Speaker 1: My rent. Wow, because of my income. Well, I know
Speaker 1: rents in general have gone off in the last two years.
Speaker 1: It's just been outrageous. I work with vulnerable population and
Speaker 1: I I deal with rents that they have to deal with.
Speaker 1: It's been extremely hard. It's the big take from Bloomberg
Speaker 1: News and I Heart Radio. I'm West Cosova today. People
Speaker 1: all over are struggling to afford their rent. How did
Speaker 1: it get so high? Inflation means the price of everything
Speaker 1: is going up. But it's a good bet your rent
Speaker 1: has risen even faster in the past few years. And
Speaker 1: not just in cities like New York where it's always
Speaker 1: been crazy. Rent increases are far outpacing wages for many
Speaker 1: people in the U US and around the world. Slowed
Speaker 1: down there for a bit during the thick of the pandemic,
Speaker 1: but then it came roaring back. Why is this happening
Speaker 1: and is there any relief insight? My Bloomberg colleague Preshanko
Speaker 1: pol reports on real estate and he joins me now
Speaker 1: from Boston, Prishan, thanks for being here. Great to be here, Prishan.
Speaker 1: I think the quickest way to lose an hour of
Speaker 1: your time is to go up to somebody and say, so,
Speaker 1: how do you feel about your rent? Everyone seems to
Speaker 1: be complaining that their rent is so much higher than
Speaker 1: it used to be. We used to think about New
Speaker 1: York and San Francisco, other big cities here the amazing
Speaker 1: stories about how much people were paying. But now medium
Speaker 1: sized cities, small town's rent is just crazy high. Exactly
Speaker 1: why is that and how did this happen? Yeah, well,
Speaker 1: you know, part of it is that the for sale
Speaker 1: market got so hot, especially during the past few years
Speaker 1: during the pandemic, so a lot of people couldn't buy,
Speaker 1: and so that meant that relatively wealthy people, people who
Speaker 1: were wealthy enough to purchase, were sort of shoved back
Speaker 1: into the rental market, which became a really crowded place.
Speaker 1: So you ended up with like the kind of rent
Speaker 1: growth that we've never seen in this country before. I mean,
Speaker 1: typically rents go up maybe a few percentage points a
Speaker 1: year or something like that, but we were like seeing
Speaker 1: double digit growth and all over the country, not just
Speaker 1: in the land of Wall Street and Silkin Valley. This
Speaker 1: was happening in the heartland. One of our colleagues, Alex Hanzi,
Speaker 1: recently wrote a story that said that more than half
Speaker 1: of renters reported that their rent had gone up by
Speaker 1: a twelve hundred dollars or more in the last year alone. Yeah,
Speaker 1: that's nuts. I mean, I I've done stories throughout this,
Speaker 1: and I remember just talking to people during the worst
Speaker 1: of it. It wasn't so long ago, maybe a year
Speaker 1: year ago or so. They were struggling, you know, in Florida,
Speaker 1: for example, people were just struggling to even to find
Speaker 1: a place to live. In Florida was a place where
Speaker 1: you could usually find a place for a reasonable amount
Speaker 1: of money outside of saying like Miami and Fort Lauderdale. Yeah,
Speaker 1: it was one of the appeals of you know, living
Speaker 1: down in Florida, right. I mean, so these people were
Speaker 1: getting on waiting lists like one after the other, and
Speaker 1: they would have to pay kind of application fee each time,
Speaker 1: and they were racking up, you know, maybe a thousand
Speaker 1: dollars or more sometimes an application fees just to have
Speaker 1: an opportunity to potentially have an apartment. They mean, you know,
Speaker 1: I guess the landlords in those cases were pocketing that money,
Speaker 1: but it was a huge mess for shot. While we
Speaker 1: were talking through this episode, our producer's end up said
Speaker 1: that a friend of hers living in Brooklyn was going
Speaker 1: through this very thing. So she gave him a ring,
