WEBVTT - Fed, Labor, and Real Estate 0:00:00.040 --> 0:00:02.480 We bring you news and analysis every day on the 0:00:02.520 --> 0:00:06.200 tape podcast, but now you can get the latest news 0:00:06.320 --> 0:00:11.400 on demand whenever you want. Subscribe to Bloomberg News Now 0:00:11.720 --> 0:00:14.480 to get the latest headlines at the click of a button. 0:00:14.760 --> 0:00:18.200 Get informed on your schedule. You can listen to news 0:00:18.200 --> 0:00:21.840 and subscribe to Bloomberg Newsnow on the Bloomberg Business app, 0:00:22.000 --> 0:00:25.880 Bloomberg dot com plus, Apple, Spotify, or anywhere else you 0:00:25.920 --> 0:00:30.280 get your podcasts. Search Bloomberg News Now and subscribe today. 0:00:31.440 --> 0:00:34.680 Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney alongside 0:00:34.680 --> 0:00:35.840 my co host Matt Miller. 0:00:36.280 --> 0:00:40.240 Every business day, we bring you interviews from CEOs, market pros, 0:00:40.360 --> 0:00:44.240 and Bloomberg experts, along with essential market movin news. 0:00:44.760 --> 0:00:47.919 Find the Bloomberg Markets Podcast on Apple Podcasts or wherever 0:00:48.000 --> 0:00:51.120 you listen to podcasts, and at Bloomberg dot Com slash podcast. 0:00:51.640 --> 0:00:54.600 All right, so we're here at the Bloomberg Sustainable Business 0:00:54.600 --> 0:00:58.320 sum A part of that is financial inclusions. To find 0:00:58.320 --> 0:01:02.440 what financial inclusion is, how we measured Kara who Canson 0:01:02.520 --> 0:01:05.280 joins a senior vice president and head of workplace Benefits 0:01:05.520 --> 0:01:09.360 at Benefits and Protection Principle. Kara, thanks so much for 0:01:09.480 --> 0:01:09.840 joining us. 0:01:09.840 --> 0:01:09.920 Here. 0:01:09.920 --> 0:01:13.520 We appreciate you coming here to Bloomberg. What is financial 0:01:13.520 --> 0:01:15.399 inclusion and how do you measure it? 0:01:16.240 --> 0:01:24.839 So, financial inclusion is about giving more people access to tools, products, 0:01:25.080 --> 0:01:29.920 services that enable them to ultimately the goal is achieve 0:01:30.040 --> 0:01:34.440 financial security, and so making sure that a much broader 0:01:34.440 --> 0:01:37.800 group than today has access to all that they need 0:01:38.000 --> 0:01:42.960 in order to make those decisions and achieve financial success. 0:01:43.480 --> 0:01:46.720 You know, it is partly about measuring the access the 0:01:46.800 --> 0:01:50.680 number of people that do have access to those products 0:01:50.680 --> 0:01:55.440 and services, but then it's also about their degree of 0:01:55.480 --> 0:01:59.000 comfort and security long term, which is a bit subjective 0:01:59.040 --> 0:02:01.720 because that's going to look different for everybody. But we 0:02:01.800 --> 0:02:04.440 have a huge opportunity ahead of us to make sure 0:02:04.480 --> 0:02:07.800 that just that access is taken care of. Principle created 0:02:07.840 --> 0:02:11.760 an index called the Global Financial Inclusion Index last year. 0:02:12.000 --> 0:02:15.440 We just this week released our second edition of that 0:02:17.000 --> 0:02:19.679 and it measures financial inclusion across forty. 0:02:19.360 --> 0:02:23.560 Two different markets, markets in terms of countries. 0:02:23.240 --> 0:02:27.440 Countries, forty two different countries, and really looks at the 0:02:27.520 --> 0:02:31.160 role of three pillars in each of those countries, the government, 0:02:31.680 --> 0:02:35.799 the financial system itself, and the role of employers. And 0:02:35.919 --> 0:02:38.800 so we can measure each of those pillars by country 0:02:38.880 --> 0:02:43.400 and then aggregate that to determine kind of relativeness around 0:02:43.520 --> 0:02:48.200 financial inclusion. One of the things that this year's particular 0:02:48.280 --> 0:02:51.720 index showed is that those countries that are making the 0:02:51.760 --> 0:02:56.000 biggest progress in terms of financial inclusion are the ones 0:02:56.040 --> 0:03:00.280 that are making investments to digitally enable access us to 0:03:00.440 --> 0:03:05.280 products and services think mobile banking, real time payments, those 0:03:05.440 --> 0:03:09.320 types of solutions, which inherently because so many of us 0:03:09.400 --> 0:03:12.280 and an ever greater percentage every day, have access to 0:03:12.320 --> 0:03:14.960 those computers we hold in our hands, and so that's 0:03:15.000 --> 0:03:22.079 a really important component of financial inclusion, the tools at 0:03:22.160 --> 0:03:23.200 people's fingertips. 