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Peter Schiff predicts home prices will come crashing down what a prediction we're gonna talk about his 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 the lending is becoming more extreme and that could put more downward pressure on home prices we're going to talk about that we're also gonna talk about the commercial real estate bubble it's likely to also pop and that's more risk for banks so let's get started now we have been talking about the housing market quite a lot lately with everything that's been happening with the lockdown the lockdown financial crisis what some people are calling it but like we talked about before home prices were very overinflated this crisis this lockdown crisis is just a pin that pop the bubble when we talked about this a few days ago and we've been speaking about this you know a lot more recently since this has been happening but we haven't seen too many well-known economists really predicting major major bloodshed in the housing market but now we have Peter Schiff out there and we're gonna go ahead and take a listen to a excerpt out of his recent podcast take a listen so crisis that's why the real estate crisis was a financial crisis it wasn't because real estate prices went down is because real estate prices going down meant loans that were collateralized by real estate weren't getting repaid and to the extent that the banks had to foreclose the collateral wasn't there to make the banks whole the same thing is happening now right the banks are even more exposed today than they were in 2008 this is an even bigger crisis now than it was in 2008 because we have a lot more debt we have a lot more borrowers who are in trouble and on top of all that on top of all the borrowers who are in trouble because of these shutdowns homeowners are gonna have the same problems because real estate prices are about to crash I'm gonna get to that in a little later in the podcast because I'm meanwhile the price of existing homes is going to be plunging and again I went over this on my last podcast the lenders are really clamping down on lending standards making it much harder for homeowners or potential homebuyers to qualify for a mortgage and they're requiring big down payments now 20% who knows maybe some of them are gonna start to walk 25 or 30% we'll see but 20% is a big obstacle if you're buying a home in an expensive market how many people have a 20% down payment in California alright so there you go now a couple key phrases out of his a little rant there and it's about an hour-long podcast I'll link to it if you want to look at the whole podcast I'm sure most of you referred Peters work you know at some point over the years but he used a couple key phrases their home prices are going to come crashing down right that's a pretty bold statement now now I think home prices will come down though I don't think they're gonna come crashing down not exactly I think he tends to use words that kind of grab people's attention but it depends on your definition I mean I think it's gonna be a pretty big decline but a crash not so much it could play out over the course of a few months which some people could call a crash because you know the home prices and sales move slower than of course the stock market buying and selling of homes sometimes take several months with everything that's involved but you can see his point and it does sound a lot like what we've been talking about here if they tighten up lending that is going to be a big big driver of home prices weakening in the housing market could get very ugly and we're gonna talk about commercial real estate also here in just a moment but just to revisit what we've been talking about here when the housing market we know that JPMorgan has now really tightened its lending 700 credit score 20% down we've talked about that in a couple videos but now also home equity lines of credit are going to be harder to get and that's going to really be a trouble spot for many homeowners let's talk about that recent article right here JPMorgan Chase taps it accepting HELOC applications as home equity lines of credit due to the uncertainty in the markets and this is against something else that's gonna likely put downward pressure on home prices when sellers lose their lifeline and for many many people these home equity lines of credit were a lifeline when times got hard and when they wanted to make upgrades to their home or when just they fell behind like so many people are doing now home equity was a big thing that they like to pull out and go to as a rescue method you take that away that's gonna really start to pile up more and more homeowners in a desperate financial position and we'll have to see if this bleeds over into owners of multiple homes like investors and corporations and institutions but we do know that when the bank's tighten lending because this market is so over leveraged that it could very easily cause a price decline now anything could happen I'm not making a prediction here on the on the virus situation there could be a drug that comes out there could be a treatment or time could just have this thing fade away anything could happen but there is a very big possibility of a major correction in the housing market that all of us have been looking at and expecting for a long time but this is something that again could drive it much quicker and down a lot harder than most people had anticipated let's talk about commercial real estate Bloomberg article right here fight over commercial rent gets ugly with default wave looming so many banks are also on the hook for commercial real estate and this is also in a very over leveraged sector of the US economy as commercial real estate pretty much everything's in a bubble but commercial real estate another big area to watch in some areas up to 80% of commercial property lease holders did not pay their rent in April then this comes back to the to the landlord's to the owners of these and again many of these owners went out and took out commercial loans for these buildings for these office buildings for these for these strip malls and again another over-leveraged part of the economy that also is at risk especially with the huge numbers of retailers that are not paying their rent and I'll just read an excerpt out of here up so far this month some mall owners got as little as fifteen percent of what they were owed according to an estimate now in some cases landlords they've been working with their tenants landlords have been pitching rent deferment saying tenants can make reduce payments now as long as they pay the balance at some point but again like we talked about deferments are not a long-term solution because when the deferment this is done when it's ended you have to go back and pay that amount that you did not pay so it's not free rent by any means so it's not a get-out-of-jail-free card for many of these businesses so we're gonna see how this how this plays out but so far it looks very very risky for the banks and the landlord's now anything could happen again the banks could get bailed out to infinity and it wouldn't be surprised but the fact that banks are pulling back does lead us to believe that the banks are not so confident that the bailouts are going to be there endlessly and let's read another section here out of this Bloomberg article many landlords are rushing to work out deals with lenders to stave off their own defaults so now we not only have homeowners calling and begging the banks for relief and forbearance and forgiveness we now have landlords of commercial property also trying to call their banks and get some sort of forbearance at the same time as negotiating with their tenants also on forbearance so pretty much everything is up in the air right now and again this is very risky and we'll have to keep an eye on it for you we're gonna go ahead and wrap this up but before we go I just wanted to let you know that I did update our seed page with seeds that are now in stock because many of these seed sellers on Amazon were selling out and CBS reported here seed companies can't keep up as more Americans turn to growing their own food so this is another area to watch because you not only have the lock downs and the the layoffs affecting people's incomes with everybody being unlocked down more people are turning to gardening and that in itself causes a greater demand for seeds but also we have the supply chain and the food shortages and the panic buying that people are doing in many of these grocery stores also causing food shortages another reason to get seeds so please check the link below if you're interested on my desktop off the channel if you go to the link down there and you go and buy something so that would be amazing if you could help out this channel and also help yourself get some seeds you don't want to have seeds be sold out and then all of a sudden see more food shortages if this virus continues several months into the future even in the next year imagine what could happen with the food supply and even the seeds at this point it's gonna be about all for this update please give us a thumbs up if you like what we talked about if you got anything out of this video please subscribe and come back for more that helps us also another great thing just leave a comment down below so many great comments ultimately we're gonna do a video here at least once a week we're gonna start rolling out videos of just your comments and me trying to answer maybe some of the questions or just kind of go over and highlight some of the comments that I feel are great but you all are great thank you so much for being here hope you're well and staying afloat in this crazy time in America in world history as we see the economy begin to transform and the economy may not 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 lock downs are done so something to think about I'm gonna keep an eye on it for you thanks everybody so much for being here bye for now you
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