Jason Hartman gives us a quick announcement on the upcoming Meet the Masters and then shares tips for investors on collecting pet rent, your property manager, and how to run numbers before purchasing your property. In the interview segment of the show, he hosts John Burns, CEO of John Burns Real Estate Consulting. They have a wide-ranging conversation about autonomous cars, the different types of markets, and the definition of “surban.”
Announcer 0:00
This show is produced by the Hartman media company. For more information and links to all our great podcasts, visit Hartman media.com.
Announcer 0:13
Welcome to the creating wealth show with Jason Hartman. You’re about to learn a new slant on investing some exciting techniques and fresh new approaches to the world’s most historically proven asset class that will enable you to create more wealth and freedom than you ever thought possible. Jason is a genuine self made multi millionaire who’s actually been there and done it. He’s a successful investor, lender, developer and entrepreneur who’s owned properties in 11 states had hundreds of tenants and been involved in thousands of real estate transactions. This program will help you follow in Jason’s footsteps on the road to your financial independence day. You really can do it on now. here’s your host, Jason Hartman with the complete solution for real estate investors.
Jason Hartman 1:04
Welcome listeners from around the world and a Happy New Year to you all. It’s great to have you here. Thank you so much for joining me from your hundred and 64 countries or 165 countries. I don’t know I can’t remember now, worldwide. It’s great to have you. And I’ve got to say, our longest distance visitor, for this meet the Masters coming up is coming from Central Africa. Wow, that’s a long flight. We so appreciate you coming out. We have had people come from all over the world before, but I don’t know this might be the farthest this might be a record. We’ve certainly had people come from Australia, New Zealand, Europe, Southeast Asia, Japan, Japan. So again, you know, many from Europe before so it’s really just such an honor to have you be willing to fly halfway across the world to come to our event and we really, really look forward to it. And my friend Alexa is here with me and she has a message for everybody listening. It’s just a quick message.
Announcer 2:06
You must get your tickets from meet the masters of income property today.
Jason Hartman 2:10
Now you always want to listen to Alexa, don’t you? She says, Get your tickets today. Anyway, that’s it, Jason Hartman, calm slash masters. And today, one of our keynote speakers will be on the show. So many of you listening are coming to this event that I want to kind of tee up some of our speakers. So when you see them live, and when you meet them, if you have VIP tickets, and you’re in the green room and, and you meet them, kind of doing the backstage thing or, or you’re sharing a meal with him or whatever. You will be more knowledgeable about their philosophies, their content, their thinking, their outlook on the marketplace. And so today we will have a returning guest, and that is Mr. JOHN burns. He is the founder of john Byrne’s real estate consulting, of course, and we talk a lot about his data and so forth on the show. Many times over the years, and he will be one of our many keynote speakers at meet the masters. So we’re going to play that interview for you today. Now just know this interview was recorded about two and a half months ago. Of course, things change, right? But it’s still very, very prescient. It’ll give you a good idea for his thinking. And you’ll see the follow up to that live at meet the masters. And by the way, many of you have asked, Will we be selling streaming tickets for meet the Masters so you can watch a live stream? The answer is, I don’t know yet. We’re, we’re talking with our audio visual and production people about doing that. Again, we did it last year, and many of you bought those streaming tickets. So you could join us kind of remotely. And again, this is really a second choice thing. You know, the best thing is to come and live and experience the event. We’ve got almost 250 of you coming so far. So Thank you for doing that and getting your tickets. The great benefit you get about being there live is you just get all the networking. Now, of course, it’s a lot easier to sit in the comfort of your own home or office and, and watch the stream. You know, depending on the streaming service, you can do playbacks and things like that. So you know, it’s certainly cool. Yeah, it’s a great technology, that’s for sure. And it is, what time is it? It’s an amazing time to be alive. Right. So this is one of the great things of it. But if you can make it out live to join us, we’d love to see you. We still have quite a few general admission and some VIP tickets left. Elite access is totally sold out. So no more of those tickets left. So that is the scoop there. Of course we had one of our speakers on the last episode