Speaker 1: and here's what he had to say. My name is
Speaker 1: not Long tens In and I am from Queen. I
Speaker 1: currently live in Bushwick. Since I moved into this apartment
Speaker 1: during the pandemic, I like got the pandemic discount that
Speaker 1: a lot of people were also getting. And it was
Speaker 1: one of those situations where it was like the rent
Speaker 1: is initially it was twenty six, but we're going to
Speaker 1: give you one month off, so it sort of came
Speaker 1: down to like twenty four or something. So that's what
Speaker 1: we signed on twenty four initially. After you're living here, Um,
Speaker 1: we got the new like lease with updated rent, and
Speaker 1: then the landlord basically hyped it up all the way
Speaker 1: up to twenty nine. Yeah, so we were just like,
Speaker 1: that is a lot of money. I like grew up
Speaker 1: in like a very like horror immigrant family where we
Speaker 1: still sort of like it's like it's hard to pay rent,
Speaker 1: you know. And yeah, I mean there's just a lot
Speaker 1: of people that are coming in that can't afford to
Speaker 1: stay here, and then it's ultimately the people that just
Speaker 1: have to move. So you talked about how people who
Speaker 1: would have bought a house but couldn't because of the
Speaker 1: financial squeeze during COVID, uh stuck with rentals and that
Speaker 1: kind of lowered the supply. What are some of the
Speaker 1: other reasons that have caused is because the increase in
Speaker 1: rent oversay the last ten years has so far outpaced
Speaker 1: wages and even outpaste inflation. Yeah, I mean, like part
Speaker 1: of this is the fact that we've had a lot
Speaker 1: of construction more recently, but we've had a lack of
Speaker 1: home construction in America for a long time, you know,
Speaker 1: of all kinds, so it just hasn't kept up with
Speaker 1: what's needed. The other thing is that a lot of
Speaker 1: the construction we did have was sort of focused on
Speaker 1: the wealthier people, and there really hasn't been very much
Speaker 1: built for the people really need it. There's that there's
Speaker 1: also this idea that you know, people were leaving their
Speaker 1: parents basements and roommate situations and striking out on their own.
Speaker 1: And you also had this kind of demographic boom right
Speaker 1: of young people all seeking you know, to begin their lives.
Speaker 1: There's just a lot of demand. And and then let's
Speaker 1: throw one more thing on top of it, which is COVID, Right,
Speaker 1: and COVID kind of lit a fire under people. It
Speaker 1: wasn't just that people were rushing to buy homes in
Speaker 1: the suburbs. People were just rushing to make changes of
Speaker 1: all kinds. And that could be just you know, finding
Speaker 1: a job elsewhere, somewhere cheaper, you know, in Phoenix or
Speaker 1: Tampa or you know, Austin is not very cheap anymore,
Speaker 1: but it's cheap, you know, if you were living in
Speaker 1: New York. So a lot of these moves really added
Speaker 1: to that demand. There's a perception I heard a lot
Speaker 1: from people that landlords are taking advantage of what you're
Speaker 1: describing here, that there is a shortage supply and there's
Speaker 1: an increase in demand to raise rents much higher than
Speaker 1: they you know, ordinarily could have. And there's a certain
Speaker 1: amount of gouging going on, just people opportunistically raising rents
Speaker 1: because what are people gonna do. Is that something that
Speaker 1: you actually see bearing in data or is that just
Speaker 1: something people kind of suspect. Oh yeah, absolutely. I mean
Speaker 1: these kinds of rent increases are just astronomical. I mean
Speaker 1: some of them they look like mistakes, you know, like
Speaker 1: increases and this is like Austin and just these are
Speaker 1: crazy and and these are sort of the bulk of
Speaker 1: these increases are going to be actually for new leases,
Speaker 1: not for existing leases, but people who even had renewals.
