The incredible scientific event of November 12th 2014 with the Philae lander touching down on a comet sets the tone for today’s Creating Wealth introduction. Host, Jason Hartman marvels at what an amazing time it is to be alive and considers the impact of such technology on real estate investments.
Later, expert in demographics and social real estate trends, Matt Carmichael of www.Livability.com joins the show to discuss the motivations behind relocation and what leads people to choose their new home locations, as well as offering a realistically stark viewpoint on the state of the middle class.
Key Takeaways
02.40 – Investing in real estate and land doesn’t come with the same risk as investing in gold or precious metals does – they’re not making any more land!
03.19 – Despite all of the physical and logistical difficulties of landing a spacecraft on a moving comet, today it was achieved.
06.37 – Demographical and life changes can often prompt a move or change in location.
11.17 – By focusing on the smaller towns and cities, Matt Carmichael can tell the stories of places which are actually more achievable for the average buyer or renter.
12.26 – Political persuasions are starting to play a bigger part in the motivation for choosing an area.
17.41 – Walkability and the whole feeling of a community can be a huge factor in real estate appreciation trends.
21.37 – The middle class is in a state of flux and it’s getting so much harder to maintain your position in that class.
27.10 – So many factors and categories go into deciding which cities should make the ‘Overall Best Place to Live’ list.
28.47 – For more general information, head to www.Livability.com. To find out about the book, go to www.Buyographics.com
Mentioned in this episode
Buyographics by Matt Carmichael
War on the Middle Class by Lou Dobbs
Tweetables
Today, humanity landed a spacecraft on a moving comet. What an amazing time to be alive. Tweet this!
We have these up and coming areas but it’s becoming harder for the middle class to actually live in these places. Tweet this!
Living in a walkable community where you know the people in your neighborhood is a very human experience. Tweet this!
Introduction:
Welcome to Creating Wealth with Jason Hartman. During this program, Jason is going to tell you some really exciting things that you probably haven’t thought of before, and a new slant on investing. Fresh new approaches to America’s best investment that will enable you to create more wealth and happiness than you ever thought possible. Jason is a genuine self-made multi-millionaire who not only talks the talk, but walks the walk. He’s been a successful investor for 20 years, and currently owns properties in 11 states and 17 cities. This program will help you follow in Jason’s footsteps on the road to financial freedom. You really can do it, and now, here’s your host, Jason Hartman, with the complete solution for real estate investors.
Jason Hartman:
Welcome to the Creating Wealth Show, this is your host Jason Hartman and this is episode number 438. Thank you so much for joining us today. Our guest will be Matt Carmichael, and he is the Editor at www.Livability.com, and the author of a book entitled Buyographics. He is an expert in demographic trends and does a lot of ratings about best places and best cities in which to live. This definitely impacts us and we need to be aware of this kind of stuff when we are investing in properties and we’re looking at building a nationwide portfolio. I think you’ll find that interview to be interesting, and we’ll have that for you in just a moment.
First, I want to say wow. Like I’ve talked about on many shows in the past, I want to say about the amazing time in which we live. It really is an amazing time to be alive. For the first time ever, we have now the European Space Agency – ‘we’ meaning ‘humankind’ – and it has landed a spacecraft on a comet moving through space at 41,000 miles per hour. We have now landed the comet and so if you’re a gold or precious metals investor, you may want to think twice about that because the idea that seemed far-fetched a couple of years ago when I first heard it is becoming closer to reality. I think Elon Musk is involved in this, if I’m not mistaken. That is the idea of landing spacecraft on asteroids to mine all of the incredible precious metals and rare earth metals – I guess you can’t even call them ‘earth metals’ – off of asteroids and bringing them back to Earth. If those asteroids contain gold and silver or platinum and paladium and there’s a whole bunch of new supply, that is not going to be good for the supply and demand equation if you are an investor. Again, invest in real estate and invest in land. As Will Rogers said: ‘They’re not making any more of it’. Even though there is a lot of land available, that is a cool statement. Land is fairly plentiful around the Earth, but not necessarily land that’s well-located, with good weather and so forth. Economic and cultural factors obviously come into it, and that’s actually what we’re talking about on today’s episode.
