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A 20-40% housing crash is coming, says investor who called crypto 'The Tulip Mania of the 21st Century' - Peter Grandich
(Kitco News) - Peter Grandich, who correctly predicted the crypto and stock market crashes, said that he expects a major correction in the real estate market in the United States. He suggested that the recent selloffs in crypto and equities would spill over into housing.
Grandich said that the goal, in this market, to "not try to lose a lot of money," and warned that real estate "could see a 20, 30, or 40 percent loss and pretty fast."
Grandich spoke with David Lin, Anchor and Producer at Kitco News.
Crypto and Equities
Stocks and cryptocurrencies continue to perform weakly, with the S&P 500 down 18 percent year-to-date, and Bitcoin down 53 percent year-to-date.
Last year, Grandich issued a warning, saying that he "didn't want to own any general equities or bonds." He also called cryptocurrencies the "Tulip Mania of the 21st Century," a reference to a 17th Century Dutch asset bubble which drove the price of tulips to $750,000 per bulb.
In response to his predictions, Grandich claimed to have received hate mail.
"In fact, I got a legitimate death threat by mail and phone," he said. "We haven't gone 180 yet in cryptocurrencies. But I think the worst is over there, and there has to be more of a shakeout. There will be survivors, but unfortunately most of the people that saw two-thirds of the market go to money heaven, they're not going to be able to play again."
While he is skeptical of cryptocurrencies, Grandich said that blockchain technology itself is "legit," and he predicts that it will trade in similar patterns as technology stocks.
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Real Estate
As a recession approaches and intensifies, Grandich forecasts a severe fall in housing prices.
"The negative wealth effect will become the overriding factor that keeps markets on the defensive," he said. "We're seeing the end of the big bubble in real estate. I think it's the one [market] we're going to see the most down this quarter versus other markets."
He suggested that current real estate prices are not based on fundamentals, "according to the old Economics 101 books and us old relics that read them."
"The only thing I've learned in almost 40 years is, we tend as human beings, in everything, to go extreme, one side or another," he explained. "We've reached a peak on one end. We're not going to go back to the middle. We're going to have to swing to the other side… Those are the points, normally, that have to be reached."
To find out Grandich's advice for protecting against the housing crash, as well as his investment philosophy, watch the above video.
Follow David Lin on Twitter: @davidlin_TV
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