How could the property market change in 2025? Vesta Capital CEO Marc Kulick recently sat down with GlobeSt to explore that topic, and more.
Global financial markets are in a tricky spot at the moment. New aggressive policy changes from the US government have sent shock waves through virtually every sector, and at time of writing, stability seems a long way off.
For an insider look at what 2025 could bring, visit https://www.globest.com/2025/02/19/is-2025-the-end-of-extend-and-pretend/?slreturn=20250310134155
However, as is often the case, things may not be as grim as they first appear. While it is difficult to look at the market as a whole and declare that everything will be fine, it is perhaps more useful to zoom in on a single sector and find out how the market is faring on a small scale.
In the interest of doing exactly that, real estate news outlet GlobeSt recently interviewed the CEO of Vesta Capital, Marc Kulick, regarding a variety of topics, and there is much to be learned from their discussion. Let's explore some of the highlights.
As Kulick explains, the past 2 decades have seen the unmitigated rise of the so-called “extend and pretend” strategy in the real estate market. Developed in the wake of the 2008 financial crisis, the controversial practice has seen lenders artificially extending the maturity date of loans in order to avoid recognizing a loss—a strategy which has loomed for years over the industry, and which could now be on the way out.
While he and other experts remain confident that the market will not collapse outright under the weight of this strategy, he predicts that lenders, faced with increased pressure from the Fed, will become more aggressive in the coming months and years. Already, lenders are putting in place stricter requirements for principal payments, among other tightening restrictions.
In the event that these loans were allowed to mature, analysts, including Kulick, warn that the effect on the market could be disastrous. Small firms have benefited most from extend-and-pretend, as the strategy has allowed them to take more substantial risks, but an end to the practice could result in closures, bankruptcy, and significant impacts on borrowers as well.
Despite this, Kulick expressed optimism regarding paths forward, suggesting that falling interest rates or alterations to the Treasury yield could both have a stimulating effect on buyer behavior. Even now, without those factors in play, Kulick says that he believes that markets will grow in 2025 at a rate consistent with 2024’s growth.
He concludes the interview by stating, “If we see stability in the debt markets, it would create stability overall. Then you’d see transaction volume increase which would obviously be good for the economy.”
Vesta Capital is a real estate investment company currently overseeing over 10,000 rental units across 3 states. The company offers a balance of high-quality, compassionate support for the communities they serve, backed by a team of over 350 qualified employees allocated to their dedicated subsidiary, Vesta Realty.
Read the full interview and learn more about Kulick at https://www.globest.com/2025/02/19/is-2025-the-end-of-extend-and-pretend/?slreturn=20250310134155
