firsthand. I used to talk about it at my conferences and seminars. I used to show PowerPoint slides on the screen of emails I would receive from what's called our wholesale lenders for my mortgage company saying, you know, one day out of bankruptcy, one day out of foreclosure, credit score of at least. You ready? 560 fico score. They would make loans to people with these kinds of criteria. No income verification, no DOC loans. I mean, it was absurdity. It was absurd. No one was putting the brakes on that complete fraud. And then of course, Wall street backed up the fraud by selling these toxic assets. And we all know the story, okay? So these adjustable rate loans of today are not the adjustable rate loans of the past. They are much more prudent and legitimate for the lenders. Okay? Now, what is the mortgage delinquency rate? 2.8%. Yeah, we went through a pandemic. We went through C1984. Okay? You know what I'm talking about. Can't say the words. And we went through all of that, and still with forbearance, with eviction moratoriums, with everything that happened, the mortgage delinquency rate is only 2.8%. And what that doesn't tell you because remember, as I always say, you can't hear the dogs that don't bark. A lot of times, you know, you gotta ask yourself, what are they not telling us? Well, what does delinquency mean? Right? You could have long delinquencies where they've been delinquent for years. And that's what happened during the Great Recession. A lot of times, you know, people would live in these houses for free for three years and that lenders still wouldn't foreclose. Okay? It's important that lenders foreclose swiftly so we have what's called price discovery and the market gets back on track. You just don't want to prolong the inevitable. Okay? But that's another discussion anyway. The delinquency rate, 2.8% are past due. That's nothing in the overall scheme of things. Okay? It's nothing like it was during the Great Recession. Okay, let's look at inventory. And as I've been telling you, it is critical that you look at inventory into. To know what's going on. So I released the inventory stats from Altos, and this is May 25th. Okay? And that showed you. If you're watching on video, you can see this, but I'll. I'll just explain it. 344,000 homes for sale. And that was a spike from the week before of 8%. But compared to what? Well, people disagree on this number. Okay? But I say to be in a normal market, we need about 1.2 million homes for sale. Some will tell you a million, some will tell you a million. 5. I'm going with about 1.2 million. To be normal, balanced housing market. That would create about six months of inventory at any given time with a. With a normal absorption rate. But right now, inventory has spiked. And I'm going to show you another chart in a moment showing you the spike in inventory with these higher rates. But just look back, because this chart goes back to July of 2015. Inventory was 1,180,000 homes. So it is dramatically lower as of May 25, 344,000. We're going to get to the current inventory in just a second here, But I just want you to realize how low the housing inventory is and how much it needs to increase to get to normal. Normal is not. Is not, I repeat, is not a bad market. Normal is just a balanced market. A normal market. Okay, what's the inventory now? You say it has increased by 52,000 as of June 10. That is a pretty substantial increase, but it is still far, far below normal inventory. We have 396,000 homes for sale in the country. We need about 1.2 million. We need inventory to increase by 300% to get to normal. That won't be a recessionary housing market. Now, there may be a recession in the economy in general, because I think we're already in a recession. But it's. I don't know, it's so hard to be. You know, it's still very hard to be in a recession when you have employment as strong as it is. But, you know, we can argue we're not in a formal recession yet, academically. The conference board has not announced a recession yet. Okay, but I think we're in a recession. Okay, but you can still have housing appreciating dramatically quickly and be in a recession overall in the economy. Okay, that is entirely possible. Now, I want to say again, for those of you who may not be regular viewers or regular listeners, national association of Realtors calculates inventory differently than Altos. I like the way Altos does it better because they're looking at homes that are actually for sale, whereas NAR counts pending and contingent sales. I don't like the way they do that because you can't really buy them today. But here's the thing. If you were to look at the NAR stats on inventory, which will show you a higher number because they're adding in more statuses in the multiple listing services in the multiple listing service than Altos does. But it's fine. Look at the NAR data if you want, as long as you look at it consistently so you can monitor the change with a consistent Source, either one is fine, but you got to have consistent source. So if you compare NAR's numbers to what should be a normal