Jason Hartman joins Steven today to discuss the Hartman Comparison Index, which poses the question - ‘Compared to what?”. Listen in as they outline some powerful data about what's happening in the market today and compare that to the historical market.
Jason Hartman joins Steven today to discuss the Hartman Comparison Index, which poses the question - ‘Compared to what?”. Listen in as they outline some powerful data about what's happening in the market today and compare that to the historical market.
Key Takeaways:
Resources Mentioned
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About our Guest:
Jason Hartman® has been involved in several thousand real estate transactions and has owned income properties in 11 states and 17 cities. His companies help people achieve The American Dream of financial freedom by purchasing income property in prudent markets nationwide.
Steven Pesavento 00:05
This episode sponsored by Von Finch Capital. And if you're interested in investing in the same type of real assets that I personally invest in, that so many of the wealthiest families and richest companies have been involved in four decades, then I invite you to head over To vonfinch.com/call and schedule an introductory call so you can start getting involved in these same type of offerings these are large institutional multifamily and commercial real estate offerings that offer a great cash flow, a great back end and you get to take advantage of tax benefits that are rarely available in any other type of investment so I invite you to register go to vonfinch.com/call schedule a few minutes with a member of my team or myself and we look forward to getting you involved.
Steven Pesavento 00:55
This is the Investor Mindset podcast an. I'm Steven pesavento. And for as long as I can remember, I've been obsessed with understanding how we can think better, how we can be better, and how we can do better. And each episode we explore lessons on motivation and mindset for the most successful real estate investors and entrepreneurs in the nation.
Steven Pesavento 01:18
Hi, guys, welcome back to the Investor Mindset podcast. I'm your host, Steven Pesavento. and each week, we share mindset tips and real estate investing strategies to help you take your business and your portfolio to a whole nother level. And today is no different. We've got a very special guest in the studio today. Jason Hartman, how're you doing today, Jason?
Jason Hartman 01:37
Hey, Steven, great good to be here.
Steven Pesavento 01:40
Jason is a prolific investor, investing in a ton of different states helping other folks invest in those, those different areas. And he is phenomenal when it comes to research and education, about what's happening within the market. And today, we're gonna be diving into something that him and his team has put together the Hartman index, which is going to be outlining some really powerful data about what's happening in the market today. And also comparing that to different times during history. So I won't give it all the way you guys don't want to listen to this whole episode. It's full of gems, because I've definitely will be taking notes over here myself as well. So with that said, Jason, tell us a little bit about what you focus on in the real estate investing space, and why you put this index together and what it is that we're talking about today.
Jason Hartman 02:30
Sure, Stephen. It's great to be here. So you know, I've been in the real estate business for a long time and started when I was actually 19 years old, I got my real estate license, going to college, started selling real estate part time just to kind of learn the business. I wanted to be an investor. But I figured I just learned the business first. So I at least know the basics. I was only 19. And, and so over the years, I've helped a lot of people invest in properties, I help traditional homeowners buy and sell their houses did very, very well as a broker also did very, very well as an investor. And I owned a real estate company that I sold the Coldwell Banker in 2005. And about a year before that, I started another business because I knew I'd have a local non compete with Coldwell Banker. And so I started selling properties nationwide or not really selling them. But I provided a referral network to people who wanted to buy properties nationwide. And I kind of modeled it after a financial services firm for real estate investors. And so I've been in that business under a few different companies that I've owned over the years. And we've had, you know, just 1000s and 1000s of clients, and investing in many different parts of the country. And we've tried to develop some really some new thinking, some some things that people haven't heard before, you know, I've been to all the conferences and seminars, I've read all the books, you know, we've all done that, probably. And this today, your people will hear some new thinking. And this is one of my latest things. It's called the Hartman comparison index, which really asks or answers, life's most important question. And I talked about this question on my podcast all the time. And that question is compared to what? And that's really how we understand the world, whether it be the value of real estate, or the value of a cup of coffee, or a car, or the value of our family. And I'm not kidding when I say that, or the value of a potential mate or date. You know, this is how we do everything. Humans are comparison machines. We just constantly compare things. And if we didn't do that, we wouldn't have a reference point. Comparison provides context. And sadly, I think a lot of investors making huge mistakes and have very scary blind spots, because they only compare real estate to one thing, when they should be comparing it to a lot of things to understand its value. So that's what I hope to dive into today. Yeah, it's
Steven Pesavento 05:18
such a huge idea. And it's something that really isn't talked about elsewhere in the industry. So I'm really excited to be able to share this with the audience. Because we're absolutely comparison machines. As humans, we're always looking to compare what is our experience today versus yesterday, and we're oftentimes looking at the past or looking at other people in the present. And so this is really, really big. I'm excited to dive in. So where does this data come from? How did you end up putting this together?
