Speaker 1: Welcome to the Bloomberg p m L Podcast. I'm pim Fox.
Speaker 1: Along with my co host Lisa A. Bramowitz. Each day
Speaker 1: we bring you the most important, noteworthy, and useful interviews
Speaker 1: for you and your money, whether you're at the grocery
Speaker 1: store or the trading floor. Find the Bloomberg p m
Speaker 1: L Podcast on Apple Podcasts, SoundCloud, and Bloomberg dot Com. Well,
Speaker 1: let's sa turn our attention now to climate change and
Speaker 1: its real world implications. Christopher Flavel is our climate policy
Speaker 1: reporter for Bloomberg, and Christopher, thank you for being with me.
Speaker 1: Tell us the story about those people who live in
Speaker 1: certain areas of Louisiana. They're packing up because of the
Speaker 1: changes wrought by climate change. Yeah, and thanks for me
Speaker 1: on the show. Pin. Louise Ana has for a few
Speaker 1: years been the leader in the US in terms of
Speaker 1: dealing with climate change, not because it wants to, because
Speaker 1: it has to. It's land is sinking faster than anywhere
Speaker 1: else in the country, and so their force with these
Speaker 1: really in some cases radical ideas. There's a huge swath
Speaker 1: of Louisiana around the delta of the Mississippi River where
Speaker 1: land is sinking so fast and the sea is rising
Speaker 1: so fast that people have to struggle with flooding almost
Speaker 1: all the time. As a result, the state is trying
Speaker 1: to figure out how and when to move people out
Speaker 1: of those areas, and even more radical, and no one
Speaker 1: else doing this, how to figure out to ensure that
Speaker 1: no one else moves back in. No one, no other
Speaker 1: state that I'm aware of, is trying anything like this.
Speaker 1: Tell us about the money that's involved, because so we'll
Speaker 1: get to the individual stories in a second. But this
Speaker 1: costs money to do, and where does the money come from?
Speaker 1: So I think I think the approach in Louisiana is
Speaker 1: figure out their strategy first and then worry about money
Speaker 1: because it's a long term problem. And I think their
Speaker 1: idea is the cost of inaction would be huge as well,
Speaker 1: So the assumptions they'll find the money, I think that's
Speaker 1: probably true. There'll be a mix of federal funding. It's
Speaker 1: federal funding that that started the program that I was
Speaker 1: writing about, the l A Safe program. They're also getting
Speaker 1: money still from the BP oil spill. And look, Luisa's
Speaker 1: an argument is is they get so much federal disaster
Speaker 1: money from FEMA after hurricanes and from HUD that instead
Speaker 1: of using that money to keep on trying to rebuild
Speaker 1: people's lives where they are, it makes more sense to
Speaker 1: move them out of harm's way. That's a that's sort
Speaker 1: of a cliche. You hear that all around the country,
Speaker 1: especially after this year's hurricane season. Louisiana is really trying
Speaker 1: to make good on that, and say, what would it
Speaker 1: mean on a broad scale? Uh, not just rebuilding in
Speaker 1: different parts of the neighborhood, but really rebuilding miles away
Speaker 1: from where you were and emptying out entire swaths of
Speaker 1: the state. How many people would uh this effect? You
Speaker 1: have any idea? Yeah, I put that question to the
Speaker 1: state officials behind this program. The amount of land they're
Speaker 1: looking at is is enormous. It's it's bigger than Delaware
Speaker 1: and Rhode Island. Uh. And the number of people who
Speaker 1: live on that land, they guess is about sixty people.
Speaker 1: Now they are only looking, at least right now, at
Speaker 1: trying to move those who live outside of the levee system.