that was Danielle DiMartino booth, and today we’ll have john burns back as a returning guest. And so I hope you enjoy this interview. And I want to just remind all of you about a couple of quick tips. These are sort of unrelated They’re not anything specific or orderly, but just a couple of things. Number one, pet rent. I was talking with one of our property managers recently. And you know, I love animals. I’ve always as a kid, I always loved animals. I don’t know why it’s just, you know, they’re I just think they’re awesome, right? I mean, they’re little humans, you know, in a way, and they have their own personalities and everything. And of course, my favorite animal would be dogs, right? I’m a big dog fan. I think as people, we should all aspire to be like dogs. And what I mean by that is they’re just so good natured. They’re forgiving. They don’t hold a grudge. being like a dog is kind of an aspirational goal. I think that would be a pretty decent one for people. What do you think about that? Is it a crazy idea? Maybe I don’t know. Or at least, Let’s all try to live up to be the person our dogs think we are. How’s that for an aspirational goal? So either right, but I have never seen an answer. Animal improve the value of our rental properties. Now, they certainly improve the lives of our tenants. And I just want to say that it is completely normal in the institutional apartment world, for people to charge pet rent for owners to charge pet rent institutional apartment. Landlords always do this, they all do it, okay. And if your tenant has a dog or a cat, you know, you can charge 25 bucks extra per month, okay, and pet rent. And you can also get an additional deposit, you can, you know, have an additional security deposit, you can make part of that non refundable. There’s a lot of stuff you can do. But look, you’ve got to push your property managers for this idea, pet rent, it’s a reasonable request, and it will increase the ROI the return on investment of your properties. And it will also pay for and compensate you for that extra wear and tear that the animal might cause. So pet rent should be I think it should be considered a normal thing. You know, it’s 25 bucks a month, it’s not a big deal. And you know, if they have multiple pets, you can charge it for each one potentially. So push this idea with your property managers. Yeah, a lot of them haven’t caught on to this yet. It’s funny, all the institutional apartments do it. But property managers there, a lot of them are reluctant. And I don’t know why it doesn’t make sense. So I’m trying to push this movement from the landlord side, okay. And of course, if you self manage, you can easily do this. And again, I recommend self management. We’ve talked a lot about that over the years in the Jq membership on our website at Jason Hartman, calm. We did some conference calls about self management, teaching people how to do it. We also have done many podcasts about it. If you are looking for information on that topic, go to Jason hartman.com. and type in self management, you’ll find some various podcast episodes and resources there. That’s one thing I want to say. The other thing I want to say is really pay attention. At least on a spot check basis, pay attention to your property managers and the statements they’re sending you. I know we all get busy. I’m certainly a busy person, you know, we kind of let things go. But don’t forget to question things, to push back a little bit on things to ask for multiple estimates on things or quotes on things to take one or two or three minutes. This doesn’t take much time. And just look online and do a quick search and verify the cost of something yourself, okay? If they say your property needs a new garbage disposal, or a new this or that, or this widget or gadget or this thing or that thing, you know, just look it up online and see how much that thing cost. And then after you’ve done that, send the link back to it in an email to your property manager or the vendor. The contractor who’s doing the work and say hey, This is what I found, you know, what do you think about this, it’s a better deal. All that does is it gets them to know that you are an astute customer, you are an astute property manager or manager of your managers, and you are paying attention. So you set the tone for things when you do that. So very important. Just, you know, kind of couple of random tips there, nothing big. The other thing I would say is when you’re looking at properties and evaluate them, of course, I’ve talked about this a zillion times over the years. But you really need to look at the overall return on investment when you’re looking at the projections on the properties and so forth. cap rate is not a super meaningful metric. In our world. It’s much more applicable to the commercial real estate world. And why is it more applicable to that world? Well, it’s more applicable because those properties are strictly sold based on income they produce. One of the wonderful things about being a resident