Jason Hartman 05:46
Well, it's, it's out of my own head that first of all, and then we gather the data at different sources. So when I go through each one, there is a fine print on the slide that tells you the source of the data, a lot of it is from the Bureau of Labor Statistics, or the St. Louis Federal Reserve website, otherwise known as Fred, that a lot of people use. So it's very well known and economic circles. So all
Steven Pesavento 06:12
this means credible sources, mainstream data.
Jason Hartman 06:15
Yeah, this is all mainstream data, but, but it's looking at the data in a different way, by using a comparison. And that's what we'll dive into today. So for those of you who are watching this, there are some slides. And if you're not watching it, don't worry about that, we're going to verbalize everything. So it's understandable either way. But if you listen to it on the podcast, and then you want to go over to YouTube and see the visuals, you can do that. Or you can visit my website, and we'll be happy to get you a copy. We've got a white paper coming out on this that really dives deeply into it at and that'll be available at Jason hartman.com. So, so the question is, you know, what is your measuring stick, right? When we value something, we measure it, right. And, and we are only using many times one measuring stick, and that is the US dollar, and that I say is a huge mistake. And we want to correct that mistake, so that investors make better investment decisions today. The first thing we need to do, Steven to do that is we need to understand that in a country as large and diverse as the United States, there is no such thing as a national housing market. There are about 400, metropolitan statistical areas or MSA days. And there are over 3100 counties in the US. And I doubt anybody listening would think that a county could even be considered a real estate market. Now there are many 1000s More cities in the US. And even within one city, you'll have different markets. So understand, we're talking about a very large country. And as the old saying goes, all real estate is local real estate is local. But the problem is, that's way too much data to analyze. So let's simplify it in one way. Let's divide these these 1000s of markets into three types of markets. And by doing that, I think we can much better understand what's going on. So I say there are three types of markets, there are linear markets that are slow and steady, and consistent and reliable and profitable. They have good cash flow. And there are cyclical markets that are like if you're looking at a chart or a graph, they're like a rollercoaster, they go up and down. They have glorious highs and really ugly lows. And, and then there are hybrid markets that are in between the two. So let's look at a couple of examples. A sick a linear market example. Good example would be one market that we've been in for many years. That is Memphis, Tennessee. And if you look at the chart, it's very linear, it just kind of chugs along it has some little ups and downs. I mean, even during the Great Recession, not very pronounced declines. And during this time of boom time, the price is sure they go up but they're not extreme. This these markets, these linear markets are typified by consistency, and slow and steady. And then if we look at an opposite of that would be a cyclical market. Not too far from me, south of me by about a little over an hour is Miami, Florida. And Miami is a cyclical market. The chart looks like a roller coaster up, down, up and down, up and down again and go back to linear. Let's look at Indianapolis right. This is a market I've been doing business in for many, many years. And in Indianapolis, slow and steady. Contrast that to my hometown, where I grew up Los Angeles, California. up down, up, down, up down, though, if you're looking at an EKG G or a heart reading I guess this is good. But for investing it, it bothers my heart.
