Skip to comments.Peter Schiff: Housing still has at least 20% on downside to go.
Posted on 12/30/2010 1:16:40 PM PST by GlockThe Vote
Peter Schiff: Here's Why Home Prices Have To Decline At Least 20% And Probably More Gregory White | Dec. 30, 2010, 12:09 PM | 6,520 | 25
House prices have to decline at least another 20.3% to come back to the historical trend and may have much further to fall, according to Peter Schiff of Euro Pacific Capital.
Writing in the Wall Street Journal, Schiff breaks down the horrible state of the U.S. residential real estate market just days after a negative Case-Shiller number pretty much confirmed we're in a housing double-dip.
Schiff explains that, if we all believe that we were in a housing bubble, then house prices need to come back to the historical trend line before we're actually through this.
But that 20.3% is only the beginning of the break.
From Peter Schiff (in the WSJ, emphasis ours):
With a bleak economic prospect stretching far out into the future, I feel that a 10% dip below the 100-year trend line is a reasonable expectation within the next five years, particularly if mortgage rates rise to more typical levels of 6%. That would put the index at 114.02, or prices 28.3% below where we are now. Even a 5% dip would put us at 120.36, or 24.32% below current prices. If rates stay low, price dips may be less severe, but inflation will be higher.
Read more: http://www.businessinsider.com/peter-schiff-home-prices-2010-12#ixzz19dBDDWwY
(Excerpt) Read more at businessinsider.com ...
Obama and Bernake should just print up a fresh 120 Trillion and be done with it.
Housing prices aren’t the problem. It’s how much people owe on the inflated products they bought that is the problem. Now we have this huge oversupply that’s hurting everyone.
I’m in Real Estate. We are hoping it only goes down 20% more. There are so many bank owned out there that one has a hard time seeing an end to this in the next couple years. We also have the added benefit of interest rate going up dramatically any minute.
I have been on the sidelines for a few years because i know we are still way off the bottom.
Karl Denninger (Market-Ticker.org) agrees.
I have been telling my GF that prices are still 20 - 40% too high based on historical criteria, and she used to yell at me for not buying, but no longer.
I have been following Schiff/Celente for years and they have been spot on.
Has Schiff ever been wrong? I remember when he was ridiculed about five years ago for predicting that real estate prices were going to crash and burn.
I am 35 y/o and do ok, but not great, and still can’t even remotely afford a starter home in Westchester County, NY.
Housing is simply unaffordable and still way too high in most areas fo people under 40 y/o to afford.
Schiff is my go to guy on most issues.
I almost feel like I should send him a check for the education he has given me on economics on his youtube page.
If you have never seen his web videos - check them out on yuotube.
I actually met him and got him to sign his book for me. he is a cool guy.
Between him and Celente - I trust those two on most issues before anyone else.
The house I'm in now I rent from a friend of mine, is a little bit smaller, but he paid 190k cash for it 11 years ago.
The problem is also the lending.
Banks have raised the bar so high that no one except cash buyers can qualify for the credit requirements.
A realtor friend said she couldn’t complete a sale for a couple with something like 30% down and a high 700s credit score.
Schiff still says renting is better than buying for many reasons.
Come to Vegas. We’re at 2000 levels, which was affordable then, and is a downright steal now.
Will it go down further here? It could, but there are tentative signs we’re bouncing along the bottom in Las Vegas.
I’m guessing Schiff is talking about the national average when he says we have 20% to go. This may be, but I suspect in the hardest hit markets much of the damage has already been done.
The prices are still grossly too high, as are the property taxes, insurance, etc.
How much did housing prices drop across the whole nation during 2010? Does anyone know? There were expectations at the beginning of the year that the drop would be 12%.
It's actually worse, at least in this area (North West) See my #11
May just be time to walk from my house (100k upside down), save money for a year while being foreclosed on and rent / buy another house at a deep discount. Sounds moraly questionable but the banks dont exactly apply morals to what they do now do they?
Well if you hold out longer you can get a McMansion on Cape Cod prices. There are two factors that no one is talking about in this mix.
1) Mellennials are gun shy and super conservative. They are trending toward renting for life to avoid the issues their parents are experiencing owning a home these days. No one is buying starter homes like they used to.
2) Baby boomers who bought these McMansions are getting too old to want the hassle of the big house. They are willing to take huge losses to get out of the overhead and retire in a more suitable home. That is leaving a lot of these on the market and it will only get worse.
Factor in bank owned stuff that they want off their books and that leaves what I read was almost a 12 supply of existing housing.
I can’t imagine seeing a sellers market again for a few decades if ever.
Problem is thatwages are so low and stagnated that most people cant afford the carry costs of even a remotely mainstream home.
Housing became like everything else in this country - PONZINOMICS.
Yeah, it’s rough here. The less developed areas are really ugly. I live in one of the newer areas, and I don’t even bother looking at values around me. It’s too depressing.
