Wednesday, September 3, 2014

Peter Schiff sounds US housing market alarm again

I think this[US Housing prices] is a bubble. 

The main difference between the last bubble and this bubble is the last one was a main street bubble and this one is a wallstreet bubble. This one is a more Wallstreet bubble because the principle speculators are hedge funds, private equity funds and very high net worth individuals who are paying all cash for properties. And buying them on the anticipation of selling them at a profit or renting them to Americans who can no longer afford to buy. 

I think a lot of real estate that was snapped up in foreclosure auctions, people overpaid and I think investors are just now realizing they overpaid. So I think the speculative buyers are leaving the market and there is no one to fill the void because the real buyers are absent. 

And if you look at the recent home statistics the percentage of homes bought by first time buyers is at a record low. 

In fact home ownership among individuals is at generational lows, so prices have to come down dramatically from here before real buyers can actually afford to buy all the properties that have been bought by speculators, and at some point the speculators who own these properties, if they cannot collect enough rent to cover the cost of ownership they are going to be selling these properties, and look out below because when they put these properties up for sale, again there are no buyers anywhere near the current prices.

via RT