Speaker 1: And they don't know what share of that wouldn't be
Speaker 1: in that category will be outside of the levees. It
Speaker 1: could be it could be a few thousand, it could
Speaker 1: be tens of thousands. Um, but you know what, no
Speaker 1: one has tried anything on that scale. So even if
Speaker 1: it's just a thousand people, that would be just a
Speaker 1: groundbreaking idea. And the big question is going to be
Speaker 1: how much pushback will they get where But they get
Speaker 1: the pushback from the individuals, the people who are actually
Speaker 1: going to be displaced. To my great surprise, being down
Speaker 1: there a few days this week and talking to people
Speaker 1: in these areas, I got a pretty strong sense the
Speaker 1: people who who the state is trying to help, they
Speaker 1: realize what's going on. They are not in denial. They
Speaker 1: know that the flooding risk is so bad they're going
Speaker 1: to have to move eventually. Hate the pushback might come
Speaker 1: from developers who probably are aware likewise that in Louisiana's
Speaker 1: is real, but might be concerned about a precedent. It's
Speaker 1: one thing if Louisiana does this. If other states facing
Speaker 1: similar flood risk and is a lot of them start
Speaker 1: saying which parts of our geography should we declare off
Speaker 1: limits to new development, that could be a real issue
Speaker 1: for developers, for realtors, for for commercial industries that want
Speaker 1: to locate here. So I think they'll be wondering, like
Speaker 1: the rest of us. How far will this go? Christopher
Speaker 1: is the is the unintended consequence of hurricanes and flooding
Speaker 1: that people become more aware of whatever the reason for
Speaker 1: these catastrophes, their catastrophies that are going to ruin their lives,
Speaker 1: their property, and as a result, they are more inclined
Speaker 1: to go along with the idea to move out. Yeah.
Speaker 1: I think definitely there's a there's some sort of relationship
Speaker 1: between people being repeatedly hit by these disasters and being
Speaker 1: open to more and more um far reaching solutions. It's
Speaker 1: not a straight line. Often after one big event, people
Speaker 1: will say it happened once, it probably won't happen again.
Speaker 1: But after enough repeated disasters, my reporting says there's a
Speaker 1: real shift and what people are willing to accept and
Speaker 1: in what local officials are willing to endorse. A plan
Speaker 1: that might work in Louisiana would for the moment, be
Speaker 1: a really really tough sell in California or Maryland, or
Speaker 1: Virginia or New York State. But as time goes on
Speaker 1: and Louisiana looks less like an outlier uh and more
Speaker 1: like our future, I think there'll be more appetite to say,
Speaker 1: is it working there? In Louisiana, and if it is,
Speaker 1: should we try it where we are? Christopher, isn't there
Speaker 1: a federal designation that would allow people to apply for
Speaker 1: federal assistance if there was some kind of natural disaster,
Speaker 1: and that if that's taken away, that's just another push
Speaker 1: in the direction of leaving. Yeah, there's there. There's a
Speaker 1: designation um called the Under the Coastal Barrier Resources Act
Speaker 1: that was meant to protect areas that haven't been developed
Speaker 1: along the coast and keep them undeveloped. Louisiana saying let's
Speaker 1: apply that to areas that already have homes on them,
Speaker 1: which is a really radical idea, and it would say
Speaker 1: we are not going to help you if you're in trouble,
Speaker 1: so you better leave because if you don't, you'll be
Speaker 1: on your own. It's it's a really a very strong
Speaker 1: push for people to get out of these areas. Thanks
Speaker 1: very much, Christopher Flavelle, our climate policy reporter for Bloomberg,
Speaker 1: on how Louisiana is moving people out of areas that
Speaker 1: are ravaged by climate change. We've got something perhaps more
Speaker 1: were important, which is food. You can't exist without that.
Speaker 1: And Alan Stillman knows a lot about food and serving people.
Speaker 1: He is a restaurateur, is also the founder of Quality
Speaker 1: Branded Partners, and he may be better known as the
Speaker 1: founder of Smith and Wilenski, but he's also the founder
Speaker 1: of t G I. Friday's. Alan, thank you very much
Speaker 1: for coming into the studio. Let I want you to
Speaker 1: begin by telling the story of how you started in
Speaker 1: the business with t G I Friday's. Yeah. My relationship
Speaker 1: to the restaurant business walls exactly zero. But my relationship
Speaker 1: to having a beer on the way home was at
Speaker 1: least once a week. And us called our First Avenue
Speaker 1: in sixty three Street in Manhattan, had a bullet hole
Speaker 1: in the window, typical first avenue bar, And while drinking
Speaker 1: about beer, I said to the bartender, you know, there's
Speaker 1: an awful lot of young people that live in this area.