property investor is you’re dealing with a less sophisticated market. And you have more options when you ultimately liquidate your portfolio or sell your properties. You can sell to an illogical homebuyer that just wants the right home. And they’re not gonna like agonize and analyze the numbers. So there’s more room for creativity. Just remember one of the Jason Hartman rules of investing, the more perfect the marketplace, the less opportunity is available. So the comparison I’d like to draw here is the stock market. So if you own stock in Apple or Amazon or you know, whatever, right or Hey, Enron, let’s talk about some bad stocks. Okay. Enron, WorldCom, global crossing, or if you invested with Bernie Madoff, or any of this, right, if you own stock, it’s a very perfect market and In the famous book a Random Walk Down Wall street address that issue very heavily, didn’t it? So, the idea being that, you know, you can’t beat the combined knowledge of the marketplace. Everybody tries to beat the wisdom of the market, but they can’t and why can’t they? Because the market when it comes to stocks is a very perfected market. So take this funny example I’m about to share, say you had a good old fashioned stockbroker that you actually talked to on the phone. I know most people don’t have that anymore. They’re just doing stuff online. But say you did. And you call up your stock broker, and you say, Hey, you know, I’ve got this stock in XYZ company. And I know it’s trading at $100 a share, but I’d really like to have you promoted a little more aggressively. And I’d like to fix it up a little bit, do a little bit of work on it may be presented really well. And even though it’s only trading on the exchange at $100 a share You know, do you think you can give me 110 or $120? a share? He or she would like laugh you off the phone out of the room? Whatever, right? Because it’s a crazy question. Because you can’t apply creativity to a very perfect market like that. Now perfect doesn’t mean good. In fact, my point here, my thesis is that perfect means bad, because perfect, diminishes creativity, it diminishes marketing. it diminishes all sorts of other opportunities that you have. But in the real estate market, especially in the residential real estate market, because commercial is more of a perfect market than residential. Okay. And that’s why I like housing for all the other reasons I always talk about, it’s the least perfect real estate market would be the single family home market, right and when it’s lost Perfect, you can apply more creativity to it. And you know, look, you’re all creative. I know you’re all brilliant because you regularly listen to my podcast. You know, dumb people don’t listen to the show, because, hey, they can’t keep up. So that’s the thing, the less perfect the market, the more creativity can be applied. And you’re all creative people. So use your creativity, in presenting your properties and so forth. And by the way, another random tip, I want you to make sure that you get on your computer, and you file things and name them so you can find them later. because trust me, you’re gonna need this one. When you buy your houses, especially the first time around, right, right when you buy it, get yourself a really good set of photographs of your house. Now, it would be great if you could throw in a virtual tour or videos, you know, taken with wide angle lenses and so forth. But hey, at the very least, you got to have some Good photos of ALL your rental properties, okay? And it’ll probably never look better than when you buy it when it’s just freshly rehabbed. Or it’s maybe even brand new. Okay, that’ll be the best time to get some good photos. There is a genre of photography called real estate photography. Okay, really? It is. Yeah, I know. I know. I know. Most people think photographers are always taking pictures of beautiful models and, you know, Victoria’s Secret or whatever, right? But no, there are actually real estate photographers, right. And they have, you know, nice wide angle lenses. So they make the rooms look big. It’s worth spending a couple hundred bucks to get some truly good photos of your properties. And you’re going to want these later. Okay, you are going to want them because someday you will maybe change property managers or you’ll be placing your own ad and doing self management and and you’ll be sticking your property on Craigslist. or one of the many rental sites and having those really good photos. You know, have these photos retouched. Have you know adjust the exposure, make sure the sun is on the right side of the house when the picture is taken. So there’s not a bunch of shadows. Use a little Photoshop creativity and just have a really good set of photos for your properties. This is an important thing. This is your investment portfolio. It’s your retirement portfolio. Get some good photos of all your properties. Okay, that’s my other random tip for the day. All right, hey, without further ado, because we are going along here, as always, Sean