0:03:23.400 --> 0:03:25.840 So I imagine we were just talking about holistic systems, 0:03:25.880 --> 0:03:30.600 and this isn't something that you're doing because necessarily you 0:03:30.680 --> 0:03:33.080 feel sorry for the people who aren't included. It's not 0:03:33.200 --> 0:03:36.240 about charity, right, I mean, in some senses maybe, but 0:03:36.840 --> 0:03:40.800 really it should be good for the entire society if 0:03:40.840 --> 0:03:44.240 you include more people. So do you see a correlation 0:03:44.480 --> 0:03:49.680 between those markets that are more financially inclusive and say, 0:03:49.760 --> 0:03:51.600 you know, stronger more sustainable growth. 0:03:51.640 --> 0:03:54.680 Absolutely? So great, astute question. So not only did we 0:03:54.720 --> 0:03:59.080 develop this index, but beyond that, we compare that index 0:03:59.160 --> 0:04:05.240 to different indicators of overall economic progress, and there is 0:04:05.280 --> 0:04:11.000 a strong correlation there. Countries that have greater financial inclusion 0:04:11.120 --> 0:04:14.720 are more resilient, whether it's resilience to climate change, whether 0:04:14.760 --> 0:04:20.960 it's resilience to geopolitical risks. They ultimately are more ethical 0:04:22.000 --> 0:04:27.720 economies and that leads to happier, more excuse me, more 0:04:27.839 --> 0:04:32.000 food secure individuals, and brighter prospects for the future. 0:04:32.520 --> 0:04:34.400 How does the US rank on your index? 0:04:34.880 --> 0:04:39.239 So the US actually currently ranks number four, sure, four. 0:04:39.480 --> 0:04:43.920 We actually dropped a couple of spots from last year's rankings, 0:04:44.400 --> 0:04:47.800 and there were a variety of factors that went into that, 0:04:48.160 --> 0:04:51.200 one of which is, you know, just consumer sentiment is 0:04:51.240 --> 0:04:55.400 an underlying consideration in this research, and consumer sentiment is 0:04:55.480 --> 0:04:58.680 changing given you know, all the different factors, whether it's 0:04:58.720 --> 0:05:04.120 the economy and concerns related to that, politics, the news cycle, 0:05:05.040 --> 0:05:07.680 all of that feeding into overall consumer sentiment. 0:05:08.279 --> 0:05:08.920 Who's number one? 0:05:09.000 --> 0:05:13.039 Yeah, Singapore is number one. Surprised, Yes, very strong and 0:05:13.200 --> 0:05:14.080 on all three. 0:05:13.880 --> 0:05:16.560 Pillars, so much easier though it's almost unfair, right, I 0:05:16.600 --> 0:05:19.360 mean it's a much smaller market, it is, Yeah. 0:05:19.080 --> 0:05:22.240 But there's also been a lot of intentionality around how 0:05:22.279 --> 0:05:26.000 those three different pillars all pull their own weight in 0:05:26.120 --> 0:05:29.559 order to create a very financially inclusive. 0:05:30.040 --> 0:05:31.680 And they have I think a much. I mean, it's 0:05:31.680 --> 0:05:35.320 easier with a centrally controlled economy, right, It's probably more 0:05:35.360 --> 0:05:41.159 difficult with totally chaotic and broken democracy like they have 0:05:41.279 --> 0:05:41.919 here in the US. 0:05:42.000 --> 0:05:45.479 There are definitely different sets of challenges when not all 0:05:45.520 --> 0:05:47.400 the ores are rowing in the same direction. 0:05:47.880 --> 0:05:50.000 What are some of the countries that are, you know, 0:05:50.000 --> 0:05:52.880 maybe making big gains or maybe have some real challenges. 