While many people think right now is a great time to buy a new home because interest rates are so low, you will find experts who continue to advise caution. Euro Pacific Capital CEO Peter Schiff states home values have not bottomed out yet. In a recent Wall Street Journal piece, he even goes as far as to suggest that home values will fall at least 20.3 percent – and may decrease even further. Before you take out pay day loans to purchase your home, make sure you are taking caution to get the best deal out there.
Following pattern means house values have to decrease more
Schiff explained that there is a historical trend that comes with the home values falling like this. It means that there needs to be another 20.3 percent decrease in home prices. He explains that home values might go even lower than that though. Considering the U.S. has recently seen a negative Case-Shiller home price index, it is 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 United States may technically be in economic recovery, that recovery is weak at best.
The Fed is stalling the inescapable
It is suggested by Schiff that the Federal Reserve is not helping the housing industry at all really. It is just a distraction. The job industry, public debt and private debt are all are making the economic picture for the United States get a bit clouded making it so the only way to get out of trouble will be with economist defined historic cycles.
Over the next five years, Peter Schiff thinks that it would make sense for the home prices and the Case Schiller to go 10 percent beneath the 100 year trend line. If rates on mortgages were to go to the consumer amounts, it would make sense. If it were just a 5 percent decrease, that would be good too. That is half. The dips will get smaller while the rates stay low, according to Schiff. He also thinks that there can be a rise in inflation.
Several say buy now
Despite Peter Schiff’s warning that home prices will fall significantly, several believe the grass is greener on the other side. Hedge fund manager Bill Ackman says ignore the naysayers, because houses are now “a screaming purchase.” Right now there are cheap government loans, value loss that already occurred and low interest rates. This is why Ackman says it’s the perfect time to buy.
Information from
Business Insider
businessinsider.com/bill-ackman-ignore-plummeting-house-prices-and-real-estate-doomsayers-houses-are-now-a-screaming-buy-2010-12#-1
Credit Write Downs
creditwritedowns.com/2010/12/housing-double-dip-progress.html
Wall Street Journal
online.wsj.com/article/SB10001424052702304173704575578190261574342.html
Schiff doesn’t think the dollar is in a good place, either
youtube.com/watch?v=pQ34p8MBf2E
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