Real Estate is Still CHEAP! Here's Why - with Lynette Zang

Every government is basically over indebted. They're producing fiat currency. That's their main product, is the currency they produce. That's any government's and central bank's primary product. Their widget, if you will, is the dollar, the yen, the euro, the Brazilian real, the peso, whatever, right? That's their product. And they must get us to keep consuming that product because we're with that product. They control so much of our lives. And once that product becomes digital, they will control dramatically more.

And I'm very excited today because here's somebody else that can help you do that. My friend Jason Hartman, a specialist in real estate we which is something that all of my viewers are interested in. But considering everything that's happening in the real estate market, from moratoriums to evictions to cancellations to sky high prices, we have a lot to talk about today. He's a very popular keynote speaker. So thank you so much for coming today, Jason.

Well, Lynette, the pleasure is all mine. It's great to be back on with you. And I always love our talks. Years ago, people would have considered some of this stuff out there, but I think the population is waking up and you just don't know who you can trust anymore. You know, there's an old saying that I'm sure you've heard, and I'm sure many of your viewers have heard too. If you don't have your own plan, you will be part of somebody else's plan. You know, that's what's wonderful about the work you're doing, is you're trying to help people stay with their own plan for their life, which is a much better plan than somebody else's plan.

Oh, I guarantee you. I mean, you will own nothing and you will be happy.

Scary.

That is the plan. It is actually really scary. And programmable money too. I mean, you know that they can dictate everything that we're doing in this lovely surveillance economy.

Yeah. We are nearing a point of what I'll call checkmate. You know, 20 years ago, I was studying how there was this movement to have a global fiat currency. They were talking about a North American currency like Villamero. Right? And now that we have had the advent of Bitcoin, around 12, 13 years ago, and all the cryptocurrencies, now, they've gotten so much smarter, Right? Because they know that with a central bank digital currency, they will exercise so much control over everybody's life, whether it be social scoring, whether it be lockdowns, whether it be what you can Spend your money on what you can't spend it on, how quickly that money in your phone, probably it'll be in your phone or will expire. Will it go down in value? Can you spend it more than a mile from your home? What if they want you to stay in your own area? I mean, it is, it's getting pretty, pretty scary out there.

Yeah, you're right. And I, and I agree with that wholeheartedly. And it just points to the importance of really having physical gold and silver completely outside of the system, because that's the only way that you're going to be able to maintain your, your independence along with the food, water, energy, security, and then community and shelter.

Right.

So there's a lot. You know, I think the Shift started in 2008 to corporate America really owning and controlling the mom and pops. Can you talk really more about that and give us an overview of where you think we are right now?

Yeah, you know, in some ways, it's an amazing time to be alive. You know, we have all this great technology and for a while we had a free Internet. Of course, that's changed, sadly, especially after January. Now the gloves are off. Everybody knows that they are censoring everything, that they're controlling the narrative, that we're just not going to get the truth anywhere except places like this while they last, because they're censoring us too, and de. Platforming people and all kinds of things. You know, when you asked about corporate America, though, we're really in this environment, Lynette, where it's winner take all society. And instead of it being a more flattened environment where the power and the capital and the businesses are in the hands of small businesses of mom and pop entrepreneurs, which are really the backbone of America and the backbone of any great society. It's all sort of coalesced into a small number of corporate giants. And of course, we all know about the big tech companies and the other big companies, but even with something as simple as coffee, you know, try finding a coffee shop that's not. That doesn't start with an S, you know. And the poison that that company, Starbucks, is foisting onto society is just ridiculous. The stuff they sell causes diabetes. It's full of pesticides, it's full of sugar. It's awful. There's really no other practical, reasonable choice anymore. The way capital is formed in this country, it lends itself to this winner take all type of situation. And that is very disconcerting.

Yeah, it sure is. That's. That's the importance of being as self sufficient and independent as possible. You know, so I don't personally go to Starbucks myself, but yeah, I think we, we vote with our purse. I mean, that's how, that's how you vote. And if you support these guys that are taking over, and Amazon really did, that was the start of the death knell for the mom and pops, because they didn't have to make money, they'd have to make profits.

