Peter Schiff: Home Prices to Drop, Commercial Real Estate Defaults, Economic Storm 2020

Peter Schiff predicts

home

prices

will plummet what prediction we're going to talk about from one of his most recent podcasts here what he talked about

home

prices

JP Morgan pulls back on home equity loans we see the tightening of loans is going down becoming more and more extreme and that could put more downward pressure on home prices, which we're going to talk about, we're also going to talk about the

commercial

real

estate

bubble, it's likely to burst as well and that's riskier. for the banks, so let's start now we've been talking a lot about the housing market lately with everything that's been going on with the lockdown, the lockdown financial crisis as some people call it, but as we talked about before, house prices they were very inflated, this crisis, this lockdown crisis is just a pin that pops the bubble when we talked about this a few days ago and we've been talking about this, you know, a lot more recently since this has been happening, but we haven't Seen many well-known economists actually predicting major bloodshed in the housing market. but now we have Peter Schiff out there and we're going to go ahead and listen to an excerpt from his recent podcast.

Listen to the crisis. That's why the

real

estate

crisis was a financial crisis, it wasn't because of real estate prices. went down is because falling real estate prices meant that loans that were collateralized by real estate were not being repaid and to the extent that the banks had to foreclose on the collateral it was not there to repay the banks, the same It's happening right now. The banks are even more exposed today than they were in 2008. This is an even bigger crisis now than they were in 2008 because we have a lot more debt, we have a lot more borrowers that are in trouble, and then all the borrowers that are in trouble because of these closures. , homeowners will have the same problems because real estate prices are about to collapse.

I'll talk about that a little bit later in the podcast because in the meantime, I'll talk about the price of existing homes. is going to crash and again I mentioned this in my last podcast: lenders are really clamping down on lending standards, making it much harder for potential homeowners or buyers to qualify for a mortgage and they are requiring large down payments now of the 20% that You know maybe some of them start walking 25 or 30%, we'll see, but 20% is a big hurdle if you're buying a house in an expensive market, how many people have a 20 down payment? % in California?

Now he takes a couple of key phrases out of his little rant and it's an hour long podcast. I'll link it if you want to see the full podcast. I'm sure most of you mentioned Peter's work that you know. at some point over the years, but he used a couple of key phrases: House prices are going to crash, right? That's a pretty bold statement. Now I think house prices will go down, although I don't think they will collapse. exactly, I think he tends to use words that catch people's attention, but it depends on your definition. I mean, I think it's going to be a pretty big decline, but not so much a decline that could develop over the course of a few months, which some people might say a crisis has occurred because they know that home prices and sales They move more slowly than, of course, the stock market.

Buying and selling homes sometimes takes several months with all that it entails, but you can see the point and it is very similar to what we do. We've been talking here about if they tighten lending, that's going to be a big driver of weakening home prices in the housing market, it could get very ugly and we'll also talk about

commercial

real estate here in a moment, but just to review it. we've been talking about here when the real estate market we know that JPMorgan has now actually adjusted its 700 credit score loans by 20% down, we've talked about that in a couple of videos, but now also the lines of credit on the value Home liquid is going to be harder to come by and that will really be a problem point for many homeowners.

Let's talk about that recent article here. JPMorgan Chase is taking advantage of it to accept HELOC applications as home equity lines of credit due to uncertainty in the markets and this goes against something else. That will likely put downward pressure on home prices as sellers lose their lifeline and for many people these home equity lines of credit were a lifeline when times got tough and when they wanted to make improvements to their home. home or when they were simply left behind. Many people are now making home equity an important thing that they like to withdraw and turn to as a rescue method.

If you take it away, that will really start to pile up more and more homeowners in dire financial straits and we'll have to do it. Let's see if this affects multi-home owners such as investors, corporations and institutions, but we do know that when the bank restricts lending because this market is so leveraged that it could easily cause a price

drop

, now anything could happen. I'm not sure. making a prediction here about the virus situation, a drug could come out, there could be a treatment or time could make this go away, anything could happen, but there is a strong possibility of a major correction in the housing market. which we've all been watching and waiting for a long time, but this is something that could again push it much faster and much harder than most people had anticipated.

Let's talk about commercial real estate. Bloomberg article right here. The fight for commercial rent is obtained. It's ugly with the wave of

defaults

coming, so many banks are also hard pressed for commercial real estate and this is also happening in a highly leveraged sector of the US economy, as commercial real estate Pretty much everything is in a bubble, but commercial real estate is another great area to watch. in some areas up to 80% of commercial property tenants didn't pay rent in April, then this goes back to the landlord, the landlords of these and again many of these landlords went out and got commercial loans for these buildings for these office buildings for these malls and again another over-leveraged part of the economy that is also at risk, especially with the large number of retailers not paying rent and I will only read an excerpt from here to So far this month, some mall owners commercials received only fifteen percent of what they were owed, according to one estimate.

Now, in some cases, landlords have been working with their tenants. Landlords have been proposing a rent deferral saying that tenants can reduce payments now as long as they pay the balance at some point, but again, as we talk about deferrals, they are not a long-term solution because when the deferral It's done when it's over, you have to come back and pay the amount you didn't pay, so it's not free rent. It's not a get-out-of-jail-free card for many of these companies by any means, so we'll see how this plays out, but so far it looks very, very risky for the banks and the owners.

It could happen again, the banks could be bailed out ad infinitum and it wouldn't be a surprise, but the fact that the banks are pulling back leads us to believe that the banks are not so sure that the bailouts are going to be there indefinitely and let's read In another section of this Bloomberg article, many homeowners are rushing to reach agreements with lenders to avoid their own

defaults

, so now we not only have homeowners calling and begging banks to help them, be patient and sorry, now we have commercial property owners too. trying to call their banks and get some type of forbearance at the same time negotiating with their tenants about forbearance as well, so pretty much everything is up in the air from time to time, this is very risky and we will have to be vigilant.

For your sake, let's go ahead and wrap this up, but before we go I just wanted to let you know that I updated our seeds page with seeds that are now in stock because a lot of these seed sellers on Amazon were selling out and CBS reported here that the companies Seed markets can't keep up as more Americans turn to growing their own food, so this is another area to watch, because not only are there lockdowns and layoffs affecting people's incomes, but also They are unlocking everyone, more people are turning. to gardening and that in itself causes increased demand for seeds, but we also have the supply chain and food shortages and the panic buying that people are doing at a lot of these grocery stores, which also causes shortages of food, another reason to buy seeds, so check out the link below if you are interested in my desk, outside the channel, if you go to the link there and buy something, it would be awesome if you could help out on this channel and also help yourself yourself to get some seeds that you don't have.

I want seeds to run out and suddenly see more food shortages if this virus continues for several months into the future, even into next year. Imagine what could happen to the food supply and even seeds. all for this update please give us a thumbs up if you like what we talked about if you learned something from this video please subscribe and come back for more information to help us and also another great thing just leave a comment below lots of comments ultimately great. We will make a video here at least once a week. We'll start posting videos of just your comments and me trying to maybe answer some of the questions or just go over and highlight some of the comments that I'm feeling. you are great but you all are great thank you so much for being here I hope you are well and staying afloat in this crazy time in America in world history as we watch the economy begin to transform and the economy may not It will recover when this lockdown ends because a lot of damage is going to be done and a lot of people are not going to spend like they used to even after the lockdowns are over, so there is something to think about.

I'll keep an eye on it. Thank you very much to all. for being here goodbye for now you