0:05:52.480 --> 0:05:55.000 In front of them, you know, I would say back 0:05:55.000 --> 0:05:59.520 to the comments around you know, digitally enabling, you know, 0:05:59.600 --> 0:06:03.000 place is like Taiwan and Vietnam are making some pretty 0:06:03.000 --> 0:06:06.560 significant gains because of the infrastructure investments that they are 0:06:06.640 --> 0:06:12.920 making to enable their citizens to access financial products and services, 0:06:12.960 --> 0:06:16.920 and beyond that, it's also the education that goes with 0:06:17.160 --> 0:06:19.400 the use of those products and services. 0:06:19.480 --> 0:06:22.040 Are there any big laggards that surprised you, any countries 0:06:22.120 --> 0:06:24.040 that you think should be making more headway. 0:06:24.440 --> 0:06:27.360 Not specifically country by country. I think, you know, it's 0:06:27.400 --> 0:06:30.920 probably not a surprise that developed markets that have more 0:06:31.000 --> 0:06:36.440 resources to support their citizens generally rank higher on the index, 0:06:36.960 --> 0:06:40.680 and you know, emerging markets tend to fall lower on 0:06:41.120 --> 0:06:46.320 the index. But again, the digital component and investing in 0:06:46.320 --> 0:06:50.240 infrastructure to support digitization is really key, and those countries 0:06:50.279 --> 0:06:52.920 doing that are making the most progress year over year. 0:06:52.960 --> 0:06:54.760 I bet for women, I'm not sure if it's just 0:06:54.920 --> 0:06:57.200 us or just kind of what generally your findings are women? 0:06:57.279 --> 0:07:00.400 Do they feel more or less inclusive relative that maybe 0:07:00.680 --> 0:07:01.520 the general population? 0:07:01.800 --> 0:07:05.960 Sure, So the short answer to that is they feel 0:07:06.160 --> 0:07:11.480 less included, they have less less confidence, and their perceptions 0:07:11.640 --> 0:07:17.920 around money management and investing are are different than men. 0:07:18.480 --> 0:07:21.400 This is there's recent research that principal did with her 0:07:21.480 --> 0:07:25.240 money that just reaffirm that. I think there's very few 0:07:25.240 --> 0:07:28.520 people that would say they wouldn't benefit from additional education 0:07:28.800 --> 0:07:33.880 and advice, but in particular, women will significantly benefit. 0:07:33.880 --> 0:07:35.720 Well, here's a good little story just from yesterday. I 0:07:35.720 --> 0:07:37.960 had lunch with my twenty seven year old daughter. We 0:07:38.000 --> 0:07:41.760 spent most of lunch talking about investing, like she would, 0:07:41.760 --> 0:07:44.400 you know, and you know, she's got that Marcus savings 0:07:44.440 --> 0:07:45.600 account and. 0:07:45.480 --> 0:07:46.800 She's got a high interest rate there. 0:07:46.880 --> 0:07:48.720 Yeah, she's got a high interest rate there. She's just 0:07:48.760 --> 0:07:50.600 kind of asking a lot of questions about kind of 0:07:50.600 --> 0:07:52.680 what to do, and you know that's great. Yeah, So 0:07:52.760 --> 0:07:53.160 I was like. 0:07:53.440 --> 0:07:55.800 Nice, and she's listening to da. 0:07:55.480 --> 0:07:59.960 Exactly exactly exactly, probably has a head start compared to 0:08:00.080 --> 0:08:02.240 most other women in the world, though, right, That is. 0:08:02.280 --> 0:08:05.000 Very, very true, and that often is one of the 0:08:05.040 --> 0:08:09.000 issues is just this overwhelming feeling of where to start. 0:08:09.080 --> 0:08:10.760 They may you know, a lot of people don't have 0:08:10.800 --> 0:08:12.920 a dad that can talk with them, you know, over 0:08:13.000 --> 0:08:16.320 a meal to you know, answer those questions. And if 0:08:16.360 --> 0:08:19.320 you do a search on whatever your browser of choices, 0:08:19.560 --> 0:08:22.960 you know, the amount of information that is at someone's 0:08:23.000 --> 0:08:26.480 fingertips doesn't make that process easier. 