Jason Hartman 10:07
Yeah. So, so understanding this is really the difference of that old fable that we all know the tortoise and the hare right. The tortoise is very consistent just plods along, and the hair, well, the hair runs really fast, but then runs out of energy. And so so that's, that's kind of one of the differences. So, if you look at home prices, compared to inflation, looking at, say, the Case Shiller Index, which I think is a very poor index, by the way, but just comparing the two, you see that home prices are usually somewhat in lockstep with inflation, but then they do get out of sync at various times. And that would lead some to believe that they're overvalued. And they might be right, depending on which of those three types of markets they're in. So it makes a big, big difference. So case, Shiller Index Only profiles, 20, big metro areas, and 75% of those are cyclical markets, only 25% are hybrid or linear. So that would be a bad index to use. The housing affordability index published by the National Association of Realtors, I think is a pretty good index, I like this one, it's not perfect. A couple of blind spots it has is that doesn't take into account foreign money coming into a market. And it doesn't take into account people that already live in that market that might be highly appreciated, or they might have lived in a home for many years. And they're when they move, they're just simply trading equity. So the the price is relative to the equity they have in the home they sold. So a market that I do like the array index that I do, like, is published by first American, and they call it the real house price index. And that's my second favorite only after my own index, the Hartman comparison index. Now, the rhpi says that since January of 20, of 2000, okay, right at the New Year, 21 years ago, that real house prices are actually almost 27%. Lower. Hmm, you heard me right, lower than they were 21 years ago, today, real house prices. Now they measure this by adjusting for inflation, interest rate and house price. And we all know the interest rates are super cheap, and they're making houses much more affordable. Did you have a question?
Steven Pesavento 12:39
Yeah, no, it's a big it's a huge point to make. And so what is causing that to actually make it cheaper? We know inflation is a big cause of a big contributor. But how does interest rate play into that?
Jason Hartman 12:52
Well, interest rate is huge, because every 1% in mortgage interest rate is equal to about 10% in price. So it's it's giant. I mean, the interest rates before the Great Recession, were more than double what they are today. So think about it. I mean, you know, the house price could double. But if the mortgage rate is 50% of what it used to be, then, you know, what are you paying for? Maybe you're paying more for the cost of the house, only measured in dollars, which is very flawed, but we'll talk about that. But you know, do you want to get the house cheap? Or do you want to get the money cheap? Right? That's a question people should ask. Right? And they should always ask when valuing anything, what my listeners have dubbed? Because I say it's so much the Jason Hartman question. Now, clearly, I did not invent this question compared to what, but it is a question I repeat often. And I think it is very valid, and so important that I based an entire index of housing prices off of the compared to what question? So we need to ask ourself, is it cheap? Or is it expensive, if we're if we're, if people are concerned that we're in a bubble, and there's going to be a big adjustment, then the way that would happen is if it's expensive. If it's cheap, the likelihood of being in a bubble is very low. And the likelihood of an adjustment is very low. So we need to really peel the layers of the onion. And we need to understand whether it's cheap or expensive. And to do that, we need to compare it to many other things in the marketplace, not just dollars, because if we just compare to one thing, it's going to be very flawed. So this is why I created the Hartman comparison index. And so let's go through a couple of examples here. If we look at Gold, now, I am not a gold bug, but gold has been considered money by the human race for 1000s of years. So whether or not you think gold is a good investment? I don't really think It's a very good investment, but it is a measuring stick. Okay, it is a measuring stick, it is a comparison item. So if we go back to 1970 51 years ago, gold, the gold price then was controlled for just one more year until Nixon took us off the gold standard in 1971. But let's start there, it's an even number. Gold was $35 an ounce, the median house price was almost $23,000. So if you wanted to buy the typical home, in gold, you would need to pack in your suitcase full of gold 646 ounces of gold to buy that house. By 1980, when the gold price was allowed to be free, and not controlled by the government, for nine years, the median house price had tripled. It went up three times in dollars, it was now over $66,000. And gold went up by 10 times to about $653 an ounce. So to buy the same median price house 10 years later, in 1980, your suitcase would only have to have 102 ounces of gold, less than 1/6 the amount of gold. But everybody thought houses were more expensive 10 years later in 1980. Because they were pricing them only in dollars. But if you price them in gold, the question is, is housing cheaper? Expensive? Okay. Well, you say Jason, look, that's only 10 years, and 1980 was a long time ago. Fine. You're right. Let's look at today. So today, the median house is about $350,000. And gold is about $1,800. And it would cost 212 ounces of gold to buy the house. Now, is it cheaper, expensive? Well, 21 years ago, in the year 2000, it took 610 ounces of gold to buy a house. Today, it only takes 1/3 The amount of gold to buy a house than it did 21 years ago. If you even look to, to 2010, it was 208 ounces. Most people would consider that the cheapest time to buy a house coming out of the Great Recession. Right, right around 2010. But today, it's only two more ounces than it was 11 years ago.