We’ll get to our guest here in a moment, but it is truly amazing that we have landed a spacecraft on a comet for the first time ever in human history. That was achieved just today. Can you imagine the complexity of that? The complexity of getting to the exact location you need to be on a comet that is moving at 41,000 miles an hour through space, and how you have to be synced up with it in order to land? I’m sure a comet has almost no gravity at all because it’s very small. Gravity is determined by the amount of mass, so that was a tricky deal, and it was achieved today. It’s an amazing, amazing time in which to be alive. That was the Rosetta landing, so check that out and find out more about it.
Speaking of good demographics and again, we don’t profile this stuff when we talk to www.Livability.com, but we do profile it when we think of investing in income property. Birmingham, Alabama has fantastic rental properties with good numbers that make sense and that work, so check out our property tour coming up. There’s still a chance to come last minute. Check that out at www.JasonHartman.com and by the way, thank you to all of you who have already registered for our Meet the Masters event coming up in January in Irvine, California. We look forward to having another great Meet the Masters. I’ve kind of lost count because we used to do them twice a year – now we just do them once a year – but I think this is our 15th or maybe even our 16th Meet the Masters event that I’ve done. It’s going to be a fantastic event, so register for both of those at www.JasonHartman.com in the Events section.
Let’s get to our guest, Matt Carmichael, as we profile www.Livability.com and Buyographics and look at some different places around the country.
It’s my pleasure to welcome Matt Carmichael to the show. He is Editor of www.Livability.com and the author of Buyographics: How Demographic and Economic Changes Will Reinvent the Way Marketers Reach Consumers. Matt, welcome, how are you?
Matt Carmichael:
I’m doing great. How are you, Jason?
Jason:
Fine, thank you. This is a subject that is really interesting to me – where one lives really makes a huge difference in their life. In fact, it even determines a lot in their life and being in the right place is important. Maybe moving around is important? America’s the most mobile population in all the world and it’s interesting when you look at these Top Ten lists, Top 100 lists and you break them down by categories: What’s the best place for Conservatives or Liberals or singles or marrieds or young families or retired people. Whatever it is, there’s just a lot of ways to dice this up. Tell us what you’re working on nowadays. What’s your most common thing you’re looking at?
Matt:
We just put out our Top 10 Cities for Retirement. If you’re looking at the reasons why people move, there are certain demographic and life-stage points at which people are tending to pick up – it’s when they go off to college, it’s when they have kids and the kids are starting school, and of course, at the end of the spectrum, it’s when people are retiring. I think something like 4 in 10 Americans plan to pick up and find a new community when they hit that stage. We took a deep dive into the data and came up with a list of places where people might want to go when they reach that point.
Jason:
Okay, good. I guess since you led in that way and that’s what you’re working on now, let’s talk about retirement first, but we’re going to talk about a lot of these categories. What are the best places to retire and why?
Matt:
We looked issues of affordability, we looked at healthcare and we looked at the traditional drivers of just being a good place to live like a good climate, low-crime rates, and we came up with a list that I think gives a pretty good range of cities. Not every city might be exactly what you’re looking for, but one of the top ten probably would be. We’ve got everything from Springfield, Missouri at number one; places like Knoxville, Bellevue outside of Seattle; Honolulu, Hawaii; Albuquerque; Tucson and even Coeur d’Alene, Idaho.
Jason:
Affordability is usually a pretty big target when you look at retirement. A lot of retirees really like college towns, don’t they? They want to go to courses and lectures and have some intellectual stimulation and maybe feel kind of young again. They probably want coffee shops, golfing, all sorts of things, right?
Matt:
Yeah, Albuquerque, for instance, and the University of New Mexico there has a really reduced rate for Seniors who want to audit some of the classes. I totally agree that college towns are a great place to retire. They’re also a great place for staying involved with the community and all of the cultural aspects; it gives them something to do in their retirement years besides just being able to golf 365 days a year.