0:08:26.520 --> 0:08:28.560 All right, Carols, thanks so much for joining us. Kiro 0:08:28.600 --> 0:08:31.480 really appreciate it. Caro Hugginson, she's a senior vice president 0:08:31.560 --> 0:08:35.000 and head of workplace benefits at the firm is principal 0:08:35.040 --> 0:08:37.040 correct correct, Awesome. So we got it there. So we're 0:08:37.080 --> 0:08:39.959 just talking about the financial inclusion. They've got a cool 0:08:40.000 --> 0:08:43.240 index there that kind of measures that the US is 0:08:43.360 --> 0:08:43.840 ranked num. 0:08:43.720 --> 0:08:45.880 Beerfore, we got a little work to do there, folks. 0:08:45.960 --> 0:08:47.040 Let's get out there and get it done. 0:08:47.160 --> 0:08:48.520 This is Bloomberg. 0:08:49.720 --> 0:08:53.560 You're listening to the Team Ken's live program Bloomberg Markets 0:08:53.600 --> 0:08:56.720 weekdays at ten am Eastern on Bloomberg dot com, the 0:08:56.800 --> 0:08:59.880 iHeartRadio app, and the Bloomberg Business app or listen on 0:09:00.040 --> 0:09:01.920 a man wherever you get your podcast. 0:09:03.679 --> 0:09:06.360 We got sun beating down on us right coming through 0:09:06.640 --> 0:09:08.400 the window here at seven thirty one, like snab we 0:09:08.400 --> 0:09:10.800 should use it. We should perfect time. What a great 0:09:11.520 --> 0:09:13.920 solar panel. Let's put up a solar let's talk solar energy. 0:09:13.960 --> 0:09:16.840 Abigail Ross Cooper joins us. She's a president and CEO 0:09:16.920 --> 0:09:20.360 of the Solar Energy Industries Association s E. I A 0:09:20.640 --> 0:09:23.280 for the folks in the note. Abigail, thanks for joining 0:09:23.360 --> 0:09:27.200 us here talk to us about solar energy. I gotta 0:09:27.240 --> 0:09:30.800 think it's a big beneficiary of the you know, the 0:09:32.200 --> 0:09:34.840 looking at the green transition. Yeah, the green transition, the 0:09:34.840 --> 0:09:35.720 inflation reduction. 0:09:35.960 --> 0:09:39.800 Right, We've seen peaks and troughs in terms of investor interests, 0:09:39.840 --> 0:09:42.600 but I'm sure the amount of panels out there just 0:09:42.679 --> 0:09:44.800 continues to grow to record after record. 0:09:45.000 --> 0:09:48.080 Yeah. I mean, first of all, it is hot right here. Yes, 0:09:48.760 --> 0:09:51.360 so let's just have a moment. It's working, okay, if 0:09:51.360 --> 0:09:53.440 anyone wonder, the technology. 0:09:52.880 --> 0:09:56.680 Works, the sun works, Global warming feels real. 0:09:56.880 --> 0:10:00.200 It's really real right now. Yeah, it is a ptty 0:10:00.200 --> 0:10:03.040 exciting time to be in the solar industry. Our projections 0:10:03.200 --> 0:10:05.120 tell us that this year our industry is going to 0:10:05.200 --> 0:10:08.040 grow by about fifty two percent, which you were talking 0:10:08.040 --> 0:10:10.679 about something growing in half as I was walking up here. 0:10:10.800 --> 0:10:13.800 We're going to double, which is an exciting Uh, it's 0:10:13.800 --> 0:10:14.480 it's pretty. 0:10:14.480 --> 0:10:17.240 We were talking about thirty year treasuries. Yeah, typically a 0:10:17.320 --> 0:10:20.200 very safe investment. Yeah, it's been a over the last. 0:10:20.000 --> 0:10:23.800 Three not not so exciting. So, yeah, solar is gonna 0:10:23.920 --> 0:10:25.400 uh the installations. 0:10:26.280 --> 0:10:30.400 What the backlash that Paul has been talking about. You know, 0:10:30.400 --> 0:10:34.160 it's become a very political issue ESG in general, the 0:10:34.280 --> 0:10:38.640 pain transition obviously, and even though we probably see more 0:10:38.679 --> 0:10:42.320 solar panels in Texas than anywhere else in the country, 0:10:42.800 --> 0:10:46.520 you've had, especially those people down south, like really pushing 0:10:46.559 --> 0:10:47.520 back against ESG. 0:10:47.640 --> 0:10:50.000 Yeah. So that's why you're never going to hear those 0:10:50.080 --> 0:10:52.120 letters or those come out of my mouth. But you 0:10:52.160 --> 0:10:53.520 know what you are going to hear come out of 0:10:53.520 --> 0:10:57.040 my mouth at lower prices. Yep, Because yes, it is 0:10:57.080 --> 0:11:00.319 true that California is the state with the most solar 0:11:00.360 --> 0:11:00.800 in the country. 