Campus Apartments CEO and billionaire David Adelman warned about the health of the housing market this year and touched on the limits of artificial intelligence (AI) tools during an interview with Fox News Digital.
Adelman said that interest rates, which were “artificially low for a very long time,” may come back to bite Americans who took on mortgages.
Low mortgage rates, he explained, allowed “more people than you probably should have had” to buy homes and take houses off the market. But Adelman said he was “hopeful” that at least some of those buyers locked in a long term mortgage, because otherwise they might get a “punch in the face” that they were not expecting.
The Federal Reserve under Chairman Jerome Powell’s leadership hiked interest rates 7 times in 2022 alone. In late March, the Fed announced its 9th consecutive hike in yet another attempt to cool historically high inflation rates.
“There needs to be an equilibrium in the housing market to make sure that you have enough supply,” Adelman explained.
“I’d certainly like to see more supply,” he added. “I’d like to see more affordable housing. I’d like to see a way where the private sector and government can work together to ease that development process, to get more housing into the hands of first time buyers and young professionals.”
Adelman, who heads Campus Apartments — one of the biggest apartment companies in the U.S. — has worked in the housing and renting business his entire career. He said that while his generation was raised to believe that buying a home was the ultimate goal in life, he wants to challenge the “notion” that renting is a waste of time.
That’s because with renting, “you’re buying flexibility,” Adelman said.
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“You’re locked in for a finite period of time. You can move.” Buying a house is a much more limiting investment, one that can even turn into a “liability” if circumstances change, he pointed out.
“You buy a house, you don’t know how long you’re locked in. Your situation changes.”
When asked how the government and the private sector could work together to create more affordable housing, Adelman gave one of his current projects — the new 76ers arena in Philadelphia — as a prime example. Adelman is one of the owners of the Philadelphia 76ers basketball team.
“One of the things that’s really important to us and my partners is to make sure that we can help create affordable housing in the adjacent neighborhoods to really solidify those neighborhoods. And so when you take private capital,” he explained, add “good government programs for affordability and leverage that capital stack together, you get the ability to build housing.”
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Another way to help increase the housing supply in general, Adelman said, was to streamline the permit approval process because “time adds cost to deals.”
Adelman also spoke out on artificial intelligence systems and its effect on his businesses. He is founder of cred.ai, “a bank alternative issuing next generation credit cards and deposit accounts,” according to the company’s website.
The billionaire, who stressed that he was not a “technologist,” said that the future of AI was anyone’s best guess. He likened the current AI landscape to the early years of search engines, when Internet Explorer, Yahoo!, Google and others were scrapping it out to become the most popular search platform on the internet.
Back then, “you didn’t know who the winners would be or who the losers were going to be,” Adelman said, AI as a technology, like search engines, “is not going away” anytime soon.
But that doesn’t mean AI can do everything, he added.
“I’m not sure I’m prepared to hire a computer to be my lawyer,” Adelman said.
AI tool ChatGPT made headlines after it passed the bar exam and even outperformed some Ivy League students at the University of Pennsylvania’s Wharton School of Business on a final exam.
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Adelman spoke out on the SVB controversy, as some experts argue over whether it technically counts as a “bailout” or not.
Adelman emphasized that while he doesn’t “believe in bailouts,” Silicon Valley Bank, which collapsed on March 10, did not technically benefit from a “bailout.”
“I think that making sure that people can have confidence in our banking system is really important. I don’t think that’s a bailout. I think that’s where the government is putting its faith and credit behind industry and economy. And so for me, that makes sense.”
“Again, I wouldn’t be supportive of any bailouts to the equity holders or the management of the folks that owned stock in those companies,” Adelman added.
“Spooking the markets is not good for anyone. I don’t care if you’re a Republican or a Democrat.”