399: Interest Rate Shock: What It Means For The Housing Market with Eric Basmajian, EPB Macro Research


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Jason Hartman welcomes Eric Basmajian, economic analyst and founder of EPB Macro Research. Jason and Eric discuss the rapid decline in real personal income and standard of living, how the rate shock will filter through to the housing market and much more. Eric also talks about the single most important variable to understand where the next 10 years of the real estate market are going and the four corners of an economy: income, consumption, employment and production.

How far do our dollars actually go and how do we measure the standard of living in real terms? Eric looks for inflection points in long term economic cycles, what he calls secular economic trends, and cyclical trends to better position people for what's on the other side. We now have a rate shock being pushed onto the private sector which will cause a lot of problems as it filters through to the housing sector. So if you have no new home sales, or no new construction, and you have no existing home sales, how is that going to impact employment in the construction sector? How is that going to impact hours worked or hourly earnings in the construction sector? And as higher costs are being pushed onto the private sector, whether it's construction, food or gas prices, we're seeing a rapid decline in real personal income.

Eric Basmajian is an economic analyst providing research on the most critical secular and cyclical economic trends impacting interest rates and asset prices.

Learn about Eric's secular and cyclical framework: https://www.epbmacroresearch.com/

Key Takeaways:

0:00 Welcome Eric Basmajian, founder of EPB Macro Research

1:12 The Fed and increasing rates - did they panic?

5:26 Are we in for a 30 year housing shortage?

8:36 Homes for sale and permits for new construction

10:53 Higher costs pushed onto the private sector

13:35 As private borrowing rates increase, result will be a huge pullback in spending

15:29 Savings rate has come down substantially

16:45 The Consumer Price Index is understated

18:46 Almost no first time buyer market anymore

21:19 Working age demographics around the world

25:45 Secular economic trend predictions for the next 3-5+ years

26:42 Transfer of wealth from baby boomers to millennials

29:33 The single most important variable to understand where the next 10 years of the real estate market are going

33:17 The demand curve is set by those demographics

35:27 Immigration can help the demographic curve

37:05 Four corners of the economy: income, consumption, employment and production

38:43 Increasing talk of recession

41:39 We live in a centrally planned economy

44:18 Learn about Eric's secular and cyclical framework: https://www.epbmacroresearch.com/

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380 episodes