0:11:00.880 --> 0:11:02.679 Right now, California has more than Texas. 0:11:02.760 --> 0:11:06.040 Texas and Florida are two and three, and over the 0:11:06.080 --> 0:11:08.480 course of the next few years, it's really a race for 0:11:08.520 --> 0:11:10.640 which one is going to be number one. Texas and 0:11:10.679 --> 0:11:13.719 Florida are not known for their big d politics, right, 0:11:13.760 --> 0:11:15.960 but what they are known for is wanting the lowest 0:11:16.000 --> 0:11:19.920 energy prices and competitive energy markets. And so that's really 0:11:19.960 --> 0:11:22.040 why people are going solar. And when I say people, 0:11:22.080 --> 0:11:25.199 I shouldn't say people, I should say customers. And customers 0:11:25.200 --> 0:11:29.080 are utilities, customers are corporations, and customers are homeowners, right, 0:11:29.440 --> 0:11:34.160 apartment owners, warehouse owners, utilities, co ops, kind of anyone 0:11:34.200 --> 0:11:36.600 that wants low energy prices, which is pretty much every 0:11:36.679 --> 0:11:39.360 person and every company in the United States talk to. 0:11:39.400 --> 0:11:43.280 Us about the efficiency of solar energy versus the other sources, 0:11:43.320 --> 0:11:45.880 and sure, and kind of how that I guess maybe 0:11:45.920 --> 0:11:47.320 the Eternal mind investment works. 0:11:47.400 --> 0:11:51.079 Yeah, So so you sort of ask two different questions, 0:11:51.120 --> 0:11:54.400 like breaking news, you guys, the sun does not shine 0:11:54.440 --> 0:11:57.680 twenty four hours a day, okay, And so if your 0:11:57.920 --> 0:12:01.520 only source of energy is you like unplug from the 0:12:01.600 --> 0:12:03.960 grid and you do not have any kind of backup power, 0:12:04.920 --> 0:12:07.280 not gonna have power twenty four hours a day. So 0:12:07.320 --> 0:12:10.080 you have two choices. You can either not unplug from 0:12:10.120 --> 0:12:13.040 the grid and rely on your electric distribution utility for 0:12:13.080 --> 0:12:14.760 the other hours of the day, or you can have 0:12:14.800 --> 0:12:17.800 a backup battery system, you can have some combination of those. 0:12:18.240 --> 0:12:21.200 So we talk about the efficiency or sort of the 0:12:21.200 --> 0:12:24.760 capacity factor of a solar system being about you know, 0:12:24.800 --> 0:12:27.679 somewhere between twenty and thirty percent. But that's like a 0:12:27.800 --> 0:12:31.720 known feature. That's not like shocking news. In terms of 0:12:31.760 --> 0:12:35.000 your investment. There's it's a payback period right like it's 0:12:35.280 --> 0:12:37.360 and it depends on what your energy prices are to 0:12:37.400 --> 0:12:39.360 the payback period. In a high where are we now 0:12:39.440 --> 0:12:41.920 New York, your energy prices are a tad bit higher 0:12:41.920 --> 0:12:45.640 than Wyoming, right or then South Dakota, and so your 0:12:45.679 --> 0:12:48.120 payback period is going to be shorter because your prices 0:12:48.160 --> 0:12:50.480 are higher than in those places. So it might be 0:12:50.720 --> 0:12:54.319 seven years here, it might be more years in a 0:12:54.640 --> 0:12:56.439 lower cost place. It depends a. 0:12:56.360 --> 0:12:58.880 Lot many years, is what the payback for you're talking about. 0:12:58.880 --> 0:13:01.160 I guess the average family putting solar on that if you. 0:13:01.080 --> 0:13:04.360 Put solar on your roof exactly, you know, lots of 0:13:04.520 --> 0:13:06.920 lots of factors, but that's around ish. 0:13:07.120 --> 0:13:13.200 But how power viewed versus wind nuclear gas. 0:13:13.120 --> 0:13:17.079 So so interesting. You know, you can't actually put wind 0:13:17.280 --> 0:13:19.880 usually on your home, and you can't have your personal 0:13:19.960 --> 0:13:20.560 nuke power. 0:13:20.640 --> 0:13:23.280 Right, So those you live in South Dakota. 