burns let’s get to him. Get your tickets for meet the masters. If you don’t have tickets already, grab a VIP upgrade. You know, we had several people upgrade today. Just today a bunch of people upgraded their tickets. So we’re glad to have you doing that. Get yourself a VIP upgrade again. Elite tickets are totally sold out. But VIP is still available. also enter the raffle to win a couple free tickets to at Jason urban comm slash contest. spine Oh, the domain name isn’t exactly what it is, it’s not a contest. You don’t have to do anything. Just go to the page and enter to win. And you might win a couple free tickets to and those are general admission tickets, by the way. So hey, we will look forward to seeing you all in La Jolla very soon. Let’s get to john burns and hear what he has to say before meet the masters. So you’ll get a little background on him in this interview. Here you go. It’s my pleasure to welcome john burns back to the show. He is a returning guest. He is founder and CEO of john Byrne’s real estate consulting, and his materials often discussed on our show, even when he’s not here. JOHN, welcome. We absolutely love all the research you do, and have talked about it many times on the show. So it’s great to have you here in person.
John Burns 16:51
Thanks, Jason. I always learn a lot from you as well. Yeah, well, welcome back.
Jason Hartman 16:55
We’re also excited to have you speaking at our upcoming meet the masters of income property event in La Jolla, California in January. So we can’t wait to hear what you have to say there. But let’s talk about some of the big stuff that’s going on out there in the marketplace. One thing that is in the news constantly and unless you have some inside information, I certainly don’t amazon.com is going to I’m going to set up a second campus, I guess cities around the country are vying for the opportunity to have them right.
John Burns 17:23
It’s gonna be very interesting to see how many cities submit I would not be surprised to see 100 it looks like there’s going to be two bids just from Orange County, California where I live and if he could pick a more business unfriendly state than California, I’d be surprised. So I don’t think we’re gonna get it
Jason Hartman 17:42
because it was moved to New York. Right. And that’d be just about California etiquette.
John Burns 17:47
Yeah, exactly. Exactly. My mind is on Denver for what it’s worth. So it is okay. Good.
Jason Hartman 17:53
Yeah. Good to know. Good to know. And you know, off tape when we were talking before we started the show today, you were talking about some of the Great growth markets being kind of in the middle of the country, the business friendly low regulation places do you want to kind of expand on that idea for the listeners.
John Burns 18:08
So the coasts have gotten just way too expensive. And young adults call them millennials, if you will, are looking for affordable fun places to live and they’re finding Denver, Austin, Dallas, I think Phoenix is finally making a comeback to Nashville. These are the hot growth markets. I’m sure they’re all at the top of Amazon’s list if they’ve got a good airport. That’s the other thing is that good airport is critical. I pro growth governor may sound silly but I think there’s an element of truth to it, legalizing marijuana and Colorado A few years ago, it wasn’t just about the marijuana it was sending a message that hey, we’re accepting of this type of lifestyle and the young adult growth there has just been unbelievable.
Jason Hartman 18:55
The marijuana things really quite fascinating. If you want your employees to be loyal lazy and stoned, come to a marijuana legal state, right?
John Burns 19:07
That’s exactly right. I’m not sure there’s good jobs or testing for that. Yeah, it’s it’s interesting,
Jason Hartman 19:13
but I guess it makes people a little more creative. So we’ll give them that for sure. The more creative class type people, you know, all of those cities that you mentioned, you know, are cities that we have done business in at one point, and they all kind of got a little too expensive for us to recommend to investors, just as yield, you know, cashflow oriented investors. And we’ve talked about this before john, but we generally classify things into kind of three types of markets that the linear markets, the hybrid markets, and the cyclical markets. Of course, you live in Orange County, still, I used to live there for many years. And I call that a cyclical market, you know, any of the expensive markets are cyclical, and, and then the hybrid in the linear type markets. And I would call all of those markets that you mentioned, hybrid markets, and you know, where they’re at They’re kind of in between the two. They’re not crazy cyclical, like South Florida, for example, totally cyclical, kind of in between the two. Do you classify things that way at all? And next I want to go to demographics because you I think, do a better job classifying the cohorts than the millennial, baby boomer or Gen X concept.