Steven Pesavento 17:33
Yeah, it's a significant difference. Looking at 1970 or 2000. compared to today, you know, three times the amount of gold was required to go buy that same house. We think about it in dollars, it seems like things are much more expensive. But when we're actually comparing it to gold, it's seems cheap.
Jason Hartman 17:51
Yep, that's true. But gold is only one other measuring stick. So now we have the dollar and we have gold. And that's it. We beat we'd make mistakes if we only use those. So we need to use more. Okay, so So the question for the day is priced in gold? Is it cheaper? Expensive? It's cheap. That's the answer. Right? Okay. Let's look at oil. Oil is arguably, you know, maybe the second most important commodity in the world after water. Okay. So it doesn't matter what the tree huggers say the world still runs on oil, it's a super, super important commodity. In 1970 oil was $3 a barrel. We know the median house was just over $22,000. If you wanted to buy a house priced in oil, it would be 6700 barrels of oil. Today, it's only 5600 barrels of oil. So priced in oil housing is cheaper than it was 51 years ago. Now. It's not cheaper than it was 11 years ago. It's much more expensive. It's about double the price. So in 2010, for example, the median house price was 224,000. Oil was $78 a barrel. And it would take 2900 barrels of oil approximately to buy a house. Today, it takes about double that. So it's expensive compared to that. But historically speaking, you know, it's not terribly expensive, but it's more expensive. Now remember something? We're only talking about the price of the house. We're not talking about the way most people buy a house, which is based on the payment every month, not the price. So we'll get to a couple of examples of that. But pricing oil. It's relatively cheap. It's not super cheap. Like it is in gold, but relatively cheap. priced in oil. Okay, wait, this
Steven Pesavento 19:47
is right. That yeah, this is big stuff, you guys. I hope that you're taking notice of the the difference between comparing things based just on dollars versus comparing them to these other baskets of goods.
Jason Hartman 19:59
Yeah, you know Here's here's something that just came up this morning. He asked about the Hartman comparison index this morning. And I, I kind of responded to him differently, I thought of it a little differently, I think this might help. It's the first time I've said this on the air. But if people think of the dollar, or gold, or oil, or any other commodity, the way they think of a language that might be helpful. So for example, you know, we're speaking English, right? And we can communicate something and you could ask me for something, or I could ask you for something. And you might give it to me, or I might give it to you. And we get the same result. Now, if we spoke another language, say we spoke Spanish or Russian or something, right. And if we ask for the same thing, we might get the same thing in the other language. So these commodities, and the dollar is just another commodity. It's like a language. Right? But, you know, some languages are easier than others. And some languages are better than others. And some languages have a larger vocabulary than others. And so some languages literally are more effective than others. Right? And so, that might be another way you could you could look at this. Let's look at Rice. Rice is the food stock for two thirds of the human race. This is their basic survival food, you know, rice, okay. So, in 1970, it would take you now rice is measured in what's called 100. Weight. Okay. So it would take you 43,000 units in 1972 by the median price house. Today, even though everybody thinks it's really expensive, it would only take you 27,000 units. So, almost less than half right? Almost. So priced in rice, housing is cheap. How about something a little less, maybe esoteric, and something that more people are familiar with? How about the s&p 500? Index? Okay. So the s&p 500 Index is a broad measure for the US economy. 70% of it is consumer spending, and priced in a share of the s&p. What is housing cheaper, expensive? Well, in 1970, the s&p was 93 bucks, the house was 23,000. Almost, to buy a house it was 243 shares the s&p. Today a share the s&p is about $4,300 Give or take it's you know, this isn't accurate, like real time data here, okay. It's a month old, maybe. So it only takes you 80 shares of the s&p to buy a house today. So priced in the s&p is housing cheaper, expensive, and think of it this way. Okay. So say there's a, say there's a person out there who wants to buy a house, they don't own a house. And at the beginning of a decade, say, you know, 1990, they decided to start saving for a house. And in 10 years in the year 2000, they had enough money to buy a house. Every every time they get their paycheck. They have a choice. Do they store their excess disposable income? Do they store it in a savings account? denominated in dollars? Or do they invest it in something like gold, rice, Bitcoin, s&p shares or orange juice or oil or any one of these things are all investable assets, people can buy all of these things on the commodities exchange, right?