0:13:24.000 --> 0:13:26.920 True, True, and you asked the SMR guys, right, they're 0:13:26.920 --> 0:13:28.959 going to tell you could have your own personal SMR. 0:13:30.080 --> 0:13:33.520 But so so solar is unique in that you can 0:13:33.600 --> 0:13:35.840 have your own like it's scalable in a way that 0:13:35.880 --> 0:13:38.640 a lot of other technologies are not. But utilities, right, 0:13:38.679 --> 0:13:42.679 they have a choice of different energy prices or energy technologies. 0:13:42.960 --> 0:13:47.240 Solar is the number one, number one new energy source 0:13:47.640 --> 0:13:49.319 in the country, and it has been for the last 0:13:49.360 --> 0:13:52.560 few years. So utilities that are putting on RFPs for 0:13:52.640 --> 0:13:58.000 new energy sources, oh sorry, requests for proposals. So they're saying, hey, 0:13:58.200 --> 0:14:01.280 you know, we have new load, we have new customers, 0:14:01.360 --> 0:14:03.320 we have new towns that are being built, we have 0:14:03.360 --> 0:14:06.440 new subdivisions, we have new electric vehicles. Like we are, 0:14:06.480 --> 0:14:10.040 we are retiring some assets. We need new capacity to 0:14:10.160 --> 0:14:13.000 fuel our system. So we got we were putting out 0:14:13.000 --> 0:14:17.199 a request of proposals to build some new electricity. So 0:14:17.280 --> 0:14:20.080 who's the best option? And they'll get a whole bunch 0:14:20.080 --> 0:14:24.200 of different proposals, and over and over they are choosing 0:14:24.800 --> 0:14:28.280 solar and building solar because it's the lowest price and 0:14:28.360 --> 0:14:29.760 it's making the most economic sense. 0:14:29.960 --> 0:14:32.600 Also, I guess it's easier in places like South Dakota 0:14:32.720 --> 0:14:36.400 or Texas right where there's just so much space. Right, 0:14:36.400 --> 0:14:41.240 You're not going to build a solar farm in Westchester County, 0:14:41.280 --> 0:14:43.800 for example, because everybody is like right next to the goodness, 0:14:43.800 --> 0:14:48.080 the Princeton campus for Bloomberg has a massive solar arrangement 0:14:48.080 --> 0:14:51.960 down there and everywhere. So does Dennis University's campus. Just 0:14:51.960 --> 0:14:52.880 looking at it Grandvillow. 0:14:53.160 --> 0:14:55.360 But but your version of massive. 0:14:56.680 --> 0:14:59.520 That's you're exactly exactly So do you still see growth 0:14:59.520 --> 0:15:01.480 in those big, massive solar farms. 0:15:02.120 --> 0:15:08.200 Yes, So the massive version in the West is like, uh, 0:15:08.400 --> 0:15:11.400 thousands of acres, thousands of acres. The massive version in 0:15:11.640 --> 0:15:14.680 west is some acres. 0:15:14.400 --> 0:15:16.560 All right, Abigail, thanks so much for joining us. Abigail 0:15:16.640 --> 0:15:18.560 Ross Hooper Hopper, Hopper, hop hopper. 0:15:18.640 --> 0:15:18.960 I got that. 0:15:19.000 --> 0:15:21.040 I'm sorry, I have to p's a typo here, uh, 0:15:21.200 --> 0:15:25.240 President and CEO of the Solar Energy Industries Association. Bring 0:15:25.240 --> 0:15:29.360 this up to date here on the powers of solar energy. 0:15:29.360 --> 0:15:30.240 We're gonna more coming up. 0:15:30.400 --> 0:15:31.440 This is Bloomberg. 0:15:31.760 --> 0:15:34.880 You're listening to the tape Cat's are Live program Bloomberg 0:15:34.960 --> 0:15:38.560 Markets weekdays at ten am Eastern on Bloomberg Radio, the 0:15:38.600 --> 0:15:41.840 tune in app, Bloomberg dot Com, and the Bloomberg Business App. 0:15:41.880 --> 0:15:44.680 You can also listen live on Amazon Alexa from our 0:15:44.680 --> 0:15:49.760 flagship New York station. Just say Alexa play Bloomberg eleven thirty. 0:15:50.680 --> 0:15:52.720 Let's take the discussion of interest rates over to the 0:15:52.760 --> 0:15:55.320 world of real estate. You can do that, Soma Hep, 0:15:55.720 --> 0:15:58.840 chief economist at core Logic. She can talk about to 0:15:58.880 --> 0:16:02.560 fed the rates and the real estate market in general. Selma, 0:16:02.560 --> 0:16:04.880 thanks so much for joining us. I just popped up 0:16:04.880 --> 0:16:07.720 on the Bloomberg terminal the Bank Greade thirty year fixed 0:16:07.800 --> 0:16:10.840 mortgage seven point eight eight percent. 