Jason:
That’s for sure. Okay, good. What are some of the other categories that we should consider?
Matt:
For retirement cities or for best places to live?
Jason:
Oh no, for anything. I’m kind of letting you pick one. Best places for entertainment? There’s just so many categories! Best places to go to college? You’ve got one here which is the Ten Best College Towns; how did you rate that one?
Matt:
We look at a lot of our usual idea of best places to live because it’s not just best college towns, period, it’s best college towns to live in. But then we also looked at the role of the college in the community and we looked at some fun metrics like the ratio of the student population to the stadium size. At a place like Ann Arbor you could fit almost the entire city in Michigan stadium.
Jason:
[Laughs]. That’s interesting! Okay, so what does that tell you when you look at the relationship between student population to stadium size? For example, I’m here in Phoenix and ASU is one of the biggest schools in the country. I could be way off on this, but that’s a pretty big stadium. I think it does about 40-50,000, probably. I’m guessing here. The college is somewhere around 60,000, give or take. I don’t know how they count that with online enrollments and so forth. What does that mean?
Matt:
If the ratio of the population of the town to the stadium approaches 1:1, as it does in a place like Ann Arbor, it shows what a huge outsize role the University plays in the community as a whole, which I think is a good proxy for it being a serious college town. There are certainly big cities that have great schools like New York and NYU and Columbia, or ASU in Phoenix, but Phoenix also has an awful lot of other things going for it, as do New York and Chicago, for the matter. We have Northwestern, which is a great place and the University of Chicago, but it’s not like you’d necessarily consider Chicago a college town just because it has great schools.
Jason:
Right, right. OKay, so by the way, I looked it up while you were talking and Sun Devil Stadium in Phoenix, or in Tempe, Arizona has a seating capacity of 65,000, so that’s pretty big! That is a proxy for how happening the college is, how much intention it gets and so forth, it looks at that sports angle, obviously. You don’t really look a whole lot at the larger cities, do you? You mention New York and Chicago, but that’s not really your thing, is it?
Matt:
No, we tend to be focused on the small to mid-size cities. For our overall best places to live, the range is about 20,000 to 350,000, and we certainly know that there are things we can learn from the larger cities in the US. We tend to focus on the cities that don’t necessarily get all the attention and all the limelight that say, Portland, does.
Jason:
Why is that?
Matt:
Well, we know that there are great stories in these towns. We know that they are great places to live, but they do tend to get overshadowed by some of these huge metro areas. Everybody knows Portland is a great place to live – great. Not everybody knows that a place like Madison, Wisconsin is also a great place to live. We want to be able to tell those stories of these great communities that are out there and that are actually a lot more achievable for a lot of people.
Jason:
Okay, yeah, it makes sense. One survey that you’ve done which is particularly interesting, if not kind of funny, is the political side of things. I remember reading many years ago that people really are moving based on politics. You’ve got a ranking of best cities for Liberals, best cities for Centrists and best cities for Conservatives.
Matt:
Yeah, people are definitely clustering based on their political beliefs, and whether or not that’s intentional and whether or not that’s the reason they’re moving isn’t really known. If they’re picking up and moving to a bluer place or to a redder place – they’re naturally doing that anyway. Knowing that and knowing that now half of all Americans live in what are essentially ‘safe’ counties where the Presidential election, at least, is pretty much pre-determined each November, we want to have a look at the cities where if you are thinking about these things and you do want to be around people who are voting like you are, but also we wanted to get a consumer angle as well.
We looked at products, services, goods and shopping places that tend to skew one way or another. For instance, Liberals are more likely to drive a Subaru and Conservatives are more likely to drive a Buick. We found places that over-index on Subaru purchases and Buick purchases. That way, you’ll feel at home not just politically, but in terms of all the things that factor into your day-to-day life.
Jason:
Okay, yeah, very interesting. You talked to Glenn Beck, right? He asked about your survey..
