Commercial Real Estate Pro Network

J Darrin Gross

I'd like to ask you, Neal Bawa, what is the BIGGST RISK?

Neal Bawa

So I'll give you two risks that affect insurance prices, and all other forms of prices in the United States. So one is a bigger, sort of more, you know, overarching risk. The second one is, is well known to us this. So the first one is climate change, we are continuing to see devastating impacts of climate change in many markets. It is a political, you know, issue where, you know, half of America doesn't want to acknowledge what is happening in markets like Florida and Texas and many other markets, like California, for example. But insurance costs are absolutely skyrocketing. And what's interesting is that it's even happening in markets that are not as impacted. So for example, Chicago is not considered to be a market that's highly impacted by climate change. But I just renewed my insurance for a triplex that I own on Brandon Avenue in Chicago. My insurance went up 58% 58%. And I went through a very detailed process of shopping it. So the climate change, is it an evolving thing? So it's not one of those? Yeah, you know, we've had insurance almost doubled in the last three or four years. I think we're done with that process. That's a nonsensical answer. I am not seeing any evidence that we are, quote, unquote, done with climate change that we're done with the insurance hikes, there's no doubt in my mind that we will continue to see double digit insurance hikes at least into the foreseeable future. So that's really the first biggest risk. The second largest risk is to inflation. So it's not necessarily directly tied to insurance, I'm sure insurance will go up because of it. The second largest risk is that there is a now an increasing chance that the United States will get into a shooting war with China in 2027. By 2026, the Chinese navy will achieve parity with the United States by 2027, they will be stronger than us, the chances of a shooting war are high. If that happens, we could have a year with 100% inflation in a single year.