And Lynette, there's the flip side of that equation. You're absolutely right because Amazon could do illogical things just like Uber and Lyft do. They, they run businesses at a loss by raising money. I mean, look at. Raising money is not a business. Businesses actually sell products and services and mark them up. That's a business that's, you know. Yeah. Raising money is not a business, okay? That's a Ponzi scheme, essentially. You know, Amazon is not only putting the mom and pop businesses and retailers out of business, but they're also destroying the lives of workers. You know, we all have read about the abuses, the terrible abuses and absolute sort of iron thumb control that they exert in those warehouses on people. They have sensors that sense carbon dioxide, in other words, exhaling. Because when those sensors are triggered, they can tell people are talking too much amongst themselves. They promote a diversity agenda, which, you know, on its face, we think is good, but what really happens and the reason the corporatocracy is promoting this diversity agenda is because it splits people up into clans. Okay? You know, we all have seen that with BLM and the riots and all of this stuff, right? And you know, just look at social media. Everybody's arguing and fighting and it makes much less likely to unionize, right, and gain some rights against the employer. You know, these are not capitalists, okay? These are the robber barons of our time. They are the new Carnegie's Mellons, Rockefellers and Vanderbilts. They're just totally abusive, okay? They're, they're abusing the workers. They're usually not abusing the customers. They're usually kind of customer centric. And since most of the audience is the customer, they please the customer, right, by offering cheap products, mostly imported from China. Yeah, right. And yeah, so you, you, you know, I probably don't have to rant too much more about it.

Well, no, but you know, we want to hear what the viewers want to hear as well, what we're having in this conversation, because the only way to really protect ourselves is to come together as a community, because there are a lot more of us than there are of them. And a lot of what's happened over the last year and a half has consolidated that power.

Sure has. And they know that people will always default to convenience and price. And so that's how they woo us in. That's how the big companies are just. They've been just stealing all our data. You know, there's an old song, I think it's by Bob Seeger. You remember it? You know I'm not just a number. Right, you're all just a number now. Wow. Thousands of data points on each person. They have massively abused their privileges. They've invaded our privacy, they've sold our data. Remember, when the product is cheaper, free, you are the product. So be really careful of that. You know, back to your point though earlier, Lynette, about being self sufficient. And you have done just a great job at that. And I'm, you know, as good as.

I'd like it to be. I still have a ways to go, but I'm working. I've been working on it for a long time.

Well, we all do, because as humans, you know, that really is our strength. To be not independent, but interdependent. The problem is the version of interdependency we have now is giant corporations and government to individual people. Right, right. Who have been fragmented up into clans. What we've got to remember is that the government in times of crisis, and we do have a desperate government, and most governments around the world are quite desperate, not just the United States. So this is not just a US thing.

Right.

For my podcast, I've got listeners in 189 countries. I'm sure you're about the same.

Yeah. All over the world.

And every government is basically over indebted. They're producing fiat currency. That's their main product, is the currency they produce. That's any government's and central bank's primary product, Their widget, if you will, is the dollar, the yen, the euro, the Brazilian real, the peso, whatever. Right. That's their product. And they must get us to keep consuming that product because with that product they control so much of our lives. And once that product becomes digital, they will control dramatically more. With vaccine passports, you know, the whole.

That's already started too.

Yeah, I know, I know. Yeah. New York. You know, the governments though always look for the low hanging fruit. And you mentioned gold and silver, of course, that's a good insurance policy. That's your business. There are other pieces of low hanging fruit out there and one is real estate and that's my business. And I love income property. I think it's the, the most historically proven asset class in the world. It's more of an investment than an insurance policy like gold and silver. But it's sort of hard to confiscate it. Yes, they are doing things around the edges, there's no question. And we can talk about moratoriums as well. But you know, it's really easy when the government is in dire straits to go take all of the retirement plans, the 401ks and the IRAs. And all that money in those plans is basically in brokerage accounts, right? And they can just make an edict, you know, even an executive order, possibly they'll engineer a crisis or take advantage of a crisis that they might be even be complicit in. Or crisis will just happen and then for our own protection, the government will have to step in. And of course, who's going to administrate that? A big tech company along with the government. They're of course in bed together. And when they do that, they will retitle those accounts to the government and then they will just inflate the value of them away so that you might get your government stipend, your stimulus in nominal dollars, but in real dollars it's almost meaningless. And listen, you don't have to believe me. It's already been happening for decades.

