Despite Struggling Real Estate Market, Insurance CEO Remains Bullish
There is a lot of doom and gloom about real estate these days, but the CEO of Prudential Financial isn't bothered.
Attitudes about the real estate market are full of doom and gloom lately, with everyone from industry experts to Elon Musk warning of a collapse in prices.
But one industry insider isn't worried about "many parts" of the real estate market, despite commercial real estate experiencing stubborn headwinds that won't die down.
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"When people ask me about real estate, what they're actually asking me about is office. But the two shouldn't be conflated. Many parts of the real estate market are actually doing very well," David Hunt, CEO of Prudential Financial told the audience at Bloomberg Invest.
"Multi-family, which is probably our largest holding, is actually holding up extremely well, rents are doing fine, we are not having problems with payments."
The problem, according to Hunt, is that builders have been undersupplying the residential real estate market for decades, causing prices to remain artificially high.
"We do not have enough housing in the U.S., the UK and many parts of the world," Hunt said.
It's a sentiment that has been echoed recently by CNBC's Jim Cramer.
Real estate has hit the skids since the Federal Reserve began raising interest rates in March 2022 and the economy showed some signs of slowing.
Rising interest rates hurt real estate because many owners borrow money to pay for their properties. So that borrowing becomes more expensive. Also, higher rates hurt real estate by making bonds more attractive as an investment, given their climbing yields.
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