Matt:
Yeah, he did a ten-minute segment on his show. He was bothered by the idea of doing lists that segregate people, instead of uniting people. You can argue one way or the other about whether you consider Glenn Beck to be a segregator or a uniter himself. He was also bothered that the Conservative cities were not as interesting, in his opinion, as the Liberal cities. He said that Boulder, Colorado is a great place to live, and that’s a Liberal city. He said ‘I would live in Boulder, Colorado’..
Jason:
Yeah, I was just there a couple of weeks ago.
Matt:
He was like “They get all the good cities. I wouldn’t necessarily want to live in Berkeley, but I can see that it’s a good place. The Conservatives; we get these cities that nobody’s ever heard of like Alabaster, Alabama”, and he seemed very offended.
Jason:
Well, you know, it is kind of true, and I’ve always found that interesting. I’ve definitely thought about that myself over the years. What’s interesting is that if you look – and I don’t want to make this a political conversation, but I just have to mention it because it kind of goes along with what we’re talking about here – the Liberal ideology is spend, spend, spend and let tomorrow somehow figure out itself. If you look at the State of California and if you look a lot at Californian cities (I’m from California and I lived there all my life until three years ago, pretty much), it’s like they had their boom at a time when they weren’t as Liberal, and then because of that prosperity, they became more Liberal. That’s a natural tendency – it’s like ‘Hey, we’ve got money, let’s just spend it and have another government program for this and for that’ – and then you see this migration of the population. What scares me about California is you see the middle class leaving in such high quantities, and then they run into really bad financial trouble. It’s interesting; California is still a beautiful place, no one would doubt that. Gosh, financially, it’s a disaster.
I don’t know what to think. It’s interesting. Thoughts?
Matt:
You touched on the issues with the middle class, and I think that is one of the really important issues facing all of our cities. When we talk about the issues of livability, we’re often talking about how it’s good to be able to live in a place that’s walkable and in a place that has density and a place that has transit options and a place that allows you to do a lot of things in a lot of places conveniently and easily. Increasingly, we’re seeing that that’s becoming a bit of a luxury good. The areas that are most dense and most walkable and the downtowns that are thriving, you see that even places like Los Angeles and Atlanta have had a 24 hour a day downtown, but there’s a cost to that. It’s becoming harder and harder for the middle class to live in these places. I think that’s a huge issue for our cities these days.
Jason:
Yeah, it definitely is. One of the reasons is that inner-city living – and a lot of these cities are really going through nice Renaissance periods where there is a lot of money flowing in and they’re seeing a lot of development and some nice stuff is happening in some of these downtowns – but of course, new construction is more expensive that old construction. The new construction that’s being built is high-density and it’s mixed-use. When you go up, the construction costs skyrocket, as does the building. Personally, I’m a huge fan of that high-density, mixed-use living. I wouldn’t recommend it for investment because it’s just too expensive and the numbers never work. There’s a lot of problems when you deal with home owners’ associations and high-rise buildings and such, but gosh, it sure is nice to live.
I’ll tell you, just from a personal perspective, I lived in Orange County California until 3 years ago, and moving to Arizona has been a wonderful thing for me. The two communities I’ve lived in while I was here – one was Tempe, Arizona; that area was very walkable, and the area I live in now across town is also very walkable. Walkability is a big deal. Just personally, I think that the automobile is a very impersonal thing. It’s really nice to walk your dog around a neighborhood, know people, wave at people and just not have to deal with traffic and complexities like that. It’s a very human experience when you live in a walkable community.
I actually interviewed the founder of, I think the website is called www.WalkScore.com, on my show before. Do you rate cities for walkability too?
Matt:
We don’t ourselves, but we actually use Walk Score as a metric in a lot of our rankings. It’s not only a great measurement of walkability, but it becomes a good proxy for a lot of other things as well, because we know that walkable communities and communities with a high walk score are having their real estate appreciate more. We know that they can be healthier places to live because people are out of their cars and are active and are outside and moving around. Walk Score is a great metric and we are big fans of theirs.