John Burns 20:19
Yeah, we’ve got five classifications for us. I don’t remember them all off the top of my head, but maybe let me expand a little bit. So what you’re calling cyclical is the expensive markets right that there’s so supply constrained that they have a couple years of surging demand, they can’t meet it and prices go through the roof and the minute we have a recession prices crater. There’s another type of cycle I look at though, which is the markets that can really ramp up and supply and I would put the Texas markets there that historically, they don’t cycle because they get too expensive. They cycle because there’s so much supply being built and then there’s a recession they get crushed. I like to break the cyclical markets up into two pieces, one that cycle based on price and the other cycle based on brand new construction, if you will, right. And so in
Jason Hartman 21:05
other words, what you’re saying there is the ability to meet the supply demands quickly. In other words, where there’s a very pro growth attitude, limited zoning, Houston is probably the poster child for this. Remember back in the old days, the billboard was the last person to leave Houston, please turn out the lights during the, you know, when it was a very oil based economy. It’s more diversified Now, fortunately, but the markets that are cyclical can’t meet the supply demand when there’s an upsurge. Right, right.
John Burns 21:34
Yeah, right. And that’s why prices go through the roof. Yeah, right. And interestingly, a lot of people aren’t aware of this. Houston went through a oversupply cycle earlier this year, the apartment market completely overbuilt. They were giving away two months of free rent. And then the hurricane came along and wiped out all the units and they all got occupied. Yeah, right. So I mean, we’ve had a very recent example of even a market like Houston getting overbuilt.
Jason Hartman 21:59
Mm. Very interesting. Very interesting. Okay. Hopefully we’ll have time to talk about apartments and millennia. Well
John Burns 22:05
finish your day your thought on the different types of markets if you went Sorry about that. That’s okay. So and then the linear markets I’m guessing you’re the ones that you’re considering just steady Eddie never get overheated never really crashed. And and that’s most of the country and that’s, that’s some of the markets you were describing to me earlier that you’ve been looking at Memphis and Oklahoma City and Indianapolis and Little Rock. Those are linear markets. And then I think your definition of hybrid is a good one. For some of the markets I mentioned, like Austin and Denver in Dallas historically, well, at least Austin and Denver historically don’t get over supplied or get too expensive. But in this cycle they have because there was so much job growth that even the relative the market being relatively easy to supply new construction, there’s been more than enough demand for all of it. Austin is approaching an all time high in home prices. In relation to income, there’s a lot of markets that are getting up there with payments in relation to income but price in relation to income that’s pretty rare on a four interest rate environment. So I would agree with you that Austin has best days are behind it from a price appreciation standpoint, I think. Yeah,
Jason Hartman 23:16
yeah. Interesting. So you talked about Houston and how the apartments got overbuilt. I remember, you know, just what, five six years ago it seemed like there were cranes everywhere building apartments, just every city I visit and I’m constantly traveling around the country. I have we over built apartments yet, or is the demand still there and apartment dwellers?
John Burns 23:37
There’s about 12 cities and really in the city itself, where all the construction seems to have been gone on and almost all of those markets, and I was gonna say except Seattle, although it’s Seattle starting to roll over a little bit right now to got overbuilt, and it’s not just over built in terms of numbers by the time they came to market with the construction costing They’ve seen they were really pushing rents and targeting just a very few affluent folks. Those sub markets are overbuilt and they were driven by pension fund capital, who said, you know, I’m not going to get fired by building in Seattle or San Francisco or Dallas. I see the world shifting right now more towards suburban apartments being driven by more local money instead of big institutional money. And there’s plenty of demand for those so that I don’t think the apartment market is over built nationally very much, but those certain sub markets they are right, right.
