The topic of identity theft was covered in the previous episode of the Creating Wealth podcast, and Jason Hartman added to it in this episode by covering one of the scariest companies in the world and how the Facebook data mining process works in ways that users don’t notice. The company has access to everything on user smartphones and PCs from photos, text records, call logs, and even PC storage.

He then interviewed Chief Economist at Windermere Real Estate, Matthew Gardner. The two discussed the macro US economy, the inventory shortage, the Millennial generation and their quest to become homeowners, as well as ways to lower home prices in the regulatory sector.

Give Credit Where it is Due

Jason Hartman greets listeners by thanking them for joining in the midst of a historic and unfairly-covered story. He explains that he has received several messages from people requesting that he stop bashing President Trump. He adds that he will try and admits that he’s better than the criminal syndicate that the Clinton Administration ran for years.

Recently, Trump has accomplished something that no other US president has, and Hartman wonders aloud if he’s looking at a Nobel Prize for ending the Cold War with North Korea. Perhaps he’s being too optimistic, he says, but it’s truly amazing that he accomplished the summit with North Korea.

Hartman adds that the leftist, Marxist media is doing all they can to find every fault with the summit they can. He states that he doesn’t care about being partisan and whether you’re a Trump fan or not, it doesn’t matter. He recalls a quote by Voltaire stating,

I may not agree with what you say, but I’ll defend to the death your right to say it.”

The left media is run by George Soros and his gang, who want to completely control and govern the “little people” and they can’t bother to find anything nice to say for the accomplishment.

Hartman explains that if former-President Obama would have accomplished the summit, he might have had to sell the US down the river to get it. With Trump, he adds that he doesn’t feel like he’s in danger. The President did write the book, The Art of the Deal. He’s a deal maker.

Hardman adds that maybe the next summit will be with Iran.

More on Identity Theft

Hartman explains that he will be interviewing an economist on the show today. Though he’s a real estate economist from Seattle, in the high-flying cyclical market, he had a fascinating interview.

Before that, he mentions that he wants to revisit the topic of identity theft covered in the previous episode. He states that it’s the new criminal win-fall, and it’s a big thing going on.

He recalls that one of his companies had an incident years ago, and states that someone with access to the building, maybe the cleaning service, likely found one of his checks in the office. That someone copied the check and went to a bank in Southern California, either Fresno or Bakersfield, in an attempt to cash it.

Hartman states that he received a call from a detective in the area, and the man told him not to trust that he was a detective, and instead instructed him to look up the phone number of the police station in the city and call him there. Hartman followed the detective’s directions, called the station, and the detective explained to him that someone went into a bank in their area with one of Hartman’s checks made out for $4800, and the teller became suspicious. They refused to cash the check and followed the person outside, who fled the scene right afterward.

Hartman adds that he was asked about whether he wrote it, and he explained to the detective that he didn’t. These incidents aren’t uncommon. The chances of being mugged or having your house robbed have lowered because we’re alert now. Identity theft is the next big threat.

Facebook Data Mining Process

Hartman mentions that he has talked several times about two of the scariest companies in the world, Google and Facebook, adding that Monsanto was another scary one until they were bought up by Bayer. He cites a recent Business Insider article, entitled Facebook is Tracking You in Ways You Never Knew, and adds that Zuckerberg is not the kind of person who should be trusted. He flaunts his abuse of privacy constantly.

He states that Libertarians will likely just advise people not to use Facebook, but good luck with that, he says. Facebook is a global conglomerate like Starbucks. It’s everywhere.

He explains that he considers himself a Libertarian as well, but he’s one who has sense.

According to the article, the Facebook data mining process records your mouse movements, and they state that it’s to ensure that users are not robots. Facebook monitors whether the browser is in the foreground or background, collects your battery levels, the signal strength of your internet connection, and the available storage on your PC. They know what operating systems users have, plugins, data, mobile operators, IP address, cookies, time zones, download speed.

In some cases, Facebook monitors devices around you or those sharing your network. They know Bluetooth signals, GPS locations, photos, camera use, call longs, and text history. They’re also able to check past purchases from third parties, games you’ve played, your apps, and accounts.

Hartman states that Facebook may very well be scarier than Google.

Upcoming Event

Hartman reminds listeners not to plan for a tropical vacation because he has a brand new two-day conference that will be held in a tropical location during the first week of November. Stay tuned for details on that in future episodes.

What’s Going on in the Macro-Economy?

Hartman welcomes to the show Matthew Gardner, the Chief Economist at Windermere Real Estate.