market, that's going to be a higher number because NAR is counting other statuses that ALTOS is not counting. Just understand that. That's a very important thing to understand. So wherever you get your numbers from and your statistics from, make sure it's a consistent source. Because if you're looking at different sources, you're going to get different numbers. And that's one of the reasons we recommend so highly that investors, when they want to analyze property, and you can go to Jason hartman.com and everybody should, no matter how many times you've watched this video before, go watch my video on how to analyze a real estate deal on the front page of Jason Hartman dot com. It's a free video, 30 minutes. It'll make you a great investor. And you know what, if you're a regular listener and you've already watched that video, you probably have many, you know, tens of thousands of people have watched that video, maybe hundreds of thousands by now. I don't, I don't know. Watch it again. This is a time you need to watch that video again. So you really understand the math of how return on investment is calculated when you are calculating for a multi dimensional asset class like income property, multidimensional asset class. One of the things to always remember with real estate, and I want to differentiate real estate from income property because those are different. So we'll get to that in a moment. But one of the things to always, always remember is that you have the opportunity to constantly renegotiate the deal after you buy it. You can't do that in any other asset class. If you buy stocks, bonds, precious metals or anything else, cryptocurrencies, you can't renegotiate the deal. Once you bought it, you bought it. You've set your deal, that's the deal. But with income property or any kind of real estate in general, you get to constantly change the deal. You get to be really wishy washy and you get to be a weasel. Okay, you get to be a weasel in a grumpy great way. And the way you get to do that is that you can constantly change the deal. You can change the financing structure, you can change the tenant structure on the property. You can, instead of renting to a regular traditional renter, you could turn it into a short term rental or the other way around, you can do a lease option and a rent to own and increase your Income. That way you can do all sorts of creative things. You can improve the property and add value through sweat equity or through various ways that we've talked about on the show before. You can add value and you can refinance. It's one of the very, very few assets in the world that you can do the deal today and constantly change the deal as you go through time. Very, very important. Another thing you can do is of course you can not only change the deal through time, but you can sell the deal without paying taxes or you can't do that with anything else. And you can earn returns in many, many ways because it's multi dimensional. So with most assets, the whole story is buy low, sell high, end of discussion. Some it's buy low, sell high, get some dividends in between. If it's a dividend paying stock with income property, you get your return from a whole bunch of ways. And if you're new here and you don't understand that, go to Jason hartman.com, watch the video on the front page in 30 minutes. I'll make you a very good expert investor. Okay, now here's the other thing we've got coming at the housing market, and I've been talking about this for 15 years, and it is demographics. You know, there's an old saying, demographics are destiny. Okay? And they are, because you just know that no matter what the biggest force in the world is, how many people are at a certain life stage in an economy, they're going to act a certain way. It doesn't matter what's going on. Yes, that will bite it around the margins. It'll nibble. If the economy is bad or if it's good, people will act a little differently, for sure. No question about it. But by and large, demographics are destiny. And by the way, I interviewed Peter Zion on Friday and that episode will be up soon. You must listen to this episode. It is phenomenal. He's been on the show several times. He's out with a new book, the End of the World is Just the Beginning. Great interview. It's coming up probably next week. We'll play that interview and you'll love it. And by the way, Peter Zion, the geopolitical strategist, he's out with four books now. He thinks the future is very much inflationary. And you know my strategy. Inflation induced debt destruction, which is a trademark term that I came up with many, many years ago, is the ultimate wealth creation strategy when it comes to income property, even just regular real estate, not even income property. But look at the Demographics. The United States has the best demographic pyramid. And that's what it's called, by the way. And if you're looking at the screen, if you're watching this on video on my YouTube channel, you see what I've got up here. The best demographic pyramid of any developed country in the entire world. Every other one is