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.
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