In America now, its a very different housing bubble because the houses now are being bought by institutions, hedge funds, private equity guys, to rent them out to the guys that lost them out to foreclosure the last time around.
So, this housing bubble is very different from the last one. But I think, its even more dangerous because these guys that own these houses, they will sell them quickly just like they are going to cut their losses in their stock portfolio. And you have all these houses now that are owned by hedge funds that are empty because they actually can`t find tenants because people don`t have jobs, so they can`t afford to rent these houses. So, they want to rent small apartments and apartment rents are rising very rapidly in the United States, meanwhile we have all these single family homes for rent sitting vacant, yet we are still building them because of the Federal Reserve. So, if we had a rational interest rate policy, we would have lower home prices, we would`t be squandering our resources.
Peter Schiff is an American businessman, investment broker and financial commentator. Schiff is the CEO and chief global strategist of Euro Pacific Capital Inc.
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- A Different Housing Bubble
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