When asked about his views on how the US is doing in general, Gardner states that a couple of years ago, he mentioned that he expected another recession around the end of 2019 or the beginning of 2020. He adds that he’s sticking to it for now and that a few fellow economists are jumping onboard. The US is due for another recession, but it’s still a couple of years away.

Gardner also explains that his company is now in about ten states in the west with about 6,500 brokers in about 300 offices. They’re as far east as Denver, as far north as the Canadian border, and as far south as San Diego.

Hartman states that the Pacific rim places covered some of the higher end markets, but with so much expansion over the years, that might not be totally true anymore. He asks if Gardner views the markets in terms of cyclical, linear, or hybrid categories.

Gardner agrees that yes, he mostly looks at the markets in that sense and adds that if you look at the western states, they’re doing well. The offices in Colorado and Utah are doing well, and those farther west are getting more buoyant. He adds that, to a degree, his company is in the boom/bust markets. Utah seems resilient when it comes to town turns.

Hartman mentions the shortage of inventory and states that new home builders were building entry-level housing before the recession hit and continued into the crash a bit. Now, they don’t seem to be building for that market anymore, and instead, they’re building higher-priced housing. The cost of construction has also gone up.

New Home Development and Home Prices in the Regulatory Sector

Gardner explains that he is asked about that topic quite often. It’s easy to ask why, if we have the pent-up demand that we do, why builders are not creating more homes. He states that it’s important to look at the four corners of building: land, labor, materials, and regulation. When it comes to land, there are a lot of geological regulations, meaning that there’s a limit to urban development and places that people can or cannot use for building. There has also been a big push up in the cost of land.

As for labor, there are a lot of workers that were building before the recession. When the market crashed, the left the market and have not come back. On top of that, the immigration reforms have caused a retraction in people who are able to work. This makes prices higher. Materials work the same way, increasing in price at about half a percent a month.

Regulatory costs, Gardner explains, count for 25% of the price of building or buying a new home.

Hartman points out how shocking this is. He explains to listeners that if they purchased a $400,000 home, then $100,000 of that price went to covering regulations like OSHA and environmental requirements.

Imagine a builder who’s looking to make a development, Gardner explains. The builder is going to throw in the costs, and his figures will spit out a number, a number telling the developer what he needs to sell houses for in order to make money. If that number is $600,000 but market acceptance is only at $400,000, the builder is not going to begin that venture.

As of now, the US is only building around 900,000 single-family homes per year, which is short about 200,000 needed to keep up with demand. Development is not coming close to what’s needed. In addition, the builders are not venturing into where there is a robust demand, first-time buyers. Not only is new housing expensive, it isn’t following what the market wants.

Gardner states that its hard to take the price off the land, because the seller names what price he wants to achieve from the sale and if he doesn’t get it, he doesn’t sell. The same issue arises with labor and materials. As of now, all we can do is look at regulatory costs and find ways to get them reduced. It isn’t an easy solution but at some point, people can’t simply be told to fix the problem when regulation is a big part of it.

Hartman adds that the regulations are mostly on local levels, and the cost of regulation for lumber or concrete isn’t being included. This is state or city regulations.

Gardner gives the example of permit fees, water, and sewer.

Millennials are Having a Tough Time Saving for Down Payment

facebook data mining processHartman states that millennials are the largest cohort in US history and that they’re thus far different from other groups, like the Baby Boomers, Generation X, or the Matures.

Millennials are delaying the purchase of homes or starting families, often because of their huge student loan burdens. It’s a large generation, so even having some out of the 80 million buying homes makes an impact.

Gardner adds that they’re the largest generation by 5 million strong and that they’re an interesting demographic to look at. The oldest of the generation are now in their mid-thirties and some are buying homes. Many are lumbered with debt, as the student loan balance is around $1.5 trillion, compared to national credit card debt at $850 billion.

It’s also important to note that bankruptcy doesn’t forgive student loan debt. Many millennials are having a hard time saving up for a down payment, and 25% are still dependent on their parents for down payment assistance. In past decades, families tapped into the equity lines in their homes, and now they’re less likely to do so. In high-flying markets, millennials don’t know whether to make rent or save up for a down payment. They’re often forced to be renters.

68% of the millennial generation want to buy homes, but 74% believe that they can’t qualify for a mortgage.

Millennials Want to Live in the Exurbs

Hartman mentions a time that a millennial friend of his texted him about her money trouble and mentioned that “adulting” was difficult.

Gardner agrees that it certainly is remarkably hard. What’s interesting is, millennials want to move out of apartments, but they don’t want to move into the suburbs. They want to move into the exurbs, to where they have one foot in the city. Unfortunately, those homes are not affordable, and the cost of living is almost forcing them out farther. Builders are just not building for market demand.