House prices are still too high on account of two factors:

a) Demographics. Home purchases usually peak at age 45-48. The Baby Boom peaked in 1958, so you’d expect house prices to peak somewhere in the 2005-‘06 horizon, which is what happened. The demos turn sharply negative by 1962 which indicates heavy downward pressure after about 2010 or so. YOU are HERE. The demos continue downward until about 1977, suggesting the first real reversal in the down-trend will begin no earlier than about 2022 to 2025.

b) Overbuilding. There are currently 20 million un-occupied houses in America. At an average family size of 3.5 persons, that is enough for 70 million people. They’re not presently living under bridges and waiting for a house to buy. They’re simply not there. Allowing for a 67% ownership rate, that is a 35% oversupply of houses in the market.

If you’ve been thinking of selling your home at all, put it on the market Monday and take any offer that’s not an obvious “stink bid.” I’d also recommend staying away from any financing contingencies on the part of the buyer—and make that known up front so you don’t waste time with people unlikely to get financing.

Also, get realistic. What a house is worth as a place to live is about 100 times what the same house would rent for. Find out what houses like yours rent for per month, add two zeroes, and recognize that anything beyond that is gravy. If you can get it, great. If not—or you can’t write a $78,000 check at closing to get out of your house—well enjoy it, ‘cause you’re gonna be there for awhile.

I have earned my living as a carpenter from time to time, and for at least ten years I’ve been trying to get people to understand that a house is a liability, not an asset. Utter futility so far, but that may be beginning to change.

The destruction of “wealth”—which never existed in the first place—has only begun. After the world-wide peak in real estate in 1890 it took until about 1980 to get back to the same prices, adjusted for inflation.

Given American demographics, we’ll be fortunate indeed if the 2006 peak is reached again any time before 2045. Strapping on my carpenter belt for a moment, the only positive factor is that most houses built after about 1990 are of such miserable quality—built primarily of cheap composites that cannot be repaired—that they’ll be torn down by the early ‘30s and supply might begin to match demand.

Some of his political views are pretty radical (two steps removed from anarchist), but Peter Schiff has consistently been ahead of the ball in his economic forecasts.  Some people may disagree with him.  But no one is laughing at him anymore.