Speaker 1: We're seeing crazy jumps and it was shocking to them, right,
Speaker 1: But they didn't have much of a choice because where
Speaker 1: are they going to go. Another thing that seems to
Speaker 1: be contributing to this is real estate companies, sometimes financial institutions,
Speaker 1: buying up a lot of rental property simply to make
Speaker 1: money on it in a way that hasn't been done before. Yeah,
Speaker 1: I mean, it's sort of the institutionalization of the American
Speaker 1: housing market. Right. This really was a byproduct of the
Speaker 1: Great Financial Crisis and the massive housing crash and foreclosure
Speaker 1: wave that we experienced starting in two thousands seven or so,
Speaker 1: and you ended up with just a whole lot of
Speaker 1: distressed properties. And you know, like White Knights, private equity
Speaker 1: firms showed up starting around and they kind of hoovered
Speaker 1: up all these for closed properties that we're sitting vacant
Speaker 1: and disrepair, often bank owned, and they kind of got
Speaker 1: the housing market moving again because they bought those properties
Speaker 1: up and turned them into rentals, which was a new thing.
Speaker 1: You had a sort of a whole new class here.
Speaker 1: You had mom and pop landlords in the past that
Speaker 1: it owned single family homes. We never had sort of
Speaker 1: institutional players that were doing this. They were they bought
Speaker 1: apartment buildings, not sort of scattered site single family rentals.
Speaker 1: So by doing this they actually allowed home prices to
Speaker 1: start rising. But what happened is they did this so
Speaker 1: aggressively in some places that they ended up kind of
Speaker 1: getting rid of a lot of the homes that might
Speaker 1: have been affordable to first time buyers, and you ended
Speaker 1: up with this severe shortage of housing. So it's the
Speaker 1: opposite problem in prices just kept growing building off of
Speaker 1: the shortage, and it got worse and worse and worse
Speaker 1: and worse over ten years. I see here in Washington,
Speaker 1: d C. Seeing New York, Chicago, a lot of other cities,
Speaker 1: a lot of construction of rental apartments to meet this demand,
Speaker 1: and yet they seem to be really expensive apartments. The
Speaker 1: rents are really really high in these places. Who do
Speaker 1: they think it's going to afford them, because people are
Speaker 1: already struggling to pay existing rents. Is their demand for
Speaker 1: these really expensive places. The issue now is that there's
Speaker 1: a ton of high end construction of multi family homes.
Speaker 1: It might be the highest in at least ten years
Speaker 1: that rental homes that will deliver this year, right, And
Speaker 1: these were homes that were built before inflation took off
Speaker 1: and when there was a lot of demand, and now
Speaker 1: things kind of changed once they were already committed, kind
Speaker 1: of like a giant like cruise turning around a giant
Speaker 1: cruise ship, you know, they have to make decisions like
Speaker 1: so far in advance, so they can't pivot very easily.
Speaker 1: People believed that there would be no end to this
Speaker 1: kind of boom and rental demand because people have to
Speaker 1: live somewhere, right, So even if the first sale market
Speaker 1: weaken that that would only be good news for rentals
Speaker 1: because yeah, more people will be renting. But I think
Speaker 1: a lot of people are just kind of not leaving
Speaker 1: their apartments. They're staying in place, you know. And one
Speaker 1: reason that's happened is because where they're going to move.
