Peter Schiff: Housing still has at least 20% on downside to go.

Business Insider ^ | December 30, 2010 | Gregory White

[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

[GlockThe Vote]

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.

[VegasCowboy]

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.

[Paul Ross]

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.

[GlockThe Vote]

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.

[The Comedian]

Habitative-easing ping.

"Economic Holocaust" ping.

Increasing volume ping list watching the slow motion Economic Holocaust.

FReepmail me if you want on or off
The Comedian's "Economic Holocaust" ping list...

Frowning takes 68 muscles.
Smiling takes 6.
Pulling this trigger takes 2.
I'm lazy.

[Las Vegas Ron]

Somehow the annual income/home cost ratio got out of whack.

Seems that right around the mid 70’s everything went haywire.....Carter and the CRA were just about that time, hmmmmm.

[GlockThe Vote]

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.

[GlockThe Vote]

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.

[Zakeet]

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:

• Few buyers. Massive unemployment (much greater than today's), plummeting real incomes, and soaring taxes will greatly diminish the ranks of those who can afford to purchase housing.

• Exploding number of units for sale. Many individuals, especially those on fixed incomes and those who have lost their jobs, those whose incomes are falling in real terms, will be forced to place their homes on the market. ARM's (adjustable rate mortgages) will reset with greatly increased payments causing many to default. Many more will simply walk away from their dwellings for some of the many reasons listed below.

• No financing. There will be no money with which to buy housing. Few, if any, lenders will be willing to make long term fixed rate mortgages. Those who do will demand extraordinarily high down payments, short loan terms, and huge interest rates. In jurisdictions where they exist (or where lenders anticipate they may be enacted), usury laws will kill the mortgage lending business altogether.

  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.

• Soaring ownership costs. Real estate taxes will undergo staggering increases. Local governments will face enormous cost hikes and will simply have no means of raising money. Additionally, as more and more people walk away from homes they own and into rent subsidized units, the number of persons paying taxes will plummet. Expect a double hit for people who must also pay neighborhood association fees.

• Rapidly depreciating investments. Vacant homes quickly deteriorate in value. The quality of neighborhoods diminish as home owners are replaced by renters (especially those living on government subsidies). Crime soars as local governments scale back essential police services. Local areas frequently become war zones with the only real protection coming from gangs who collect protection money.

• Limited returns on investment. Rent controls and a crashed real estate market limit the upside potential. Meanwhile investments in commodities will realize enormous real gains. And commodities are liquid assets that can be stored overseas. Dirt simply can't compete.

Vastly increased supply. Vastly decreased demand. You do the math.

[Las Vegas Ron]

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.

[Las Vegas Ron]

Yikes, I’d hate to see his pessimistic views.

[GlockThe Vote]

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.

[The Comedian]

Schiff still says renting is better than buying for many reasons.

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.

Frowning takes 68 muscles.
Smiling takes 6.
Pulling this trigger takes 2.
I'm lazy.

[GlockThe Vote]

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!

http://www.youtube.com/watch?v=tZaHNeNgrcI

[familyop]

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.

[EVO X]

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.

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...

[Chickensoup]

does that include residential apartment buildings?

[Las Vegas Ron]

Thanks, am watching now.

[GlockThe Vote]

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.

[4rcane]

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