I was going to say, you know, I mean, Poland did that right after 2008 and they went in and they took, I think it was 50% of everything that was in the private retirement plans and even our government. And I haven't looked at this in a little while. So I should go in and see the chatter because there's a lot of chatter coming up around pension plans again. But they discussed having an 11, I think it was 11.47 one off event because if you only think they're going to do it once, then you don't change behavior. So the way they're going to position is we're only going to do this once. And it is again, you know, for your protection. But what about real estate taxes?

Well, the nice thing about real estate taxes is they are very fragmented among over 3,100 counties in the United States. So that's pretty hard to coordinate. Now at the federal level, sleepy Joe Biden wants to reduce the opportunity for investors to use the 1031 tax deferred exchange. Who knows if he'll get that through, but he wants to limit the deferral benefit on that. When people sell properties, they can buy other investment properties and trade them all their life, tax free. It's a fantastic deal. Income property, at least currently is the most tax favored asset class in America. And he wants to limit that to $500,000 per year. But you know, Lynette, I think he's going to have a pretty hard time making that happen because the big giant corporations are in the real estate business in a big way. They're now in the single family home business in a big way. But before they've always been in the apartment complex business, the retail shopping center business, the office space business. But now they're doing single family homes by the tens of thousands. Invitation homes, for example. Right. In American homes for rent. Yeah.

And so we've heard from the World Economic Forum, you will own nothing and be happy. So that's certainly part of it is where you live. Right. And so then these big corporations can then dictate how much you're going to pay. And if everything's digital, it's easy enough for them to take it out.

It sure is. It sure is. And so we'll see where that goes. But as far as the big companies in the single family home business, that number is definitely increasing. But in relation to the overall market size, it is like a drop in a bucket. It's nothing yet. It is increasing, but so far it's still a very, very small number. There's approximately 18 million single family rental homes in the country owned by mom and pop investors. And you know, the number owned by institutions is really a very small number. It is growing, though, so it's something to keep an eye on.

Well, and I've read a lot of documents when you're talking about the mom and pops, of course we've had the rent moratoriums that came in, but the costs, the taxes, the insurance, those other things keep going on. And so mom and Pops, and please correct me if I'm wrong, because you know this area better than I do, but you know, the mom and pops are getting squeezed out and you're also looking at prices, nominal prices of these properties at, you know, insane levels. Again, which corporations don't really care because they're barring that money for zero and then basically turning around and taking that debt and turning it into a Wall street product and selling off the risk.

Right.

Is that what you're seeing?

That is what we're seeing. But again, it's not that big a deal yet. However, it is increasing. As far as the moratoriums, I was commenting on that interestingly on Monday night on RT News, as We talked about. And then literally the next day after, after I was talking on the news about how they were ending the moratoriums, they put them back into effect through the cdc. Now, did anybody ever imagine that the center for Disease Control would be dictating rental housing policy?

I couldn't have imagined that. Honestly, I couldn't. It's kind of insane.

I'm dumbfounded, you know?

Right.

These are crazy times. They really are. So basically, what's happening in so many ways in our life, not just with rental housing, just in ev. They're doing it from every angle you can imagine. It's a taking. Okay. It's a taking.

Wealth transfer.

It's a wealth transfer. It's a centralization of power and control. All of these things are very worrisome.

Yeah, they really are. But do you think, you know, with the scarcity of properties on the market, do you think that the corporations going in and buying big tracts of home. It's, you know, I mean, isn't it making it almost impossible, especially for a first time home buyer? That percentage of mortgage debt is really, you know, the mortgage boom is driving debt levels for individuals that are buying their own homes to new heights?