Speaker 1: So if they move somewhere else, there's now such a
Speaker 1: What they were charging for these new leases for you know,
Speaker 1: empty apartments is so much higher than what you'd pay
Speaker 1: if you just stayed put. So a lot of people
Speaker 1: just stayed put. The other thing is that a lot
Speaker 1: of people are nervous about the economy. So when you're nervous,
Speaker 1: you don't really want to make big moves, right, So
Speaker 1: there's that. There's also the fact that the cost of
Speaker 1: everything has gone up, you know, from groceries to commuting
Speaker 1: to everything else. So for renters, their budgets are squeezed,
Speaker 1: and again that's another reason to kind of not make
Speaker 1: a big move. Preshian, please stay with me. We'll talk
Speaker 1: about what renters can expect in the year ahead after
Speaker 1: the break. Prishan, We're talking about the U S rental market,
Speaker 1: but rents are high all over the world. Our producer
Speaker 1: in London went out to hear what people there had
Speaker 1: to say. So our rent was up in October, so
Speaker 1: we're running for a year, and then they were like
Speaker 1: trying to increase it. We're like, come on, we've been
Speaker 1: here for a while, you know us, please half it,
Speaker 1: and then we did so like it's out not too bad,
Speaker 1: I guess. So I'm from Greece and I rent here
Speaker 1: in London, but I mean, like I'm a landlord as well.
Speaker 1: I mean I would raise my rents. I mean, of course, absolutely,
Speaker 1: the students I'm living with their on like k Yeah,
Speaker 1: so if it increased, there's no way we could collectively
Speaker 1: afford it at all. Like we're on the brink right now.
Speaker 1: So yeah, subsistence living. Rather than saying I think they're
Speaker 1: all doing well, it seems like they're all doing the
Speaker 1: bare minimum. I get that kind of vibe from all
Speaker 1: the landlords I've lived, So they just do the least
Speaker 1: they can because they know that there's high demand property here.
Speaker 1: For sure. You've spelled out this, you know, pretty challenging
Speaker 1: situation renders. I think in real life people are really
Speaker 1: feeling what you're describing. Is there any relief in sight? Yes,
Speaker 1: great news for renters this three Maybe they're a year.
Speaker 1: Landlords have a problem all of a sudden, which is
Speaker 1: that there's a ton of multi family construction underway and
Speaker 1: a lot of these units will deliver this year. And
Speaker 1: these tend to be middle or high end units in
Speaker 1: places like Seattle and Austin and Atlanta, but also in
Speaker 1: the suburbs and in the middle of nowhere. There's just
Speaker 1: a ton of construction of all kinds, you know, maybe
Speaker 1: a larger amount than we've seen in many, many years.
Speaker 1: And then on top of that, you have landlords who
Speaker 1: are gonna have to start dropping their rents in general
Speaker 1: because their tenants are gonna start bolting and looking for
Speaker 1: other opportunities. So as rents go down elsewhere and the
Speaker 1: market starts to become a little more competitive, it's going
Speaker 1: to be the landlords who have to be more competitive
Speaker 1: as opposed to buyers being exactly. Yes, so it's a
Speaker 1: real turnaround. Some cities have required that new construction set
Speaker 1: aside a certain amount of housing for people who have
Speaker 1: lower incomes. Has that helped it all? What do we
Speaker 1: see happening there? This is sort of the market solution
Speaker 1: to the problem, which is that you require, like, if
Speaker 1: you're going to build something, you have to include a
Speaker 1: percentage that would be affordable. The trouble there is, you know,
Speaker 1: it just sort of gives an incentive for the landlord
Speaker 1: to actually boost the rents for every other unit to
Speaker 1: sort of make up for it. So I'd say the
Speaker 1: jury is out, but that is sort of a major
Speaker 1: way that they've been trying to do it. There's also
Speaker 1: like various kinds of subsidies, right the low income housing
Speaker 1: tax credits and things like that, So you end up
Speaker 1: with a lot of not enough let's say, not enough
Speaker 1: affordable housing. So I think it's really hard for people
Speaker 1: on the lower end of the spectrum right now to
Speaker 1: find a place to live, and that leads to instability
Speaker 1: people you know, living in a illegal apartment and a basement,
Speaker 1: or or crowding in way too many people, or living
Speaker 1: in their car, or you know, in a tent or
Speaker 1: in a homeless shelter. This is sort of the result.
Speaker 1: And we're already seeing the data show that rank collections,
Speaker 1: whereas you're not seeing this for moderate or hire income rentals.
