Peter Schiff predicted the 2008 housing crisis, and he’s warning of a ‘housing emergency’. Is he right this time?
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Economist Peter Schiff made his name by predicting the 2008 housing crash. Now he’s sounding the alarm on another potential crisis in America’s housing market — one that could see a wave of homeowners mailing back their keys.
“Why are housing prices so high? Because for a long time, the Fed kept interest rates at zero, and so a lot of people were able to get really low mortgages, 3% mortgages, 4% mortgages,” Schiff explained in a 2025 YouTube video (1).
“And because homes are bought — not based on what the home cost — but based on the monthly payment, the lower the monthly payment, the more somebody could pay for a house. Now you have a problem where housing prices went way up, but then mortgage rates went way up, and home prices never came back down to levels consistent with more expensive mortgages.”
Indeed, mortgage rates have surged. The average rate on a 30-year fixed mortgage has climbed from below 3% just a few years ago to more than 6.1% today (2). Normally, higher borrowing costs can cool down the market, but prices remain stubbornly high: the S&P Cotality Case-Shiller Home Price Index, which tracks the price of single-family homes in the U.S., jumped more than 43% over the past five years (3).
Schiff believes prices will “eventually” fall to match today’s higher rates — a painful adjustment that, he warns, could trigger “a housing emergency.”
“It’s going to create a bunch of defaults and a lot of people are going to walk away and mail in their keys because they can’t sell their houses for more than they owe,” he said.
The scenario sounds familiar. During the 2008 bust, many underwater homeowners — those who owed more than their homes were worth — simply mailed their keys to the lender and walked away.
Today’s market is different. Lending standards are tighter than during the subprime era, making widespread negative equity less common. Supply constraints are also a factor: Zillow estimates the U.S. is short roughly 4.7 million homes, a gap that has helped keep prices elevated (4).
Schiff argues that many owners are staying put only because they locked in ultra-low mortgage rates, which are now limiting the number of homes for sale.
“But at some point, there are people that have to sell their houses for whatever reason and if they have to slash the prices to do it, they may not have enough money to repay the mortgages. And so this could have a cascading effect,” he warned.
According to December 2025 sales data from the National Association of Realtors (NAR), pending home sales were down 3% on the previous year and had plunged 9.3% since November (6). While seasonality could be a factor here, the NAR suggests that the decline in pending home sales could be the result of consumers facing a lack of inventory and feeling like they don’t have a lot of good options on the table.
While Schiff is wary of the U.S. homeownership market, he acknowledges one persistent trend: “Rents go up every year,” he noted on his show.
America’s housing affordability crisis is, in part, a reflection of broader cost-of-living pressures — and it underscores how real estate can serve as a hedge. As inflation drives up the cost of materials, labor and land, home values tend to rise as well. Rental income often follows suit, giving landlords a stream of cash flow that adjusts with inflation.
In fact, investing legend Warren Buffett has often pointed to real estate as a prime example of a productive, income-generating asset. In 2022, Buffett remarked that if you offered him “1% of all the apartment houses in the country” for $25 billion, he would “write you a check (8).”
Of course, you don’t need billions of dollars — or to even buy a house outright — to benefit from real estate investing. Crowdfunding platforms like Arrived offer an easier way to get exposure to this income-generating asset class.
Backed by world-class investors like Jeff Bezos, Arrived allows you to invest in shares of rental homes with as little as $100, all without the hassle of mowing lawns, fixing leaky faucets or handling difficult tenants.
The process is simple: browse a curated selection of homes that have been vetted for their appreciation and income potential. Once you find a property you like, select the number of shares you’d like to purchase and then sit back as you start receiving any positive rental income distributions from your investment.
In a recent J.P. Morgan report, Al Brooks, the vice chair of Commercial Banking at J.P. Morgan said, “I think multifamily housing is absolutely where you want to be as an investor.” He added, “The multifamily rental market may still feel the impact of a recession, but to a lesser degree than other asset classes (9).
If diversifying into multifamily rentals appeals to you, you could consider investing with Lightstone DIRECT, a new investing platform from the Lightstone Group, one of the largest private real estate companies in the country with over 25,000 multifamily units in its portfolio.
Since they eliminate intermediaries — brokers and crowdfunding middlemen — accredited investors with a minimum investment of $100,000 can gain direct access to institutional-quality multifamily opportunities. This streamlined model can help reduce fees while enhancing transparency and control.
And with Lightstone DIRECT, you invest in single-asset multifamily deals alongside Lightstone — a true partner — as Lightstone puts at least 20% of its own capital into every offering. All of Lightstone’s investment opportunities undergo a rigorous, multi-stage review before being approved by Lightstone’s Principals, including Founder David Lichtenstein.
How it works is simple: Just sign up with your email, and you can schedule a call with a capital formation expert to assess your investment opportunities. From here, all you have to do is verify your details to begin investing.
Founded in 1986, Lightstone has a proven track record of delivering strong risk-adjusted returns across market cycles with a 27.6% historical net IRR and 2.54x historical net equity multiple on realized investments since 2004. All told, Lightstone has $12 billion in assets under management — including in industrial and commercial real estate.
As such, even if multifamily rentals don’t appeal to you, Lightstone could still serve you well as an investment vehicle for other real estate verticals.
Peter Schiff (1, 7); Federal Reserve Bank of St. Louis (2); S&P Global (3); Zillow (4); Gold Price (5); National Association of Realtors (6); J.P. Morgan (7, 9); CNBC (8)
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