Speaker 1: You've got stewardess as, you've got models, you've got pilots.
Speaker 1: I wonder if you put some sort of on the
Speaker 1: floor and hung some Tiffany lights, would all those people
Speaker 1: come in here? And he said yeah, hey, yeah, and
Speaker 1: I walked away and walked out. I came back about
Speaker 1: ten days later and he said, hey, aren't you the
Speaker 1: guy that wanted to hang tipp and I said, I
Speaker 1: don't want to hang anything. I suggested it to you
Speaker 1: and he said, well, you ought to do it. I said,
Speaker 1: what do you mean. He said, well, why don't you
Speaker 1: do it? And I said, yeah, it's not a bad idea.
Speaker 1: I said, who was the owner of this corner place?
Speaker 1: He said, that's me, And fifteen minutes later I owned
Speaker 1: the bar and it was called the Good Tavern, and
Speaker 1: I immediately said, in my mind, I now need a name.
Speaker 1: And the name turned out to be t g I Fridays.
Speaker 1: And the rest of the story is as it is
Speaker 1: for about twelve units around the world today. And it's
Speaker 1: not as if this particular venture was your last, obviously,
Speaker 1: because you sold t g I Fridays and you decided
Speaker 1: you liked the business so much you're gonna expand even more.
Speaker 1: Tell us about how that went, like, actually expanded it
Speaker 1: while it was around in New York City, and I
Speaker 1: built uh ten or twelve of them around the country.
Speaker 1: But I also built Sundays, Monday's, Tuesdays, Wednesday. I was
Speaker 1: gonna say, you have an affinity for days of the week,
Speaker 1: and yeah. Then then I got out of the business
Speaker 1: for a while and left those I still owned it,
Speaker 1: but I wanted I lived over the South France and
Speaker 1: that was great. Six months I had gotten married and
Speaker 1: I had our four year old with us, and we
Speaker 1: had a very good time. But I also then learned
Speaker 1: about food and wine, and coming back to New York City,
Speaker 1: I put the two together because I didn't know that
Speaker 1: much about the food end of it, but I did
Speaker 1: learn a lot about wine. And I discovered that all
Speaker 1: the steakhouses in New York City were terrific steakhouses, and
Speaker 1: they were the best in the world, but none of
Speaker 1: them had wine lists. You'd walk in and they'd say,
Speaker 1: what would you like red or white? And it would
Speaker 1: come into tumbler and I said, you know, it doesn't
Speaker 1: really fit for a glass of great red wine they had.
Speaker 1: Don't change that. So I just I was going to
Speaker 1: open up baby steakhouse, and luckily enough, there was a
Speaker 1: big recession. I bought the corner of forty nine Street
Speaker 1: and Third Avenue, and we still in the corner of
Speaker 1: forty nine and third Avenue and Smith. Wilenski is now
Speaker 1: forty years old this year. Happy birthday, congratulators. Much forty
Speaker 1: year old restaurants don't exist very often it's a good
Speaker 1: thing to have and went from there. What do you
Speaker 1: believe to be one of the biggest differences from when
Speaker 1: you started Smith of Wilenski's and the way it operates now. Well,
Speaker 1: certainly wine, because almost every great steakhouse has a good
Speaker 1: to great wine list, and I believe that people associate
Speaker 1: great red wine with great red meat, and that never happened.