Yeah, that's sort of a complicated issue because you really have a lot of layers to peel back on that onion, if you will. It seems like housing prices are high. However, I would argue that they're not very high in comparison to many commodities. Now, I think the first one we should maybe talk about is gold.

Gold. And you had a great table on that.

I do. And what's really interesting here, Lynette, is to see how powerful gold has been as an insurance policy to maintain purchasing power over decades. Of course, the big change happened in the 1970s, and the 1970s was a really interesting decade for economists. It wasn't.

Yes, it was.

It wasn't a good one. But it's a really interesting one to study because a lot happened. First of all, of course, as all your audience knows, Nixon took us off the gold standard in 1971 and ended the last vestige of convertibility from the dollar to gold. And that meant that the government really had no tether anymore. They could do whatever they wanted in terms of their irresponsible spending. You know, my favorite president of my lifetime was Ronald Reagan. And he had this great quote. He used to say, to say that the government spends like a drunken sailor is an insult to drunken sailors. And so as the government has racked up the debt, it has created a lot of inflationary pressure in the system. And the 70s and the early 80s were the worst of that until our former Fed chair Paul Volcker came along and broke the back of inflation by just tightening the money supply to levels never seen before. But he had the guts to do it, and I got to give him a lot of credit for that. So if you go back to 1970, the year before Nixon took us off the gold standard, gold, as you know, was $35 an ounce. The median home price back then was just over $22,000. So if you wanted to buy the median price home in gold, it would cost 646 oz.oz of gold. Okay? Now the problem we get into when people try to evaluate what anything is worth is they only use one measuring stick. They only compare it to one thing, and that's a huge mistake. They compare it to just dollars.

Right?

Why would, why would we just use dollars? That's crazy. Nobody cares about dollars. They only care about what dollars buy them. That's, that's.

And that's actually what really matters.

That's what really matters. And so an ounce of gold will buy you a lot more. And it hasn't been debased like the dollar has. So in 1970, 646 ounces of gold to buy the median price house. If you want to buy the median price house today in dollars, you're thinking that's $350,000 almost. That's a lot of money. But the fallacy is you're only measuring in dollars. Right. If you measure in gold, it's only 194 ounces of gold. So guess what? Your purchasing power of a house versus a dollar versus gold has been a winner if you're buying it in gold. And everybody listening and watching needs to understand that when they earn their money, when they earn their income, they're not forced to keep their income stored or what, the part that they save, hopefully. Right. They're not forced to keep that in dollars. They could store that wealth in oil, gold, rice, orange juice, a whole host of things. Bitcoin, silver, platinum, palladium. You know, there's just a myriad of things that you can use other, other than the dollar. And many of these things withstand or hedge inflation much better than the dollar does.

Well, the dollar doesn't.

Yeah, no, it doesn't.

The dollar doesn't at all.

Yeah. So that's for sure. So priced in gold, houses have gotten a lot cheaper over the years. Cheaper than they were actually 51 years ago. Yet everybody thinks they're so expensive because they're only measuring in dollars.

Well, I know what I think, but I'm going to ask you what you think. Do you think this trend is going to continue and maybe even escalate?

Yeah. So, you know, I really got into this comparison thing over the last few years. I always say to my audience, lynette, maybe for the past, I don't know, six or seven years, compared to what? I always ask that question, and they've dubbed it the Jason Hartman question. Compared to what? Now, clearly, I did not invent the question, okay? But as I started thinking about it, I thought, you know, I should develop an index, an economic index, a housing index that would measure the price of real estate versus a whole bunch of commodities that we all need to live. And in so doing, I created the HCI, the Hartman Comparison Index, and it measures 70 different commodities now, okay? That's how big the index is currently. And some commodities, you know, priced. In some things, houses have become more expensive, and in others, they've become less expensive. And I'm happy to share more examples than just gold, if you like.

Sure. I think everybody'd be interested in seeing that.