Jason Hartman 23:45
While the s&p is obviously the stock market. So do they convert their money their income to something or do they leave it denominated in dollars and denominated in dollars is like a sure loser. Because dollars will get attacked by inflation and taxation. Because you pay tax on any interest you earn in dollars and inflation devalues your dollars. So you could convert your your income to shares of the s&p or rice or oil or gold or whatever, and save it that way over that 10 year period and do much better. So I think I gave the example of 1990 to 2000. What if you did that with chairs the s&p When 1990 A house was 20 $122,000 a share the s&p was 360. By 2000, the house had gone up by about 50 grand it was about 173,000 but shares the s&p were 14 155. So in 1990 when you started it would take 338 chairs of the s&p to buy the house or the year 2000 would only take 119 chairs. So you see how this really matters, what you do with your savings. If you save it in dollars, you're bound to get hurt. Okay. What about median income? What if we denominate the house price in income? How many years does it take you, if you earn the median income to buy a house, right to just buy a house with cash, while in 1970, it took you 2.6 years, in 19 83.8. Today, it takes you 4.8. So priced in the median income is housing cheaper, expensive, it's expensive. But remember, you don't typically buy the house in cash, you finance it. So when we compare it to the payment, it's going to be really interesting. So I'm going to fast forward to that. Right now. Do you have questions?
Steven Pesavento 25:52
Yeah. I mean, so there's some really big things here, for people to be able to understand. And I think one of the big questions that comes to mind is, how do you go about using this as an investor? And we're going to get to we're going to get to in a really important piece here. But how does somebody take this information, then run with it and start making some decisions about what's important to them? And how they're going to invest their dollars?
Jason Hartman 26:16
Absolutely. Good points. So one, they do what I just said, they decide how they're going to save. So look, I'm an investor, probably everybody listening is an investor, right? And, you know, they want to buy more investment properties. So there, there's a lag time, where you're usually saving your income for your next investment property. How are you going to save that? Now, it's going to be initially you're going to earn it in dollars, but then you have a choice right? At that moment, you know, if you get a paycheck, every two weeks, you make a decision, you know, am I going to take 20% That I don't spend and save that in gold, or s&p shares, or rice futures or oil or whatever, right? Like these are decisions we all have to make. And saving it in dollars, is almost always the shirt loser. Now, if if we get into a deflationary environment, that means the dollar goes up in value, then that'll be a winner. But historically, that hasn't been the case and the likelihood based on the government spending, and you know, the fiscal and monetary policy of our central bank and our government, it's just not likely. But you know, that's a different argument. Is the future inflationary or deflationary? You know, we'll see. Right. And we could talk about that another day. I have big opinions on it. And a lot of data on that too. But the bottom line is, when we look at the index, it's not about the price of the house, it's about the payment on the house. Okay, so let's look at that. So, mortgage payment for the medium price home, when you adjust for inflation, based only on the official rate of inflation, which I say is very much understated, because it is manipulated in three major ways through weighting, substitution, and hedonic indexing. So waiting says that they have this basket of goods that makes up the CPI, the consumer price index, and what weight do we give each item in the index? Well, that influences the overall official inflation rate, which is a big lie. Okay, substitution. If the price of beef goes up, maybe everybody will just switch to chicken, we'll assume that they did. Because chicken didn't go up so much. So that will make inflation look lower, and the government has a vested interest in making in understating inflation to make it seem lower than it really is. hedonic indexing says, How much pleasure do you get out of an item? Right? So that really comes into play with technology. So this iPhone that I have in my hand, you know, it's better than the last one. The price is about the same. But hedonic indexing says that even if you pay the same price in dollars, if the new phone is twice as good as the old phone, we're gonna assume you only paid half as much. So is that fair? Well, there's a rationale for it. But what it really says