Speaker 1: Forty years ago, there was no such thing. So I
Speaker 1: think that's a very very big difference. And I didn't
Speaker 1: you start National Wine Week? Yes? I did National And
Speaker 1: I remember there was a story about you actually transporting
Speaker 1: something like a million dollars worth of line in a
Speaker 1: Brinx armored truck. Yes, we did that too. Well, we
Speaker 1: we We kind of have a lot of fun with
Speaker 1: this stuff. I mean, the restaurant business is one of
Speaker 1: the most difficult businesses in the world, and it's not
Speaker 1: only difficult to make money, but it's difficult just to
Speaker 1: stay open. So you need to come out with ideas
Speaker 1: and with all sorts of public relation and marketing gimmicks,
Speaker 1: if you will, in order to keep people interested in
Speaker 1: who you are what you are. And about a year
Speaker 1: after we opened, uh Smith of Lensky. We discovered somebody
Speaker 1: who was trying to sell a wine collection, which we bought,
Speaker 1: and after we've spent the billion dollars on the wine collection,
Speaker 1: we decided, well, why don't we transported by Brinks truck
Speaker 1: to the front of Smith and Lensky, which worked, and
Speaker 1: we got a couple of million dollars worth of publicity
Speaker 1: for it, along with the million dollars worth of wine.
Speaker 1: That whole idea of being a showman and an entertainer
Speaker 1: and a host that has become a much more important factor,
Speaker 1: it seems in the restaurant industry. I'm not sure that
Speaker 1: that's true anymore. It was going back before all of
Speaker 1: the new technology. The new technology has taken away a
Speaker 1: lot from the showmanship of the restaurant business, because the
Speaker 1: methodology of putting it together a restaurant, to making a reservation,
Speaker 1: to how you get a reservation, to getting into restaurants
Speaker 1: has taken away quite a bit from the showmanship of restaurateuring.
Speaker 1: It hasn't taken away from the showmanship of cheffing. The
Speaker 1: chefs still rule the market, and that is quite interesting
Speaker 1: there sort of the artists of the food world. Tell
Speaker 1: us about your son Michael, and why did he decide
Speaker 1: to follow in your footsteps or did you not not
Speaker 1: able to dissuade him from entering. No, it's actually the opposite.
Speaker 1: There was no there was no persuasion involved. Michael graduated
Speaker 1: from Brown University and is looking around for something autistic
Speaker 1: to do, and he was definitely not interested in the
Speaker 1: restaurant business. And a couple of years later he came
Speaker 1: to me and he said, you don't beginning to think
Speaker 1: maybe there's a little bit of art form in the
Speaker 1: restaurant business. And I said, well, if you don't have
Speaker 1: any art form, the restaurant business will not be in it,
Speaker 1: because we're in the high end of the restaurant business.
Speaker 1: And Michael decided he wanted to come on in. I
Speaker 1: then turned to my good friend Danny Myers and said,
Speaker 1: Danny put him to work for a year or so,
Speaker 1: which he did. Michael then came with us. He traveled
Speaker 1: around the United States opening up Smith of Wilenski's, and
Speaker 1: for the last ten years he has run a restaurant
Speaker 1: company that he sort of transferred from what we had
Speaker 1: into the Quality Restaurant Group and he's opening his own
Speaker 1: take on high end restaurants Quality meets quality Italian and
Speaker 1: he is also running around the country. He's opened in Denver,
Speaker 1: He's about to open up in Chicago. So uh, he
Speaker 1: did it by mistake, as I did it by mistake,
Speaker 1: and so far it's worked out wonderfully. He loves what
Speaker 1: he's doing and he's fantastic at it. Well, you're getting
Speaker 1: us ready for lunch, thanks very much. Alan Stillman is
Speaker 1: a restaurants whore, of course, a founder, Quality branded partner,
Speaker 1: founder of Smith and Wilinski's, founder of t g I Friday's.
Speaker 1: He knows all about the restaurant industry. Well, we want
Speaker 1: to know the real intentions of Bowing and whether they
Speaker 1: will be acquiring Ember Air. Here to help us understand
Speaker 1: the situation is George Ferguson, our senior Aerospace and Defense
Speaker 1: and Airlines analyst for Bloomberg Intelligence. George always a pleasure.