Speaker 1: People are paying their rent, but on the lower end
Speaker 1: of the spectrum, the rent collections have have dropped in
Speaker 1: the last couple of years, meaning that people just aren't
Speaker 1: able to afford to pay their rent exactly. And do
Speaker 1: you think that the relief you describe happening at the
Speaker 1: high in the middle part of the market in the
Speaker 1: coming year will also bring some relief at the lower
Speaker 1: end of the market. It takes time, because you know,
Speaker 1: the way this works is like you build the high
Speaker 1: end unit and then ten years later it's not such
Speaker 1: a great unit anymore, and then that moves to the
Speaker 1: moderate and then eventually, you know, thirty years down, and
Speaker 1: that's subsidized housing or whatever, you know, and making up
Speaker 1: the time frame there. But it doesn't happen instantly. So
Speaker 1: there may be some help, right, but it's not enough.
Speaker 1: I mean, we were just talking earlier about how people
Speaker 1: saying that rents went up twelve hundred bucks last year.
Speaker 1: Do you think a year from now we're going to
Speaker 1: see the story that says people say their rents went
Speaker 1: down meaningfully? I think so. Yeah. I really hate predicting
Speaker 1: the future because you know, as we've learned during these
Speaker 1: past few years, that we always tend to be wrong.
Speaker 1: With all this construction happening, it does seem like there
Speaker 1: has to be a change, right, And if the economy
Speaker 1: turned south, that would only make that more true because
Speaker 1: if people start losing jobs, you know, people can't afford
Speaker 1: these sky high rents. They just went up way too fast.
Speaker 1: So in a way, the landlords are to blame for
Speaker 1: allowing the rents to get as high as they did, right,
Speaker 1: because it means that they have further to fall. Shanko, Paul,
Speaker 1: thanks so much for talking with me today. All right,
Speaker 1: thank you, after the break. What's happening in the rest
Speaker 1: of the world, My colleague Neil Callinan joins me now
Speaker 1: from London. He's going to give us a broader look
Speaker 1: at turmoil and all kinds of real estate all over
Speaker 1: the world. Neil, thanks so much for being here. Thanks,
Speaker 1: it's good to charge you. So now we've been talking
Speaker 1: about rents and hearts difficult for people to afford housing
Speaker 1: a lot of parts of the world. You have written
Speaker 1: a story that takes a big step back and looks
Speaker 1: across real estate markets, in particular commercial real estate markets.
Speaker 1: Can you first just start by telling us when we're
Speaker 1: talking about the commercial real estate market, what are we
Speaker 1: talking about. We're talking about everything that's not a house
Speaker 1: that you own effectively. So you can actually include multi
Speaker 1: family in some jurisdictions and not so. If you live
Speaker 1: in an apartment block that can be actually classified as
Speaker 1: a commercial building. But for most people, it's the office
Speaker 1: they go to, it's the shops that they go to,
Speaker 1: it's the strip mall that they stop off and on
Speaker 1: the way home, and it's those assets that combine with
Speaker 1: how they make actually propertly the biggest asset in the world.
Speaker 1: And you know, you've been talking about rental housing and
Speaker 1: the cost of rents and people struggling with Part of
Speaker 1: that comes out of the global financial crisis, when the
Speaker 1: credit crunch meant that people build fewer houses and a
Speaker 1: lot of home builders and multifamily developers went bust. So
Speaker 1: there was a kind of shortage of house building during
Speaker 1: the bad times that didn't apply everywhere, and in fact,
Speaker 1: in some countries like China, obviously there was a huge
Speaker 1: amount of house building, mainly aimed at buyers. And now
Speaker 1: we're going to start to see the outfall of that
Speaker 1: because a lot of the valuations and a lot of
Speaker 1: the house prices that people have paid, and this also
Speaker 1: goes for the office blocks and the shopping malls and
Speaker 1: so forth, are based off low interest rates, and so
Speaker 1: once the cost of paying that loan goes up, then
Speaker 1: the values start to fall because nobody else is willing
Speaker 1: to pay what you paid for. And this is the
Speaker 1: pain that we're starting to see come true now, and
Speaker 1: in many cases it won't come true in data until
Speaker 1: the second half of the year, particularly for the bank
Speaker 1: lending books. But already, for example, you're seeing commercial property
Speaker 1: values in the UK down about sevent in the US
Speaker 1: there not about fifteen percent. They may go another ten
Speaker 1: percent this year so we're seeing big, big value declines
Speaker 1: starting to come true in the property market. And you've
Speaker 1: taken a look at the property market around the world,
Speaker 1: and it seems that there really is this global trend
Speaker 1: that there are very few bright spots when you look
Speaker 1: around at what's happening with property. It's about out there.