Jason Hartman 24:33
Okay. Now, what about the housing market? And before you answer, it all depends on the type of homes builders are building. Now, this is just an anecdotal observation, correct me if I’m wrong, but it feels like builders haven’t been building on this side of the cycle. I mean, before the Great Recession, it seemed like there were a lot of entry level homes and the reason I know this is because investors bought a lot of them. Our clients bought a lot of them. We used to sell properties for Dr. Horton and polti. And you know, all the big builders like crazy. And this time around, it seems like they’re just not building as much in the entry level category. Is that true? Is that like, factually, or is that just my perception?
John Burns 25:16
That’s very true. It’s starting to shift, though. So what has changed is that, first of all, their costs have gone through the roof. And it’s more at the local level than anything else that they could build a $300,000 home in California or a $200,000. home in Vegas where you live, they would and sell it, possibly they would, they just can’t. So that’s been Problem number one. The second thing is the demographics for the last 10 years have been a huge growth of the number of people in the country aged in their 20s who are also delaying marriage and childbirth. So we saw I think it was 5 million more people from 2005 to 2015 in that demographic, and hey, you want to live close to work. You want to live close to find stuff to do. The affordable housing is in the outlying areas. But what is shifting now is that demographic growth, which there was very little growth of people in the 30s, is now changing. And we’re seeing those millennials who are going urban, now starting families and having kids and starting to commute. And the builders have responded to that by starting to move to the excerpts and building more affordable homes in their building closer in, but it’s really difficult to bring it at the price points that they’d like to. So they may be they’re charged 250 grand and when the heart of the market should be 200.
Jason Hartman 26:37
Yeah, very interesting. You just reminded me, I gave a talk to a group of developers recently and I actually quoted you, because I quoted your word serban. Guess you made that one up, and then it’s a great word. Tell us what Serbian means.
John Burns 26:53
Yeah, so we did trademark it even but anyone’s Welcome to use it. The government’s in big cities and put so much money into redeveloping their urban areas the last 20 or 30 years that that was one of the reasons why urban is really revitalized. And the suburbs have now said, Hey, we’d like some of that in our city. So when I got into this business suburbs, were saying, Give me as few homes as possible on a beta lot as possible. And now the cities are saying the exact opposite. I want a lot of density close to my urban core, I want to redevelop our old downtown. And that’s Believe it or not, that’s where a lot of people want to go. It’s if you’re a young couple, you’re close to stuff to do, and you’re in a good school district, and it’s more affordable than an urban area. So it’s bringing the best of urban to the suburbs. The other thing we’ve noticed is a lot of empty nesters. homeowners are actually selling their homes and choosing to rent for a while and that’s very popular with them to Hey, let’s go rent and a new apartment complex near downtown. And we’ve been doing a lot of feasibility on that. For the last seven or eight years,
Jason Hartman 28:02
very interesting. So I want to ask you to kind of correct the perceptions and clarify them on the generational cohorts. Because your book divides them based on the decade that are born which is more exacting than these kind of we all throw around millennial, you know, Gen Y, baby boomers, Gen X ima Gen X, or tell us about the demographics. And then I want to ask you how they’re acting and who’s most impactful in the housing market?
John Burns 28:29
Yes. So there are times when you can make a generalization about millennials but you have to remember that Mark Zuckerberg who’s 33 years old is a millennial and my daughter, Kelsey, who’s a senior in high school as a millennial. So if you’re going to be talking about housing, they’re in kind of different stages of their life.