Speaker 1: Why would Boeing be interested in acquiring this Brazilian manufacturer
Speaker 1: of aircraft? Hey, Pam, Yeah, So as we look at it,
Speaker 1: we think that the Bombardier air bus uh sort of
Speaker 1: tie up with the C series earlier this year would
Speaker 1: be the reason. You know, So if you recall Bombardier
Speaker 1: face with tariffs and bringing the C series into into
Speaker 1: the US. Basically, you know, gave the program to Airbus,
Speaker 1: and now Airbus can go out and market airplanes to
Speaker 1: airlines from about a hundred forty to just over two
Speaker 1: hundred seats. That's there, and they can offer the C series,
Speaker 1: which which an airline can use for a hundred forty seats.
Speaker 1: We think that you know, what what Boeing might be
Speaker 1: doing here is looking to blunt Airbus' ability to market
Speaker 1: two airplanes like that. You know, if they had to
Speaker 1: tie up with embry Are, they could they can market
Speaker 1: two airlines and airplanes, two airplanes, one two families, I
Speaker 1: should say, one that would go from to about a
Speaker 1: hundred and ten fifteen seats and another that could go
Speaker 1: from a hundred and thirty up to you know, two hundreds.
Speaker 1: So we think it gives them sort of the same
Speaker 1: product palette as as Airbus. Okay, we would that be
Speaker 1: like the in terms of products we're talking about what
Speaker 1: the ember air one, the different variants of that, and
Speaker 1: then maybe even the smaller the one s. Yeah, I
Speaker 1: mean any thing about embry Are is that Embry's um
Speaker 1: their primary airplane, the E jet has the one seventy five,
Speaker 1: like you said to the one in the middle of
Speaker 1: refreshing it. So they're putting new engines on it and
Speaker 1: making it slightly larger. And yeah, that that airplane can
Speaker 1: can operate from seats two hundred and thirty. The other
Speaker 1: really neat thing about it is that one seventy five
Speaker 1: is very very successful selling into regional airlines in the
Speaker 1: United States. They buy the majority of airplanes I would
Speaker 1: say that are less than a hundred and thirty seats.
Speaker 1: They can only operate airplanes that are seventy six seats
Speaker 1: are less due to clauses in the pilot contracts that
Speaker 1: the main airlines that they fly four and so that
Speaker 1: airplane the one that is very successful because of its
Speaker 1: its product placement, and that would be potentially in Boeing
Speaker 1: lineup to market the airlines well Air Canada Express, I
Speaker 1: think they all they fly as just one example, the
Speaker 1: ember Air one seventy five. Does Boeing really need this
Speaker 1: deal because I thought that Boeing was putting a lot
Speaker 1: of effort behind the new seven three seven, the Max
Speaker 1: and the focus has been on not just the aircraft
Speaker 1: but on making it more fuel efficient and reducing the
Speaker 1: cost of operating the actual aircraft. Agreed, you know, agreed
Speaker 1: on that's what the focus has been. It's interesting. I
Speaker 1: wouldn't think this would have been this interesting to Boeing. So,
Speaker 1: you know, really what we've seen demand in the marketplace
Speaker 1: has been that airlines have been looking to fly larger airplanes.
Speaker 1: Pilot salary salaries have been going up, and they'd like
Speaker 1: to you know, um, expense it over more seats in
Speaker 1: the airplane. That's one of the ways they're sort of
Speaker 1: combating rising expenses. And so we've seen airlines again moving
Speaker 1: to larger and larger airplanes. We haven't seen a lot
Speaker 1: of orders for airplanes from a hundred to a hundred
Speaker 1: and thirty seats, So it kind of looks like a
Speaker 1: market to us that is betwixt and between. It's not
Speaker 1: there yet maybe yeah, And you know, but they keep
Speaker 1: stretching the size of the seven and eight three twenties, right,
Speaker 1: the latest iterations of those two narrow bodies that Boeing
Speaker 1: and Airbus are larger than their predecessors, and therefore the
Speaker 1: efficiency um, you know, the efficiency point gets pushed higher.
Speaker 1: So this might be a response to sort of that
Speaker 1: continuing increase of seven thirty seven and eight three twenty airlines.
