27. February 2024

• Billionaire Jeff Greene has warned that the US real estate industry is heading into a “very frightening time” due to the shift in interest rates and artificial intelligence.
• Economist Peter St Onge issued a similar warning earlier this year, saying a collapse in commercial real estate could be a canary in the coal mine for the US financial system at large.
• Greene warns that inexperienced investors may be unprepared for rate hikes and advises caution before taking on any risky investments.

Billionaire Issues Warning

Billionaire Jeff Greene has issued a warning about the future of US real estate, saying that it is entering a new chapter that will test large portions of the American economy. In an interview with Fox Business, Greene said after years of artificially low interest rates, the shift towards more expensive capital could rock those who are not prepared for rate hikes.

Economic Impact

Economist Peter St Onge also echoed Greene’s warnings, adding that there may be major economic fallout if government bonds continue to bleed and bad loans remain high in regional banks combined with rising interest rates. He said these factors could create a “perfect storm” for commercial real estate.

AI as a Sledgehammer

Greene also warned that artificial intelligence (AI) could be like using “a sledgehammer” on white collar jobs, reducing the need for office workers and physical spaces many businesses rely on. He added that inexperienced investors should take caution before investing in any risky ventures as they may not know how to handle potential rate hikes or other issues brought on by AI advancements.

Rising Interest Rates

The billionaire said most people have only experienced artificially low interest rates since 2002 and now they must face what rising rates will mean for their business investments or personal mortgages. With rents dropping due to market conditions, he believes many will struggle to pay off their loans when the time comes due – creating an even more frightening situation within the entire real estate industry.

Take Caution

Given all this uncertainly surrounding US real estate markets, Greene advises investors to take caution before investing in any risky ventures or taking out loans they ultimately might not be able to afford if things don’t go as planned.