worse off demographically than the United States in terms of advanced countries. No one beats us and no one beats the US on a whole lot of things. But we'll just talk about demographics right now. When you look at the age here on the side, you see it goes from 0 to 100 years old. And you see this giant piece in the demographic pyramid here of ages 25 to about 38 years old. Those are millennials, of course. They are a huge demographic. That cohort, that demographic cohort is coming right into their prime household formation years where they are going to be renting or buying houses. Well, I shouldn't even say going to be. They're already doing it. Okay. And a lot of them will be renters. Now this is important. Make sure you're listening to this. For 18 years, I've taught a strategy called the three dimensions of real estate. There's really more than three dimensions, but hey, that sounds good. It's easy to remember. We all get the idea of three dimensions. And the importance of that strategy is understanding that the value of real estate and the rent you can charge on real estate, on income property are almost always non correlating indicators when values either soften or decline or are stagnant. Very few people are. That's usually a result of housing affordability being low and a lack of motivation because prices aren't going up. Look at as people, we are motivated mostly by fear of loss. We are motivated much more by fear of loss than we are by desire for gain. And as such, we see that people, when prices aren't rising quickly, they're just not that motivated. Like, why should I buy a house? No hurry, so I'll rent. And it puts massive upward pressure on rents. Now, we saw this during the Great Recession as people were being kicked out of their houses, being foreclosed on, or just walking away from their houses. But the government interfered during the election year in 2008. You heard McCain and Obama back then saying, we got to keep people in their houses. We got to keep people in their houses. Dumbest idea ever. No, don't keep people in their houses. Keep the right people in the houses. The people that can afford to be in the houses. And if they can't afford to be in the house. Move them out of that house. Sorry. The way you do it, if you, if you're not willing to leave is through eviction or foreclosure. That's just life, folks. You gotta, you gotta uphold the contract, right? And you know, you have a choice whether to uphold the contract or not. And that's fine. Just make the choice and do the thing, the consequences of it, right? It's just a deal, it's no big deal. So move them out and move them into houses they can afford, right? And have price discovery. That's the way a market should act. But the government did stall that for a little while around the 2008 election, and it was a bad idea. But when the governments started to get out of the way, what you saw is, you saw that upward pressure on rents, okay? And you know, who knows what the government will do in the future? Nobody knows. But demographically, the demographics coming at both the rental market and the home buying market for entry level housing are nothing short of phenomenal. Don't take my word for it. Look at the chart. It's on your screen. It's just phenomenal. Compare this chart to any country in Western Europe. Compare it to Russia, to Japan. Compare it to China, which is a disaster and a half, by the way. Peter Zion and I talked a lot about that. That interview is coming up probably next week for you. The US has phenomenal demographics coming at the housing market for renting or buying, slash, selling, in other words, pushing prices up, pushing rents up. Demographics are absolutely phenomenal in the U.S. all right, let's look at housing starts and building permits. Now this chart shows us back to 2002. The number of housing starts and the number of permits. Right. You know, these go relatively in lockstep. Not exactly, of course, but when builders are optimistic, they're going to go and try and get as many permits and as many entitlements as they can. Right? Because they want to build, because they can make money. And shortly after that, they're going to actually start the building process and build the house. So you see, in the run up to the Great Recession, we saw a lot of building activity and then it plummeted. It went off a cliff. It went down to where there was like no building activity practically. It was, it was terrible. Right. And so this set the stage for the housing shortage we are now experiencing in at least the entry level housing market most particularly. Okay, well, there's a housing shortage all around right now, but I don't know how Much that's going to continue overall, if these interest rates keep going up, some of that might go away for sure. But in the entry level market, I don't think it's going away anytime soon. I think the housing shortage will continue for a very, very long time. And then you saw construction starting. But guess what? As we saw this construction starting really slowly coming out of the Great Recession and then we saw