Speaker 1: You know, malls have had a really really tough time
Speaker 1: for a few years. That's going to continue. Just seemed
Speaker 1: like they were starting to get back on their feet
Speaker 1: last year, and then obviously interest rates wrote so much
Speaker 1: that in many cases they've made them on investable. And
Speaker 1: then i'll it's blocked to work from home trend that's
Speaker 1: really really really hitting off its values in the tech
Speaker 1: cities in particular, so from Dublin to San Francisco and
Speaker 1: in London as well to an extent. But then mainly
Speaker 1: it's a kind of like secondary offices, by which we
Speaker 1: mean like lower quality ones in not the best locations
Speaker 1: where maybe they were struggling to find a tenant in
Speaker 1: the first place, and maybe they don't the company hasn't
Speaker 1: been growing very quickly. Those are the buildings that values
Speaker 1: where really you're going to see the stress, not just pain,
Speaker 1: but actually distress starting to come true, and is all
Speaker 1: of this happening now just as a result of the
Speaker 1: general global downturn and kind of the end of cheap money. Yeah,
Speaker 1: I mean for real estate is a real double whammy, right,
Speaker 1: because you know, typically when you're going into a recession,
Speaker 1: central banks react by cutting interest rates, which kind of
Speaker 1: like allows you kick the can down the road a
Speaker 1: bit it because you don't really have to act. Now
Speaker 1: you have massive inflation meets economic downturn meets central banks
Speaker 1: who want to push rights forward to bring inflation down.
Speaker 1: So their priority is no longer the borrowers and the
Speaker 1: holders of capital. Their priority is inflation. And it's as
Speaker 1: simple as that. And the cost of living has to
Speaker 1: come down, and that means real estate is going to suffer.
Speaker 1: And so this is a pretty unique set of circumstances.
Speaker 1: The other thing you're going to see is actually a
Speaker 1: slump in transactions, so we have to wait for what's
Speaker 1: called seller capitulation. The sellers still think their buildings weren't
Speaker 1: let's say a hundred million, because it was worth a
Speaker 1: hundred million last year. The buyer, because there's far less
Speaker 1: of them and they can't borrow as much as in there, well,
Speaker 1: I actually think your buildings worth seventy eight and so
Speaker 1: we have to wait for the seller to almost give up.
Speaker 1: And that's going to be the next trend that comes true.
Speaker 1: And that's how you start getting what we call price discovery,
Speaker 1: which is when you start to see what something's really
Speaker 1: worked as a host to what it's theoretically worth. And
Speaker 1: that's when some of the banks will start to suffer.
Speaker 1: Now it's worth saying the banks have been much more
Speaker 1: responsible this time than in the build up to the
Speaker 1: global financial crisis. Their loan to values and most of
Speaker 1: the commercial real estates in the fifties, so you'd have
Speaker 1: to see a pretty big value decline in order to
Speaker 1: hit that. So a lot of the cases, it's actually
Speaker 1: the equity holders, which are many cases are are pension funds.