Speaker 1: May you know if they're if they're running to less
Speaker 1: dense markets, they may really need something more efficient underneath
Speaker 1: that hundred and fifty seat point and in the Embry
Speaker 1: air and the C Series one three hundred could be
Speaker 1: that answer. So I think Boeing might be looking a
Speaker 1: little further down the road than you know. We we
Speaker 1: see evidence in order is at you know, the ability
Speaker 1: to compete in that space and offer a product. Okay,
Speaker 1: you gotta give me your thoughts though on the fact
Speaker 1: that the Brazilian government is still involved in ember Air.
Speaker 1: It started as a government financed company military contracts. For example,
Speaker 1: the government of Brazil is said already, at least according
Speaker 1: to one Brazilian newspaper, that majority control from Boeing not
Speaker 1: necessarily going to happen. Yeah, I think this is going
Speaker 1: to be a really hard deal to put together, and
Speaker 1: it's not going to look like a wholesale takeover by anybody.
Speaker 1: It's if it gets done, it will look like a venture.
Speaker 1: And that's exactly that. The reason you know it's uh
Speaker 1: Embry is Brazil's most important defense contractor they're they're aerospace
Speaker 1: national champion. The Brazilian government does have a golden share
Speaker 1: in it, so they can decide, you know, what the
Speaker 1: fate of the company is, and you know, they want
Speaker 1: it for high tech aerospace jobs. They want to foster
Speaker 1: high tech aerospace jobs in Brazil. Obviously, letting Boeing buy
Speaker 1: the whole thing and take it home isn't going to
Speaker 1: help them much. I don't think Bowing wants to take
Speaker 1: it home anyways. Um, I think it's going to be
Speaker 1: you know, there's always a lot of politics around defense
Speaker 1: contractors and things like that. The defense business doesn't make
Speaker 1: a lot of money, and Embry are also as a
Speaker 1: bust business that doesn't make a lot of money, and
Speaker 1: I don't think Bowing really wants those businesses. So I
Speaker 1: think this has to become sort of some sort of
Speaker 1: complex structure that might get the Brazilian government the aims
Speaker 1: they want out of this company and give Boeing the
Speaker 1: opportunity to market the Embry air you know aircraft. Well,
Speaker 1: thanks very much, it makes a lot of sense, and
Speaker 1: thanks for keeping an eye on this topic, and we
Speaker 1: know we're going to come to you in the future
Speaker 1: about it. Much appreciated. George Ferguson is our senior Aerospace,
Speaker 1: Defense and Airlines analyst for Bloomberg Intelligence. Well, here to
Speaker 1: help us understand what's going on in the housing market
Speaker 1: as it relates to the tax overhaul bill that the
Speaker 1: President has just signed is Jonathan Miller. He is the
Speaker 1: president and chief executive of Miller Samuel Jonathan. Great to
Speaker 1: have you with us. What do you make what do
Speaker 1: you make of the future for the UH? Well, let's
Speaker 1: start with the high end, high cost markets such as Manhattan,
Speaker 1: Westchester County and also other areas around the country, whether
Speaker 1: they be in Connecticut or in the state of Massachusetts
Speaker 1: or California high cost property. What's going to happen as
Speaker 1: a result of this tax overhaul plan? So I think
Speaker 1: they'll be downward pressure on housing prices, UH, as you
Speaker 1: stew higher in price across the US. The basic theme
Speaker 1: of this bill as it relates to housing favors being
Speaker 1: a landlord over HOMEO worship in general. And you know,
Speaker 1: I think I think the way to think of it
Speaker 1: is that, um, you know, someone that's buying a home
Speaker 1: has a certain safe financial footprint in terms of that
Speaker 1: they can afford as a payment. And so if you
Speaker 1: could just think of it is that you're adding some
Speaker 1: additional costs, meaning reduced UM deductions in the context of
Speaker 1: mortgage interest of seven hundred fifty thousand dollars of ten
Speaker 1: thousand dollar cap on real pay taxes, those sort of
Speaker 1: creep into that payment as a share, and we reduces
Speaker 1: principle and interest. UM. I don't think it's catastrophic in
