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Peter Schiff warns of a coming housing emergency and more defaults
The average 30-year fixed mortgage rate rose from 2.65% in January 2021 to 7.79% in October 2023, and still sat around 6.55% as of July 2026, keeping new-home prices elevated.
Economist Peter Schiff, who previously predicted the 2008 housing crash, says another housing emergency could be coming as high home prices collide with higher mortgage costs and limit owners' ability to sell. In a Moneywise and Yahoo Finance article, he argued that when borrowing rates rise faster than home prices adjust, homeowners can end up facing widespread default risk.
The piece points to mortgage rate trends and current pricing as key drivers. It notes the average 30-year fixed mortgage rate climbed from a low of 2.65% in January 2021 to a peak of 7.79% in October 2023, before easing to about 6.55% as of July 2026, while the median price of a new home remains above $405,300.
Schiff warned that the gap between what homeowners owe and what their homes would sell for could create a cascade of defaults. The article says he expects some owners may decide to “walk away” if they cannot sell for more than their mortgage balance, potentially leading to behavior like the 2008 period when many underwater homeowners effectively exited by returning keys to lenders.
The article frames the central concern as a mismatch between monthly affordability and home values: housing prices have stayed high even as mortgage rates moved up. It adds that this dynamic could raise the odds of a sharper adjustment in the housing market if prices fall suddenly.