Speaker 1: They're going to be feeling the impact of this coming
Speaker 1: up in the next year. In the UK, for example,
Speaker 1: I think you write that housing prices are as much
Speaker 1: as twenty percent overvalued. Yeah, and what we're starting to
Speaker 1: see is price falls as a result of that. So
Speaker 1: it's starting to finally come true into the data that
Speaker 1: house prices have been overvalued, that they have been void
Speaker 1: by low interest rates, particularly to try and say the
Speaker 1: economy during the pandemic. Actually saw something yesterday that said
Speaker 1: house prices in London and the southeast of England, which
Speaker 1: is the areas around London, effectively are over valued. Now.
Speaker 1: I don't think anybody is saying that there's going to
Speaker 1: be a forty percent to climb, but certainly that area
Speaker 1: looks very vulnerable going forward. And I think one of
Speaker 1: the global trends you're going to see is the countries
Speaker 1: that were the winners of the last downturn, that came
Speaker 1: out of it in the best shape, are going to
Speaker 1: be the losers this time around because maybe they didn't
Speaker 1: need interest rates to be as low as they were.
Speaker 1: So you know, in China we've already seen mortgage holders
Speaker 1: boycotting paymaking payments while apartment blocks halted instruction. House prices
Speaker 1: in Sydney are falling at the fastest rate and record
Speaker 1: in Canada. Toronto has just had his worst run ever Sweden.
Speaker 1: I mean, the house price declined there is unbelievable and
Speaker 1: early eighteen percent, about eighteen percent in just a few months.
Speaker 1: When you look down the road, how do you see
Speaker 1: all this playing out? Right? Now? There's a lot of
Speaker 1: people who are upside down or in distress. Where does
Speaker 1: it go from here? Yeah, I think the market will
Speaker 1: go to a downturn until such time as basically prices
Speaker 1: reset at a level that makes sense for the borrowing
Speaker 1: environment that we're in. So it's got to go to
Speaker 1: a level where you can afford to pay your mortgage.
Speaker 1: Basically if you're a homeowner, and that might sound simplistic,
Speaker 1: but if your interest rates have gone up and the
Speaker 1: Fed raised interest rates at the fastest pace on record,
Speaker 1: and you can afford to pay let's say, of your
Speaker 1: post tax income, it's basically got to go to a
Speaker 1: level that reflects that, and in some cases that means
Speaker 1: price falls in order that people can afford these. Otherwise
Speaker 1: you have to wait, hold on to it, maybe rented
Speaker 1: out what we call accidental landlords, so you actually don't
Speaker 1: want to be a litler, but you can't afford to
Speaker 1: get rid of your place, so you kind of hold
Speaker 1: onto the rent until the market comes back. And you know,
Speaker 1: I'm irish, and we we basically had people to do
Speaker 1: this for fifteen years. It took fifteen years for the
Speaker 1: market to rec over, and we may end up in
Speaker 1: a situation like that, where lots of lots of people
Speaker 1: are holding onto property they can't afford to get rid of.
Speaker 1: And I do think the banks are in better shape.
Speaker 1: I do think there will be a shake out there,
Speaker 1: but it won't be anywhere near as bad as a
Speaker 1: financial crisis. What's interesting is for the banks is that
Speaker 1: a lot of what are called stage two loans, which
Speaker 1: is kind of a very boring jargony termed that basically
Speaker 1: means the loans starting to get a bit in trouble,
Speaker 1: but it's not in proper trouble yet. The level of
Speaker 1: increase of that in Europe in the last year has
Speaker 1: been the fastest on record, So that suggests that the
Speaker 1: banks see some trouble coming down the tracks and they're
Speaker 1: getting ready and preparing for that. Neil Calenan, thanks so
Speaker 1: much for talking with me today. Thank you. You can
Speaker 1: read more from Prashanko Pol and Neil Calenan on Bloomberg
Speaker 1: dot com. Thanks for listening to us here at the
Speaker 1: Big Take, the Daily podcast from Bloomberg and I Heart Radio.
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