Speaker 1: terms of I don't mean to exaggerate it, but it
Speaker 1: certainly applies downward pressure to these higher end housing markets
Speaker 1: far more than it would say in the middle in
Speaker 1: the Midwest, where you know a home price might be
Speaker 1: a hundred seventy five thousand dollars Jonathan, Will that pressure
Speaker 1: actually turn into lower prices or will it just be
Speaker 1: a argaining chip when it comes to negotiations. So it's
Speaker 1: interesting because one of the things that came out of
Speaker 1: the discussions on the tax bill was at the yet,
Speaker 1: you know, the higher cost markets, you know that the
Speaker 1: higher cost of housing would be offset by the uh,
Speaker 1: the bigger tax cuts and UM. And you know, human
Speaker 1: beings or homeowners don't think that way in the sense
Speaker 1: that they don't look at all their their net worth
Speaker 1: in one bucket and say, you know, because I'm getting
Speaker 1: a tax cut, I can overpay for my home. Because
Speaker 1: what's going to happen is, you know, there's a saying
Speaker 1: that housing prices are sticky on the downside, and and
Speaker 1: what happens is there's some sort of change, the prices
Speaker 1: draw declined slowly simply because transactions, uh slow down because sellers,
Speaker 1: um uh, you know, buyers are immediately adaptable to changes
Speaker 1: that favor them. Sellers tend to take a year or two.
Speaker 1: So I think what we're really looking at over the
Speaker 1: next year, year and a half is this sort of
Speaker 1: figuring out between buyer and seller what the actual new
Speaker 1: value is in these markets. So this puts the buyer
Speaker 1: in a better position. It absolutely does, because it's just
Speaker 1: that they may not their demand may not be satiated
Speaker 1: initially simply because the sellers, you know, you know, this
Speaker 1: is a you know, a hundred years of homeownership as
Speaker 1: sort of the federal um, the federal push in this
Speaker 1: whole American dream concept. High cost housing markets on the
Speaker 1: East and West Coast are more impacted by this, and
Speaker 1: it's going to take a year or two for the
Speaker 1: two parties to sort of figure it out. Um. You know,
Speaker 1: this is this is sort of like literally what we
Speaker 1: just went through. The last couple of years we've had
Speaker 1: at the high end of the market or higher cost markets,
Speaker 1: sellers have had a phenomenon that I've called aspirational pricing,
Speaker 1: where that they're asking way more than what the buyers
Speaker 1: are willing to come up with. And just only in
Speaker 1: two thousand seventeen we've started to see equilibery in between expectations.
Speaker 1: Now we have this new factor that will you know,
Speaker 1: undergo a period of a couple of years of testing
Speaker 1: out before it settles in. Could this be a positive
Speaker 1: in the for the long term that people will not
Speaker 1: be burdened with mortgages that they cannot afford that would
Speaker 1: be so linked to their income. Hey, I absolutely in
Speaker 1: the law in the long term certainly. Uh, you know,
Speaker 1: there's a lot that made of sort of runaway high
Speaker 1: end housing prices. We did see some reining in of
Speaker 1: that I called two thousand fourteen nationally peak luxury and uh,
Speaker 1: you know, and and since then we've seen a correction
Speaker 1: at the very high end of the market generally overall affordability.
Speaker 1: You know, one small benefit in the New York metro
Speaker 1: area that whose economy is heavily dependent on Wall Street
Speaker 1: accounting for about of the wages. Is higher. Bonus comp
Speaker 1: with tax cuts is a is you know, maybe a
Speaker 1: modest improvement or help for the high end, but I
Speaker 1: don't really see it as anywhere is significant with the
Speaker 1: regulatory overlay that we didn't when you compare it against
Speaker 1: sort of pre financial crisis. Got it. Thank you very much.
Speaker 1: Jonathan Miller is the president and the chief executive of
Speaker 1: Miller Samuel talking about how it is going to be,
Speaker 1: at least for now, going to be a buyer's market.
Speaker 1: Thanks for listening to the Bloomberg P and L podcast.
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