Jason:
Oddly, though, admittedly scoring communities based on walking is a pretty hard job because they’re really micro-communities. When you walk, you’re talking about a 2 or 3 block radius most of the time. On Walk Score, you can plug in a zip code, but you’re still not going to get very accurate information because one little area in that zip code might be very walkable, and that might be the area you live in, but other areas in that zip code won’t be as walkable. I found the ranking to be, I guess about as accurate as Zillow is on real estate values, which is not too much! It’s better than what we had before, which was nothing. It’s great that there are sites like this out there. As they refine their methodology and become more detailed and more accurate, I think it’ll just get better and better. I’m not bashing it, I think it’s a great service – it’s just that you can’t just do it on the web. You obviously need to go to places to really understand them.
Walkability is interesting, and even in suburban areas, what I’m noticing a lot as I travel around the country is these micro walkability places where you might use your car to still go to the big-box retailer and do shopping (Costco or Walmart trips on the weekends), but there are more neighborhood-orientated walkable centers. You use your car to drive to work and so forth, but you can still walk to a coffee shop and you can still walk to a convenience store, and that’s kind of nice. I don’t think these would rate as walkable communities, but it’s great that you can do that even on a small scale.
Matt:
Yeah, and when you factor in things like lift and some of the ride-sharing services and you factor in being able to walk to at least some, if not all, of your errands – maybe you still need to drive to the grocery store or drive to the big-box. The more things you can do without a car, the more it means that there’s at least the potential that you can cut, perhaps, a car out of a two-car household, and that does start to address the affordability and the equity issues. That’s such a huge component of the middle class budget – having to care for two, possibly even three, automobiles. In terms of the real estate affordability equation and the development cost, if you’re near transit or you’re near walkability, it really can change the economics of being able to live in that place.
Even if your real estate is down at a slightly higher premium, you can offset that by not having quite as much cost go into transit.
Jason:
Yeah, you’re right, no question about it. One thing I want to ask about your book, and we’ve alluded to it here – the first chapter is about the changing middle class. How is the middle class changing?
Matt:
The middle class is just kind of getting hammered on all sides.
Jason:
I agree.
Matt:
It’s so much harder to be in the middle class. In the book, when I’m talking about the middle class, I talk a lot about a family that I was tracking. The book tracks ten representative families throughout the US, and for the middle class, I actually wind up talking to one of the most affluent families in the set. I did that because they live what seems to be in this traditional idea of a kind of middle class life. They’ve got a nice house, they’ve got a couple of cars, they’ve got a kid – the mum is able to stay at home and raise her daughter, and yet their income is so much above the national median in order to be able to afford those kind of choices. That’s like the choice to stay home with your daughter. A lot of middle class families these days can’t give up that second income; that’s the thing that’s keeping them afloat and keeping them in the middle class.
You start seeing all of these really interesting consumer choices, and I also talk about a girl in Champagne County, Illinois. All she wanted was a laptop – she wanted to be able to come home from work, do the Facebook, stream some TV, do her online shopping. Every time she was saving for this laptop, another one of her friends would get married and she’d have to go and buy a bridesmaid’s dress, buy a couple of wedding gifts and go to a bachelorette party and have a big night out, or even go to a destination. If you’re Dell computers, you’re thinking of your set of competitive companies, you’re thinking of Apple and Acer and other people who make tablets and computers as your competition. In reality, your competition is the wedding industrial complex, and it’s going to the dentist.
Jason:
I love that – the wedding industrial complex! That’s awesome.
Matt:
It’s going to the dentist – it’s do I fix the transmission on my car? You’re making these choices that are not apples to apples. It’s not ‘Do I buy this faucet or that faucet?’, it’s ‘Do I take care of my own body and my own health or can I scrape together enough money for this other thing?’ To me, that’s kind of what the middle class is these days. It’s dealing with these kind of choices, and they’re tougher choices than they used to be. They’re not fun choices in a lot of cases. The middle class persevere – granted, they’re taking out a lot more debt to do it, but they’re out there, they’re suffering, but they’re still trying to get by.
