The Current Economy with Attorney, Author, and Professor of Economics Howard Yaruss

This article is transcribed from Episode 42 of The Accidental Landlord. Listen to the full episode here.

Today we have Howard Yaruss with us. Yaruss is an attorney, author and professor of economics at NYU. He recently published his first book Understandable Economics. Could you give us a brief introduction about yourself?

I’ve been teaching at a few schools, most recently at NYU. Currently, I teach Economics. You're right - I just recently published a book called Understandable Economics. it's published by Prometheus books and it's available on Amazon and everywhere. 

I think it is amazing, having an expert like yourself who knows about economics and what the data points mean. It’s valuable because the average accidental landlord that our show focuses on, the economic data can be overwhelming. 

I always tell my students that the biggest factor in real estate is the economy. There’s nothing that affects the real estate market more than the economy. So, it's very important for people involved in real estate to have a good sense of how the economy operates in order to say farewell to their investments. 

The problem that I see is there’s so much conflicting information out there right now. How do you suggest people to select their sources and make a plan out of that information?

I don’t want to sound too provocative but my best advice is to ignore everything. Frankly, nobody knows what is going to happen. If people actually knew what was going to happen in the economy they would not be spending time talking about it, they would be out there investing billions of dollars.

No one knows for sure what is going to happen, but we do know a few things. One, they are not making more real estate, real estate is something that is pretty much fixed. Number two, overtime the economy grows, it may not grow every year, but overtime on average it clearly grows. You put these things together and you can get pretty good prospects for real estate.

Real estate has been traditionally a great henge for inflation, which we are seeing now for the very first time after decades. So, there are going to be ups and downs, but you have to take the long perspective. Again, buying now is a tough time, interest rates are high, but I’ll say this: they are temporarily high. They are high because the government has put its foot on the brake. Eventually, its going to take it off the break and we will see lower  interest rates that will lower to a normal level. We are experiencing a temporary increase in interest rates, nobody says they will be permanent, over the long haul the prospects on real estate will look great. 

What are considered normal market fluctuations?

Right now I think  this time is different. When you look back there is a certain pattern, the pandemic does not fit into the normal range. This is not the best time, the phenomena wasn’t just the Pandemic, we experienced a war in Ukraine, there were a lot of factors that took a turn in the real estate market and the economy. However, these phenomena will not be permanent. Eventually everything will go back to normal. This is a relatively bad patch that we are going through.

What do you think the next six months will look like?

I think that we are going to see the government take their foot off the brake in the next six months, but I think we've gotten a few bad data points on inflation in the past few weeks. We are definitely going to see it, and this is not a question of if it’s a question of when. I think we are probably going to see it a lot sooner than most people think. 

You mentioned a couple of bad data points of inflations, can you expand more on that?

The fact that inflation is still very significant when they come out with the new inflation numbers on a monthly basis. There’s a slight turn in inflation but is not significant. 

If you want to keep learning about inflation and what the economy will look like listen to the complete episode here.