People here and there are freaking out these days, saying housing is so expensive nowadays. Well yes, they’re right, if we compare it with how things have been in the past recent years, but when you compare it to a longer point of history, you’ll actually be surprised at how cheaper it really is!
That’s exactly what this episode is about, with today’s guest explaining the statistics behind that. Join us as we dive into the numbers that prove housing isn’t as expensive as you think!
Jason Hartmanis the CEO of Empowered Investor and Real Estate Tools. He started a career in real estate when he was still in college, investing in his own portfolio while brokering properties for clients. Through creativity, persistence, and hard work, he soon joined the ranks of the top one-percent of Realtors in the US, which then led to him being involved in several thousand real estate transactions, owning income properties in 11 states and 17 cities today. Jason’s companies help people achieve The American Dream of financial freedom by purchasing income property in prudent markets nationwide.
In this episode, Jason goes through the detailed explanation on why housing is actually cheaper than you think, with his points revolving around the data in St. Louis Federal Reserve’s chart, going through the history of interest rates, mortgage payment, and the market.
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What you'll learn in just 29 minutes from today's episode:
02:41 – What’s going on nationally with the real estate market
05:06 – Mortgage data shown on the chart of the St. Louis Federal Reserve
08:17 – The reason why people think housing is so expensive
10:32 – Then and Now: Calculating the Consumer Price Index (CPI) the way the government does it
14:39 – The Consumer Price Index (CPI) is a complete fraud
15:32 – Difference in typical homes back then and today, then connecting it to the data in chart
17:43 – Calculating the cost per square foot, per month, adjusted for inflation
19:40 – The increase in house inventory in line with the rising interest rates
22:51 – Two more things you need to consider, according to Jason Hartman
27:17 – Go to https://www.jasonhartman.com/slides for the slides
"Real estate is really quite a bit cheaper than people think, believe it or not. And remember, nobody really buys a house on the price of a house; they buy it on the payment of the house.” – Jason Hartman
“When everybody’s screaming about housing – ‘So expensive!’ –they’re right if you compare it to 18 months ago, but they’re not right if you compare it to a longer point of history.” – Jason Hartman
“Here’s why everybody thinks housing is so expensive – it’s because of something called hedonic adaptation.We, as humans, just keep raising our expectations. We are never content. That’s the nature of human psychology. No matter what we get, we want more; we want better. And that’s exactly what we’re doing here; we’re just expecting more.” – Jason Hartman
“Those dollars are worthless. It’s not really that the mortgage payment has gone up; it’s that the value of the dollar has gone down.” – Jason Hartman
“Inventory tells the picture.” – Jason Hartman
“The market is reacting to the current interest rates; it’s not reacting to the future interest rates.” – Jason Hartman
“You’ve got to understand that investing is not about appreciation; that’s just the icing on the cake. The icing has been fantastic the last couple of years; no one will deny that. But what we got to remember is that investing is about yield, and yield comes from cash flow, and rents are skyrocketing. Rents always lag prices by about two to three years. So, rents have gone up already, but they are going up a whole heck of a lot more; they are going to be higher in the next few years. So that’s the other reason that I don’t think investors should be very worried about the market – because they’re investing for yield, not for appreciation, hopefully, and that’s why that matters.” – Jason Hartman
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