The State’s foreclosure mediation rules are definitely not helping. All they are accomplishing is the extension of the foreclosure process and delaying the establishment of true bottom. Like I said, I think we’re close on the average, but it all depends on where the home is located.
And of course the AP and Fox News (who are infiltrated by a number of liberals) reported this morning on the their radio how the housing market had upward signs with sales and increased interest rates...and never mentioned any of this.
I don’t watch Fox News as it is TV for morons, as are most other cable stations.
I honestly feel less intelligent after watching Fox News for more than 5 minutes or more.
I rely on people like Schiff/Celente/Chapman/Denninger/ZEROHedge/ et al for reality and real news.
Cable news is for morons.
Seems that right around the mid 70’s everything went haywire.....Carter and the CRA were just about that time, hmmmmm.
Anyone relying on Fox News or other outlets for news needs their head examined.
Fox is “news” for idiots. MSNBC is news for bigger idiots.
Best thing to do is seek ot news and commentary with a proven track record of being right and follow those people.
Just think of the basic economics and demographics at play.
Housing is over for DECADES! That is, unless we re-do immigration and import millions of Asians and Euro’s and get rid of the lower class scum.
Think about it - Millions of boomers tryin to sell their homes cause they cant afford it. Who is going to buy those homes? Answer - NOBODY!
The Gen X’ers and Gen Y’ers are barely making it as it is.
College kids are strapped with school loans, etc.
People need to wake the hel up and smell the coffee. We are screwed royally for decades unless we change our immigration policies drastically to where we deport the crap and import the best and brightest fom Asia and Europe.
There is no other way.
Schiff is an optimist!
Based on the experience of other countries who have undergone similar economic circumstances, housing prices will fall 90 percent or more in real terms when we begin to experience more of the effects of serious inflation / hyperinflation. Here are some of the reasons why:
Fannie, Freddie, FHA and other government programs and guarantees will become worthless and thus ineffective. The Feds simply cannot afford to pay off in the event of default.
No doubt unchecked immigration of third world illiterates had and is still having an impact too.
For every one cause that can be cited there are a hundred effects to go along with them...decades indeed, if ever.
Yikes, I’d hate to see his pessimistic views.
I often feel like i should send Schiff a check for like 10k for al that he has taught me via his books, his youtube videos, his commentary, and reading recommendations.
I came to the same conclusion. In any state under the reach of the Dark Messiah, property rights mean nothing right now. I've decided on long terms leases. Owning anything here and now that can be seized, nationalized, or otherwise stolen by the illegitimate regime is simply too dangerous.
Have you ever seen this?
Make sure you hve not eaten anything within the lat hour or two.
Schiff is almost always dead on right.
This video is why i refuse to watch Fox News most of the time. They laughed at Peter!
I agree with his partial analysis, but there’s more to be considered. It appears that commodities—especially fuel—will be going up over the next year and a half. Imagine retirees with mortgages, after heating fuel (propane, coal-fired electricity, natural gas, etc.), vehicle fuel and food go up another 25% or so. Many unforeseen foreclosures result—not just the ARMs coming home to roost next year.
I zillowed a rather drab house on the market in Yonkers. Asking price is $450K with property taxes of $9K. That house would likely fetch around $160K where I live. I couldn't even find a house listed for $200K, just condos. The median household income for Yonkers is about the same where I live. Something doesn't add up...
does that include residential apartment buildings?
Thanks, am watching now.
Ha ha ha ha - no kidding - thisis why people are fleeing N.Y. and myself included as soon as I can.
Yonkers, is literally the border city of NYC, 15 minutes to downtown NYC.
And yonkers is considered affordable compared to the rest of westchester.
I actually have a client wh pays 60k a year in taxes in scarsdale for a nice, ut not extravagant house.
He overestimate the intelligence of Chinese politicians imho. I don’t see them any different to US politicians. Both of them think devaluing currency is the way of prosperity. Peter constantly think that Chinese politicians will wake up one day and realize their error. I don’t see that happening. I see hyperinflation happening in China before the US
His analysis is too simple. It would be more appropriate to see regional numbers. Plus, houses now are not the same as houses 100 years ago or even twenty years ago.
Head in the sand.
Show me a video remotely as accurate as this as Peter has been:
NOTICE THE MORONS ON FOX NEWS LAUGHING AT HIM!
Housing will be down in some regions, flat or going up in others.
The Rocky Mtn states, for instance, continue to have a growing population that puts an upward demand on housing units.
Until someone can show me another person even 50% as accurate as Schiff will take his advice over the hacks attacking him.
I disagree. Demographics, inflation, taxes, carrying costs, young people saddled wth debt, etc is going to keep houisng in the toilet for decades.
He has been amazingly accurate...but there will be some here who think they know better.
Prices are going to going down across the board. As they are forced to raise interest rates and local taxes skyrocket, the value of the home will go lower and lower and be seen as more an albatross than anything else.
And who do we have to thank for this? Fed Reserve and the Fed/State/city govt.