0:16:11.480 --> 0:16:11.760 Wow. 0:16:11.800 --> 0:16:14.720 What does that mean for the residential real estate market? 0:16:16.320 --> 0:16:20.880 Yeah, I mean, unfortunately, housing market is really in a low. 0:16:21.440 --> 0:16:24.480 We're sitting on a bottom in many ways. When look 0:16:24.520 --> 0:16:27.160 at home sales activity, we're at the lowest that we've 0:16:27.160 --> 0:16:29.800 been since at least going back to year two thousand 0:16:29.920 --> 0:16:34.040 and what's even more sad is that we are lower 0:16:34.120 --> 0:16:36.640 than we were coming out of the Great Recession for 0:16:36.720 --> 0:16:39.160 the housing market, and that was a really low period 0:16:39.200 --> 0:16:42.760 for the housing market. In terms of mortgage activity too, 0:16:43.320 --> 0:16:46.160 we are at some forty year low, so we're really 0:16:46.240 --> 0:16:49.320 sitting at this bottom right now, trying to figure our 0:16:49.440 --> 0:16:53.440 way out. At least now in terms of home sales activity, 0:16:53.720 --> 0:16:55.960 what seems to be a little bit of a saving 0:16:56.000 --> 0:16:58.640 grace is that we do have a little bit more 0:16:58.800 --> 0:17:02.680 of cash sales going on. So cash share has been 0:17:02.720 --> 0:17:05.800 on a rise, and that's a function of you know, 0:17:05.800 --> 0:17:09.440 baby boomers having more equid in their homes and also 0:17:09.480 --> 0:17:13.679 to some extent more investors in the market, particularly smaller 0:17:13.680 --> 0:17:17.840 investors in the market. Also in international buyers seem to 0:17:17.880 --> 0:17:20.960 be back, so that's helping market a little bit. But 0:17:21.760 --> 0:17:25.800 nothing to rave about this point. 0:17:26.680 --> 0:17:28.560 Yeah, you know, it's I guess we go back and 0:17:28.560 --> 0:17:30.560 look at the last thirty forty fifty years. A seven 0:17:30.560 --> 0:17:33.240 percent mortgage market is not the craziest thing. We've seen 0:17:33.280 --> 0:17:36.040 that many many times. But I guess the question here, 0:17:36.119 --> 0:17:38.160 or the issue here for a lot of folks is, boy, 0:17:38.280 --> 0:17:41.760 we moved up in mortgage rates from the really really quickly, 0:17:41.800 --> 0:17:44.040 more than doubling, you know, in the space of a year. 0:17:44.080 --> 0:17:47.199 That shock presumably will take some time for you know, 0:17:47.240 --> 0:17:48.359 kind of the market to absorb. 0:17:48.400 --> 0:17:52.199 I guess, yeah, absolutely, I think really for a lot 0:17:52.280 --> 0:17:55.040 of buyers it is the shock. I mean affordability, like 0:17:55.080 --> 0:17:56.879 I said, is at forty year low, but there are 0:17:56.920 --> 0:17:59.639 buyers out there, and there are buyers now even at 0:17:59.680 --> 0:18:03.040 the percent rate, you know, first time buyers for example, 0:18:03.119 --> 0:18:05.760 So there are folks out that there. They are very interesting. 0:18:05.800 --> 0:18:08.159 But you know, it's something we've talked a lot about before, 0:18:08.359 --> 0:18:11.800 is lack of inventory. So it's not even just the 0:18:11.920 --> 0:18:14.720 rates at this point, but you know, rates, higher rates 0:18:14.760 --> 0:18:19.200 are locking in potential sellers. Inventories at the lowest level 0:18:19.240 --> 0:18:22.440 we've seen historically, so really, you know, it's it's it's 0:18:22.440 --> 0:18:25.679 a quagmire. It's it's we're just you know, there's nothing 0:18:25.760 --> 0:18:28.520 it's something you know, at least we need to see 0:18:28.560 --> 0:18:33.000 a lower mortgage rate at some point for something to change. 0:18:34.640 --> 0:18:37.479 So you know, it's I kind of feel like the 0:18:37.520 --> 0:18:39.919 next issue that somebody has to get a handle on 0:18:40.080 --> 0:18:42.080 is what is the rate or is there a rate 0:18:42.600 --> 0:18:44.760 that kind of frees up the market, clears out the 0:18:44.800 --> 0:18:48.880 market that would make you know, it would be sellers say, okay, yes, 0:18:48.920 --> 0:18:50.959 I'm getting out of my three or four percent mortgage, 0:18:50.960 --> 0:18:52.639 but the rates are i don't know, five percent or 0:18:52.680 --> 0:18:55.840 six percent, so it's not that bad. Do you guys 0:18:55.840 --> 0:18:58.040 in the industry have a feeling like where interest rates 0:18:58.080 --> 0:19:00.600 have to go down to before we start to see 0:19:00.600 --> 0:19:02.320 some of these sellers come back into the market. 