Jason:
The middle class is definitely getting hammered. If you want to read a great book about that, read War on the Middle Class by Lou Dobbs, it’s awesome. It’s a little old now – maybe 8-9 years old, I think – but it’s a really interesting book and it just talks about how the middle class basically has no representative. The rich can get out of the taxes with their tax planning and their crony capitalism with the government, and the poor get benefits from the government. The middle class are just in the middle getting hammered, like you say, so I completely agree. The standard of living, in many ways, is declining. From a tech standpoint, it’s advancing, but if you look at what used to be considered the typical middle class home, and I use an area in Newport Beach that’s a desirable area near where I used to live. It’s called Harbor View Homes, and when those were built in the early ’70s, you could buy a home in there on a quarter or a third acre lot and it would be something like $42-50,000. That was like a middle class home and you could probably afford that on one income. It is a little bit upper middle, I guess.
Now, I don’t think you could get a home in there under a million five. Even though the square footage of the average middle class person’s home has actually gone up, the density of those homes has massively increased. The yards have just disappeared and the density, whether they be little row houses stuffed together as massively high density in town homes or condos, that’s where the square footage statistics are very misleading. It doesn’t give the same life experience.
Matt:
Yeah. For younger people or people who are living by themselves, you’re also seeing these ‘luxury micro-units’. It’s great if you’re living by yourself and you’re in your 20s, or maybe you’ve retired and you can lead a lifestyle where your bedroom is also your dining room. Is that really aspirational or is that just straight functional?
Jason:
Right, I agree. It’s a very good point and I just think that with the middle class, unfortunately, so many of them will be moving down and the standard of living will be declining. The real hope that we have is technology, and there are some awesome things happening in the world of tech that could change things. Who knows? Maybe we’ll have 3D printed houses soon. I saw a demo on that, it was pretty interesting.
Back to Livability, just before you go. I don’t want to not give you the opportunity to mention things. Arts and entertainment, business and economy, community, education and schools, food and drink, health and wellness, we talked about housing and real estate, what about transportation? Any other rankings or insights you want to mention there?
Matt:
I think everything you just mentioned goes into our ‘Overall Best Places to Live’ list, and that’s kind of our showcase piece, I suppose. We work with Richard Florida’s group out of the University of Toronto.
Jason:
He’s great – the Creative Class City – that was an interesting distinction.
Matt:
Absolutely. He has a lot of great ideas about what goes into creating a great city, and working with his team, we’ve identified 40 different data points that help us determine a best place to live, and you’re right. It’s the whole package. Are there arts and culture? Is it walkable? Is it affordable? Is there good healthcare? Can I get to my job without a car?
Jason:
I’ve got to say – a funny thing I notice when I’m looking through your top 100 and your other lists, it doesn’t seem like you guys use weather as a ranking. You don’t mind the cold, I guess.
Matt:
Weather is one of the considerations, but it is only one of 40-something data points. We do look at a couple of weather differentials, including the January-July temperate exchange. There are a lot of California cities on our list that have good weather, there are some cities in Florida and in more temperate climates, but there are some cold places like Rochester, Minnesota that make the list too.
Jason:
Yeah, very interesting. Good stuff. Give out your website, if you would. You’ve probably got one for the book, and then obviously www.Livability.com.
Matt:
Yeah, www.Livability.com will be the site about all of these great places to live, and we also have data on pretty much every city with a population of over 1,000, so if you’re looking to relocate, we can help you research that. The book is at www.Buyographics.com.
Jason:
Fantastic. Matt Carmichael, thank you so much for joining us.
Matt:
Any time, thanks for having me on, Jason.
Outro A:
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Outro:
This show is produced by the Hartman Media Company, all rights reserved. For distribution or publication rights and media interviews, please visit www.hartmanmedia.com or email [email protected]. Nothing on this show should be considered specific personal or professional advice. Please consult an appropriate tax, legal, real estate or business professional for individualized advice. Opinions of guests are their own and the host is acting on behalf of Empowered Investor Network Inc. exclusively.