Jason Hartman 28:46
Certainly, certainly with the money
John Burns 28:50
and definitely with the money. So we broke the generations down by decade born because everybody relates to their decade they relate to their high school class, and you’re comparing nice 10 year periods. That was some of this other problems as you’re comparing Gen X to millennials and 117 years long, and the other is 19. In fact, people don’t even agree on how long they are. Right? Everybody knows along a decade is plus 13% of the country was born in another country. And a lot of that discussion is about American born, folks. But you’re leaving out one sixth of the population when you do that. So we’re looking at the country when were you born? And when we did that one of the biggest findings as each decade from the 1950s through now is 40 to 44 million in size. There’s really not much of a boom in a Boston echo boom anymore because immigration filled in that gap of people that are now aged in their 30s and 40s.
Jason Hartman 29:47
I agree with you doing it by decade you’re born it’s much easier and they I mean, are they gonna act a lot differently, like you gave the example of your daughter who’s a senior in high school versus a 33 year old. They’re both Millennials great point, how much different will they act? Or how much different will their housing choices be?
John Burns 30:06
This really helped me figure out the answer to that question. Because what happens to you when you’re a young kid and a teenager and what happens to you when you graduate from school and get your first job, really impact your behavior later in life? we documented this going all the way back to the group born in the 1930s. So Warren Buffett’s generation born in the 1930s, was born into the Great Depression, and had food rationing during World War Two his kids, they did not borrow a lot of money. They were Savers, they got to an 80% homeownership rate. Fast forward to kids born in the 90s and 2000s. They saw what happens when you have too much debt to their parents and their friend’s parents. And they’re using debit cards today, not credit cards, they’re afraid of debt. And there’s plenty of similarities I can draw here, but looking at what happens to you early in your life. I definitely impacts your attitude moving forward.
Jason Hartman 31:03
I would totally agree with you when it comes to whatever but he calls the millennials who are now in the older end of the millennial spectrum, who were teenagers. It’s arguably the most impressionable point in their life when they saw their parents get burned in the housing market. I mean, to me that says, These people aren’t like running out to buy a house. Of course, there’s a ton of other factors. They have giant student loan debt, they have a mortgage that they didn’t get a house with, and that’s their student loan. As I always say the best thing you can have on a resume for jobs is mobility. I think their whole view of life is like a much more portable world. Everything is smaller and more compact and more portable. Look at the computers and all of our pockets. They’re in the like the sharing economy era, you know, they’re they ride share. A lot of them don’t care about having a car anymore. You know, they use Airbnb. They just have a much more portable view of life. Don’t pay.
John Burns 32:00
We nicknamed I was born in the 1980s the shares because they’re the ones who invented the sharing economy, all these disruptors and all these unicorns seemed to be the kids born in the 1980s. And they were the ones who are told, go get a college degree, and you’re gonna be fine. They got their college degree, and then they ended up with a retail job for six years because the economy was terrible. So of course, they got started later in life. But I actually think that group is extremely resilient. They’re starting a lot of companies, they’re disrupting a lot of businesses. There’s been a lot of bad mouthing of them for living with their parents. But if you do the consumer research, we’re doing both and our parents are saying, Hey, this is financially smart. With mom and dad. It’s not so much that they’re a deadbeat. And I should say that the GDP growth during their lifetimes, is half of what it was for those born during the 1930s and 1940s. How are you going to blame that on them? Yeah, they’re just get smart.
Jason Hartman 32:56
You know, very, very interesting. Okay, good, good stuff. JOHN, are there any questions? I have ask you any any things that you’d like to share with our listeners, before we wrap it up? I’ll handle one more decade if you don’t mind.
John Burns 33:05
I think this may resonate. So you talked about the foreclosure distress. So those born in the 1970s, who are now 38 to 47 years old are supposed to be in their peak spending years in the heart of our economy. So what was happening to them in the early 2000s, they were in their 20s. And they were having kids and they were starting families and mortgage credit was really easy. So at their 10 year high school reunion, they had the highest homeownership rate ever, of any group at their 10 year high school reunion at their 20 year high school reunion. They are 10% behind prior generations. That’s the group that just got crushed during the Great Recession. And that’s one of the reasons why I don’t think the economy is coming back as strong as because that group who should be our big spenders
Jason Hartman 33:52
got crushed. And I agree with that. I think the wildcard is maybe the inheritance issue, right? I mean, eventually they’re going to inherit some money from They’re there, folks. That almost impossible to calculate or equate? I don’t know.