Good. The question is, priced in gold, is real estate cheap or expensive? It's very cheap. It's less than one third of what it cost 51 years ago, two generations ago, priced in bitcoin. We can't go back very far, but it's much cheaper priced in bitcoin. Okay, so we'll just leave that one. But you know, bitcoin's highly speculative, right? The cryptocurrencies are very risky. You know, they. They fluctuate like crazy, as we all know. But I think a good one to use is oil. Because oil, no matter what anybody says, is arguably the most important commodity in the entire world. Forget about what the greenies say. The world runs on oil, folks. Okay?

Yeah, that's not changing that quickly.

It's not changing anytime soon. And what's interesting, Lynette, is if anybody remembers Back to the 70s again, remember all this fear of peak oil, right? There was all this talk, and you can look up peak oil, that phrase, in Wikipedia, and read about it to understand it. They thought the world would run out of oil, but what they didn't count on was that humans, being very innovative, they invented new technologies to get more oil, right? And so, you know, we use that now, and oil has become cheaper in some cases, but the world runs on oil. I would say it is the most important commodity on earth, after, of course, oxygen and water. Okay, but we're not pricing that. So in 1970, if you wanted to go back and buy that median price house, it would cost you 6,746 barrels. And a barrel is about 55 gallons, barrels of oil. So almost 7,000 barrels of oil to buy a house 51 years ago. If you fast forward that to just 10 years, 10 years after that, in 1980, it only cost 2,043 barrels of oil to buy a house. Okay? So if you saved money in that 10 year period denominated in oil or gold, you would have been much better ten years later, in 1980, buying a house in those commodities than in dollars. Your dollar got debased, but the commodities went up, you know, vis a vis the dollar, right? And by 2021 today, 4,600 barrels of oil today to buy a house. So in 51 years, over five decades, it's now cheaper to buy a house priced in oil. And oil in 1970 was only $3 a barrel. Today it's $75 a barrel. When we did this in June, that's our last pricing. So priced in oil, you know, it's cheap, okay, so it's not cheap in everything though. I can go with a bunch of examples, but I don't want to bore you, but I would just say this, the next one is orange juice. Okay? Orange juice is a commodity. It's traded globally and priced in orange juice. Housing has actually become a lot more expensive. So 51 years ago it'd be £51,000 of orange juice and today it's over £280,000 of orange juice to buy a house. So these things are uneven.

Can I ask you a question in here, I'm wondering, do you do this with an entire food basket or do you do just the individual kind of things? Because that would be really interesting if there was a set standard food basket that most people buy.

That's a great idea. And we have priced it against a whole bunch of things. We toyed with the idea of pricing it against the cpi, but of course we all know the cpi, the Consumer Price Index is so, such a big lie, so manipulated, you know, that you can't even use it. So we've looked at a lot of that stuff. There are many food items in here. There are things like haircuts in the index. There are all sorts of things in it. You know, we've got about 70 items in it now. And overall, you know, just to bring this to a finality, I can say that priced in all of these things, when they are all averaged out and weighted and normalized. Housing is still very cheap historically. And there's a stage two of the Hartman comparison index. And it is not talking about the price of the house as we have been. It's talking about the payment on the house. And with these dysfunctionally toxic, artificially low interest rates. Not that I have an opinion about this.

No, that's why I had you on here. But you have no opinions about. About anything.

I'm a teddy bear. No opinions at all.

Absolutely.

You know, with those things, it is super cheap. When you price the mortgage payment, the principal interest payment, it is incredibly cheap. And by the way, I just want to state for the record, I would love nothing more than to see Bitcoin be the thing, you know, a decentralized currency controlled by the people rather than central planners. I think would be awesome. I just don't know because look, the two most powerful entities the world has ever known are governments and central banks. And they're not going to give up control easily.

And now a lot of the fintech companies and those large companies, I mean, if, if there is indeed a finite number of bitcoin, they own a lot of them.

Yeah.

Hello, Elon.

Yeah, yeah, yeah, well, and Elon goes back and forth and you see how volatile that is. Because when Elon makes a tweet, know he can crash the price of bitcoin, right? Yeah. I don't know that you can really do that kind of thing with gold when you've got a five millennia history from Egyptian times. Right. You just, you can't manipulate it as much. It has its.