0:19:03.640 --> 0:19:06.520 Yeah, I think if we get back to about six percent, 0:19:06.640 --> 0:19:09.800 slightly below six percent, I mean that five handle is 0:19:09.920 --> 0:19:13.240 very magical in many ways, but even at six percent, 0:19:13.280 --> 0:19:16.200 I mean if you recall earlier this year when mortgage 0:19:16.240 --> 0:19:18.520 rates came down to six point two six point three, 0:19:18.720 --> 0:19:21.240 we had quite a bit of activity in a market 0:19:21.320 --> 0:19:25.000 and even more and inven inventory was picking up to 0:19:25.040 --> 0:19:27.000 some extent at that point. At this point we're just 0:19:27.040 --> 0:19:29.280 seeing nothing, you know. So I think it would really 0:19:29.320 --> 0:19:30.880 help to get richs down to six. 0:19:30.760 --> 0:19:35.959 Percent because I guess one of the questions is the 0:19:36.000 --> 0:19:40.239 new housing market give its just a sense of what percent? Like, 0:19:40.480 --> 0:19:42.520 how big is a new housing market? Can that deal 0:19:42.960 --> 0:19:45.800 with some of the demand out there? Where are we 0:19:46.000 --> 0:19:48.760 like new housing as percentage of total housing in terms 0:19:48.800 --> 0:19:50.640 of supply, right? 0:19:50.720 --> 0:19:55.600 I mean it has been increasing, especially now as existing 0:19:56.280 --> 0:19:59.920 home sales are frozen and inventory is frozen, So new 0:20:00.040 --> 0:20:02.520 home sales is a share of total sales have been 0:20:02.560 --> 0:20:05.480 on a rise historically. I think we've seen about eleven 0:20:05.520 --> 0:20:08.960 percent of sales being new home sales. Now we are 0:20:09.000 --> 0:20:13.640 closer to fifteen sixteen percent of home sales, new home 0:20:13.680 --> 0:20:18.000 sales contributing to overall sales activity. Now, the issue too 0:20:18.160 --> 0:20:20.680 at this point is that, you know, with mortgage atees 0:20:21.040 --> 0:20:24.520 approaching eight percent, now that's freezing new home market as well. 0:20:25.080 --> 0:20:28.040 And on the other hand, new home sales are really 0:20:28.119 --> 0:20:33.760 concentrated in parts of the country where the inventory issues 0:20:33.920 --> 0:20:37.639 are not as large. So, you know, so it's the 0:20:37.760 --> 0:20:41.120 other parts of the country that continue to suffer as 0:20:41.160 --> 0:20:43.840 a result of low inventory and higher mortgage rates. 0:20:45.760 --> 0:20:47.600 Yeah, because it seems like here in the Greater Metro 0:20:47.640 --> 0:20:50.600 area during the pandemic, we had a great exodus of 0:20:50.720 --> 0:20:53.720 people for you know, states like Texas and Florida and 0:20:53.720 --> 0:20:56.960 some of the other maybe Sun belt states. Is a 0:20:57.000 --> 0:21:00.000 supplied demand imbalance even more pronounced than some of the 0:21:00.000 --> 0:21:03.880 those faster growth market or are the new home builders 0:21:03.960 --> 0:21:05.800 kind of trying they're there meeting that demand? 0:21:06.920 --> 0:21:09.359 Well, I think they're ramping up. I'm not sure that 0:21:09.359 --> 0:21:13.040 they're necessarily meeting demand just simply given how many people 0:21:13.080 --> 0:21:16.840 are moving to those areas, but they're ramping up, and 0:21:16.960 --> 0:21:19.800 they are, you know, trying to And you know, one 0:21:19.840 --> 0:21:22.560 thing to keep in mind is that's it's less restrictive 0:21:22.600 --> 0:21:25.720 to building those areas and less costly, so they are 0:21:25.920 --> 0:21:30.480 in a sense providing that more affordable inventory and smaller 0:21:30.520 --> 0:21:35.160 homes and all these features that the incoming buyers are 0:21:35.160 --> 0:21:38.919