it plummet for during the COVID lockdowns for a little while and then they said now you're exempt, you can build. And what we saw here is we saw builders not building entry level housing. So these ideal investment properties that are really good for entry level buyers, they just haven't been built, just haven't been built at all. And so we are way, way behind. There is a massive housing shortage, especially in entry level housing. Don't let anyone fool you about that. If they do. And I've debunked a lot of them. You know, there's one guy on YouTube, I've debunked his theory several times on the show. Just listen to the past episodes, you know, that say, oh, there's no housing shortage. See the thing about predicting bad news and predicting doom and gloom and the sky is falling in the end of the world, eventually you're going to be right. And then, you know, once in every 10 years you're going to get to say, hey, look, I was right. I was right. And you know, okay, Peter Schiff and Harry Dent and you know Nick, and you know, all of you, you know you're going to be right eventually. You're just not there yet. Okay? You're just way too early. This is not happening yet. So let's talk about Tina now. Tina, I was talking to her on the show the other day. You heard me last week. Tina means, it's an acronym. It means there is no alternative. What else can you do? You can put your money in the bank and for sure you're going to lose about, well between 8 and 15% annually. You can put it in stocks, we all know the stock market is a disaster. You can put it in bonds, that's a disaster in an inflationary environment. You put it in crypto, that's already a bloodbath. Precious metals have done almost nothing, okay, for quite a while. You can put it in real estate, meaning your own home. But more importantly, let's distinguish between real estate and income property. Those are different. Income property held for rental is the most historically proven asset class in the entire world. And you know, I've proven that over and over again on the last 1800 and something episodes. So I won't go into it today. But the question is, compared to what? So what if you don't do anything? Well, the government tells us the inflation rate's about 8.5%. You can borrow it somewhere in the 6% range. That means you're still getting paid to borrow, about 2.5%. Paid to borrow. But wait, there's more. The real inflation rate I say is about 17%. You might differ. So whatever your number is, pick it. If you pick 15% or 20%, then do your own math. Interest rate about 6%. That means you're getting paid to borrow because you're borrowing below the inflation rate at a negative interest rate of 11%. But guess what? That interest expense is tax deductible. So if you're in a combined state and federal tax bracket of about 40%, that gives you a 2.4% kicker. You're getting paid 13.4% profit to borrow money. And this assumes there's no income or expenses on the property. So it's a very simplified illustration, but the likelihood is you're going to have income because you're going to rent it out. So there you go. And I've talked to you about the mortgage burden being much lower on people. It's not as low as it used to be be, but it's still very low compared to disposable household income. And compared to the past, it's very, very low. Let's go longer in history, right? Let's go back to about 1984 or 1982. I wish they would on these Fred charts for the St. Louis Federal Reserve, I wish they would show you the beginning. You have to sort of estimate. But the mortgage debt burden is lower than it's ever been, except for a couple of blips during the COVID era, where it was actually the lowest ever on this chart. But it's. If you exclude those, it's the lowest it's ever been since the early 1980s. This is federal Reserve stats, folks. Don't take my word for it. Look at the screen. Mortgage debt service payments as a percentage of disposable personal income. Show me the overburdened homeowner. Show me. Because I can't find them. They'll be there. If unemployment rises a lot, it'll change. No question about it. But for now, the market disaster that everyone's expecting, it just hasn't arrived yet. So we'll stay tuned. We'll keep you informed as to when it's coming. And it will come. Eventually, it will come. Until then, I want to wish you all happy investing. Go to Jason hartman.com, get our free mini book at pandemicinvesting.com that tells you how to invest during time, the crazy times in which we live, pandemicinvesting.com and Jason hartman.com and of course, check out the past podcast episodes. Look at the other YouTube videos. Comment below. If you're, if you're watching this on YouTube, I'd love to know what you think. Do you think I'm off my rocker? Do you think I'm right? Tell me what you think. I'd really like to know. And we do periodic surveys because we have many, many tens of thousands of followers. And we love to hear from you. We've got a very sophisticated, very bright audience. So we really do value your opinions. Okay, we'll see you Wednesday. And until then, happy investing.