Finance expert Peter Schiff says home prices to fall considerably

Wednesday, December 18th, 2013 By

File photo of Euro Pacific Capital CEO Peter Schiff.

Peter Schiff thinks home prices have a long way to fall. (Photo Credit: CC BY-ND/Libertarian Stoner)

While some people think now is a great time to buy a new home because interest rates are so low, there are experts who continue to advise caution. Euro Pacific Capital CEO Peter Schiff says home prices have not bottomed out yet. In a recent Wall Street Journal piece, he even goes so far as to suggest that home prices will fall at least 20.3 percent – and may drop even further.

Home prices must drop to come back to the trend

According to Peter Schiff, home prices must fall another 20.3 percent in order for the cyclical pattern to match the historical trend. However, he admits that even that won’t necessarily be the floor upon which plummeting home values crash. Considering that the U.S. has recently seen a negative Case-Shiller home price index, it’s clear that we’re in the middle of a housing double-dip. Marry that to other economic data on jobs, retail sales and industrial production and Edward Harrison of Credit Writedowns believes that while the U.S. may technically be in economic recovery, that recovery is weak at best.

The Fed is delaying the inevitable

The artificial means through which the Federal Reserve is attempting to prop up the housing market is at best a diversionary tactic, suggests Schiff. High levels of private and public debt – as well as the continually bleak job market – have clouded the economic picture for the U.S., and only by allowing economist-defined historic cycles to play out will the nation get out of trouble without further delay.

Peter Schiff’s view of home prices and the Case-Schiller is that even a 10-percent decrease beneath the 100-year trend line is reasonable over the next five years, even if mortgage rates rise back to customary levels. Even cutting the decrease in half (to 5 percent) would be welcome. Ultimately, Schiff believes that when rates stay low, the dips will be smaller, yet inflation will rise.

Some say buy now

Despite Peter Schiff’s warning that home prices are going to fall significantly, some believe the grass is greener on the other side. Hedge fund manager Bill Ackman says ignore the naysayers, because houses are now “a screaming buy.” Ackman says that low interest rates, the already significant value loss and cheap government loans are reason enough.


Business Insider

Credit Writedowns

Wall Street Journal

Schiff doesn’t think the dollar is in a good place, either

Previous Article

« Interest Rate Down as Short Term Loans Blossom

Consumers are still strategizing on how to wisely use savings, short term loans and budgeting to make it through their monthly bills. We aren't quite out of the recession yet. Using our savings wisely is as important as ever.
Next Article

2010-2011 College football bowl schedule pulls in huge money »

The official bowl schedule for this season has been set - but with millions of dollars at stake, these games mean more than school matchups. Football

Other recent posts by Steve Tarlow

CFA Institute says financial analysts aren’t making the grade

Only 34 percent of applicants passed the CFA Institute's CFA exam Level 1 this time around. We need new financial analysts with sound ideas – now.

Paczki not enough for you? Try some king cake this Fat Tuesday!

Justice, power and faith… all this and more in a sweet Fat Tuesday confection known as king cake. Oh, don't forget that Jesus is in there somewhere.

Top 10 ways to decrease your appetite

Did your Super Bowl gorgefest set you back? Here are the top 10 ways to decrease your appetite!