is, we're not entitled to progress. The consumer price index gets the progress we as people don't get it. Hmm. So that's a scam. Right? Yeah. So yeah. So inflation, I believe the real inflation rate now, right now, as we speak, is about 12%. Now, for each person, it's a little different. We all have our own personal inflation rate because we all spend our money differently. Right. But if you use the official rate, just the consumer price index, and simply adjust the mortgage payment, the median mortgage payment for inflation, what do you get? Well, 19 70 It was $142. That's how much you paid per month on a house in 1980. It was 558. But after inflation that's in nominal dollars, meaning the name of them. But after inflation, it's only 271 in 1980, still about double what it was 10 years earlier, but not as bad as people thought. Let's just go fast forward to today. Remember, 1970, the real mortgage payment in dollars was 142 bucks a month. Today, adjusted for the understated official rate of inflation. It's only 169. It's not much more. And I would argue that the House today is a lot better than the house in 1970 was.
Steven Pesavento 30:49
So people today are under the impression that everything has gotten more expensive that things are less affordable that we're in a situation where, okay, well, housing is continued to be less and less affordable. We have this huge affordability issue. It is nearly the same as it was back in 1970.
Jason Hartman 31:11
Adjusted for the official inflation rate, which is understated, yes. Adjusted for real inflation, it's much cheaper, much cheaper. Okay, now, granted that the price of the house is higher, but the interest rate is so much lower. And that's what's making it cheaper interest rate and inflation combined. Right? Those are both ingredients in that equation. But yeah, it's it's, it's pretty amazing. It's just not nearly as expensive as people think. Now remember, also, what type of market are we talking about? We're talking about a cyclical market like Los Angeles, or a linear market, like Indianapolis, those are very different. And I don't have enough data that would take us a lot longer to go through that, to understand that right. But this is just stuff I want people to start thinking about. Right? I want them to think about this. So let's look at a couple of other measures before we wrap it up. Okay. How about paying your mortgage in ounces of gold 19 74.1 ounces per month of gold to pay your mortgage? Today point seven ounces. So your mortgage payment priced in gold is much cheaper, historically speaking, than it was really at any time. It's the cheapest it's been anywhere in the last 51 years. Today. Okay, in gold. What about oil? How many barrels of oil? Would you have to have to pay your mortgage? In 1970 42 barrels in 1980? Only 17 barrels? In 1990 38 barrels? It got a little more expensive? For sure. 2036 barrels, it was about the same over that decade. 2010, it only took 12 barrels to pay your monthly mortgage. Today it takes 16 not the cheapest it's ever been but not that expensive, either. Okay, how about average hours worked? How many hours do you have to work to pay your mortgage today versus historically 1970. If you are the average wage, you had to work 41 hours to pay your mortgage. By 1980, you had to work 78. So it got a lot more expensive to pay a mortgage by 1990. Even worse, 83 2069 2010 started coming down 50 hours, today, 46 hours. Today, it is only five hours more per month that you have to work at the average wage to pay your mortgage than you did 51 years ago. It is a little more expensive, admittedly. But it's not that much more. Compared to
Steven Pesavento 33:51
what what a question, Mr. Jason Hartman, so much, so much value in here, being able to change the way that we think about this to start recognizing that investing, and owning real estate is actually much cheaper than we had thought, you know, then a lot of the conversation that's happening on a consistent regular basis.
Jason Hartman 34:12
Yeah, absolutely. It's amazing. People don't realize it until they start comparing to a lot of other things. And that's what I hope people start doing after after hearing this interview.
Steven Pesavento 34:25
Yeah, and I hope that you guys will start recognizing and realizing that there is other ways of thinking and by changing the way that we're thinking about the investments, the decisions that we're making, and working with better and more information that we can put ourselves in a much more competitive spot. And so Jason, after somebody is in this situation, this position now they know they see that, you know, housing is in a completely different view or lands than they had thought before. What kind of action are you taking personally with this information and you know how you ready recommend other people use it?
