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Washington, D.C. Morning Brief Washington DC

Washington, D.C. Morning Brief

June 20, 2017 Bisnow

EagleBank CEO Ron Paul On

The Current Real Estate Cycle

Bisnow: The current real estate and economic cycle is already the longest in history, and, with the exception of the retail sector, it shows no immediate signs of slowing down. What does this mean? Do we need to rethink the definition of a cycle for the 21st century?

Ron Paul: We absolutely, categorically need to rethink the definition of a cycle. In my opinion, this cycle can continue for a foreseeable period of time. What would derail us is an event. It’s not the cycle that’s going to derail us, it’s an event. It’s Lehman Brothers in 2007 or 2008. It’s going to be event-driven. You almost have to subdivide your caution by who you are. If you’re a German pension fund, I’m looking at this as a 20-year run. I’m not that worried about an event, then a recession hitting, because I’ll get through that recession. The funds in real estate, there are a lot more differentiating factors today than there were in 2007 and 2008.

I don’t think this is cycle-driven, I really do believe this is event-driven. You get a Lehman Brothers event that takes place. That would have a disastrous impact on our economy. But that would be the event, not interest rate cycles. The 10-year [treasury] was 2.60% three months ago, now it’s back down to 2.25%. What’s changed? Nothing’s changed.