John Burns 34:06
I think it’s true. But when do your parents pass away? Yeah. Yeah. You’ll get it in your late 50s, early 60s. But maybe there is a cushion there at some point, but they don’t have the money to spend today. Yeah,
Jason Hartman 34:18
right. Yeah. Interesting. Interesting stuff. Well, good stuff. You know, I really enjoyed the report that you did on the self driving cars and otherwise known as autonomous vehicles. I think that’s a pretty big game changer for real estate values. I don’t know if you agree, but it seems to me like the three primary value drivers that have been with us since the beginning of time even from cave days, right? location, location, location, if transportation becomes easier, and cheaper, at least in time, if not money, is that gonna put downward pressure on the most well located properties and maybe some upward demand? The properties that aren’t as well located I mean, the three blocks around your house that matters for sure, because that’s the walkable portion. But I don’t know, if you have a 45 minute commute versus a 60 minute commute doesn’t matter that much if you’re not
John Burns 35:13
doing the driving. So that’s what I initially thought till we started doing a lot of research and thinking about it. So you’re absolutely right, that a 45 minute commute will be a lot easier. However, the other big change here is that we’re not going to need all these parking lots. And they’re in great locations. And I agree with you, and Amazon is totally disrupting retail. So we’re not going to see a lot of I think we’re going to see a lot fewer retail centers to Yeah, so what I think is going to happen is we’re going to see a lot more opportunities to live close in that will still be more expensive than living in an outlying area. But I’m willing to bet that there’s gonna be more demand to live closer and, and what you say will come true, but just not right away. They’ll take a little bit longer.
Jason Hartman 35:58
Yeah, that’s an interesting Point In fact, I remember reading I’ve talked about that before that like the typical city has 40% of its land covered by parking spaces right? And I don’t know what the real number is that’s the number I just remember. Maybe you have a real number but you know if the cars are truly on demand and not owned cars if they’re all sharing, you know, ride share, well, not even ride share, but you know, self driving car share, picks you up, and the cars never have to really stop moving and they never have to park they can just run 24 seven, pretty much boy you know, everybody’s garage and driveway in the suburbs becomes an extra room, maybe a den or something. The city’s the parking lots, the parking spaces, the streets get wider. I don’t know there’s a lot of implications aren’t there. We’ll be able to use the driveways for other things, but there’s a lot of implications here. I was just in San Antonio, and some With the city told me more than 50% of downtown San Antonio was parking. So there’s a stat proving You’re right. Yeah, that’s that’s super. I mean, it takes a long time to make those changes, though things move surprisingly slowly when it comes to rezoning things and entitlements. And but you know, these big box retail centers, I mean, Wow, that’s a lot, a lot of real estate there that can be reused for something else. Right.
John Burns 37:25
Right. And there’s a lot of people looking at that right now. And I think that those radial retail centers are the ones that cities are going to want to be redeveloped into serban housing. So I think this serban term is really going to take off
Jason Hartman 37:37
now. Yeah, I think so too. Good stuff. JOHN, give out your website,
John Burns 37:40
real estate consulting.com.
Jason Hartman 37:42
And where can people get the book, of course, the name of the book, and you know,
John Burns 37:46
where they should get it. The name of the book is big shifts ahead, and it’s available on all the internet sites, Amazon would be the most obvious one.
Jason Hartman 37:53
Excellent, excellent, good stuff. Well, john burns, john Byrne’s real estate consulting, thank you so much for joining us today.
John Burns 37:58
You’re welcome.
Jason Hartman 38:01
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