Jason Hartman 35:01
Well, you know, I, the last three rental properties I just purchased, I've been doing a bunch of 1031 exchanges, kind of reallocating, and optimizing my portfolio. And I, the last three rental properties I purchased, were fairly expensive in dollars. Right, but I'm not gonna fall for the, I'm just paying dollars for this, because compared to what is the question, and so in dollars, they were a bit more expensive than I'm used to paying for rental properties, right. But when you look at the performance, and by the way, one of the things, you know, I acquired a software company called property tracker several years ago. And it is great, you got to standardize your data. So that when you look at a performer, you are looking at a standardized thing. And one of the great compared to what's on that, by the way, is that I actually the the tool I didn't mean to use, but it sort of happened is Facebook memories, which that company, I have a lot of bad things to say about them. But one thing I really do like is that memories feature. And what I noticed is I posted some of these performance from property tracker. And that's it property tracker.com By the way, you can get a free account. And I posted some of them eight years ago, 10 years ago, the same performer we use today. And it is amazing. What you learn from that comparison, when they come up on my Facebook memories, like one came up yesterday, and you just see how incredibly cheap real estate was back then. And it's still pretty cheap. And I think people will look at this 10 years from now, and think, wow, you know, in the REIT market, I don't mean buying in Los Angeles or some you know, cyclical market, that's a high flying market, I think those are overpriced. But in these good solid linear markets, real estate is really very well priced, you know, assuming you buy the right property. And I mean, there's more to it than that. But generally speaking, it's just not nearly as expensive as everybody thinks it is. And one of the things that I think will happen, and this is a prediction for whatever it's worth is that housing will continue to have a shortage and part of that shortage is going to be brought on by the super low interest rates that people have taken advantage of recently. So for example, you know, that the asset, a big part of the asset is the mortgage. And I teach a strategy called inflation induced debt destruction, which shows people how the debt on their property at negative interest rates is this hidden wealth creator. It's just a beautiful, beautiful thing. And there's some complexity to it. And, you know, it takes a little bit to explain, but there's more on my podcast about about that. And, you know, five years from now, we will likely have higher interest rates, 10 years from now, we'll likely have higher interest rates. So all these people that got these super cheap mortgages, today, they're going to hoard them, they're not going to want to part with these properties, they're going to instead of buying a new home, if there are owner occupant, they're more likely to add on and make an addition or an improvement to their existing home, because they don't want to give up that cheap mortgage that is not transferable to a new property. So I think this is going to constrict housing supply even more in the future, these these cheap mortgages that nobody's gonna want to relinquish, because they're not going to be able to duplicate them in the future. But we'll see.
Steven Pesavento 38:44
There's gonna be a ton of shifting and changing happening I market, it's definitely moving in an interesting a great direction, especially when we understand what to compare it to. So thanks so much for joining us today and really appreciate it. Jason, where can people find out more about this index?
Jason Hartman 39:01
My main website is Jason hartman.com. We have a new white paper coming out on this. So if you get on our email list, we're going to email it to everybody. And, you know, just sign up anywhere, Jason hartman.com. I also have a free book. It's kind of a mini book, at pandemic investing.com. During the crazy times in which we live, I kind of modified a bunch of my strategies for the pandemic era. And so people can find that book and get it for free at pandemic investing.com.
Steven Pesavento 39:31
Wonderful, it was super great having you. Thanks for listening, you guys. And remember, take action on some of the knowledge that you learned here today. Ask yourself the question, what did I learn and how can I apply it and go run with that in your life? Thank you guys so much. We'll see you next time.
Steven Pesavento 39:51
Today's episode is sponsored by Von Finch Capital. If you're interested in investing alongside me in the same type of real estate opportunities that I personally invest Then head over to Von Finch Capital and join their private investor network. You can do so at vonfinch.com/invest. Join me on that next deal. I look forward to seeing you on the inside.
Steven Pesavento 40:15
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