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When Peter Schiff talks about housing, people tend to listen—he was one of the few voices who warned about the 2008 crash before it happened. Schiff, the CEO and chief global strategist of Euro Pacific Asset Management and host of “The Peter Schiff Show” podcast, is once again sounding the alarm.
He argues that rising mortgage rates and inflated home prices are on a collision course, and that this time many homeowners may simply “mail in their keys.”
On his YouTube channel in mid September, Schiff laid out how he sees it: “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.”
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He explains that homes aren’t bought based on absolute price so much as the monthly payment they generate—if interest rates are low, people can afford higher prices. But now the dynamic has reversed: mortgage rates have shot up, yet home prices didn’t recalibrate accordingly. “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,” he says.
Schiff believes that mismatch can’t last forever. “Now, of course, that will happen eventually,” he adds, predicting that it may “create a housing emergency.” He goes further: “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.”
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He notes that many homeowners are holding on because they locked in low mortgage rates, which has kept some selling pressure off the market. But sooner or later, people will be forced to move — whether for a job, a relocation, or financial strain. If that means slashing prices just to sell, some won’t have enough to cover what they still owe. In that situation, Schiff says, people might simply opt to hand in their keys. He adds that this could set off a “cascading effect” across the housing market.
That narrative echoes part of 2008’s story, but the differences are important. Back then, many buyers had adjustable-rate or subprime mortgages that reset to much higher payments, and prices had dropped in many markets. The S&P/Case-Shiller home price index showed an 18.2 % drop in Q4 2008 versus the prior year. Mortgage defaults and delinquencies skyrocketed—serious delinquencies rose from ~1.7 % historical averages up to 4.5 % by mid-2008. Many homes went underwater, forcing foreclosures or walkaways.
Today looks different in several ways. Loan standards are tighter, the risky subprime products that fueled the last crisis are largely gone, and most borrowers locked in fixed, low rates during the past decade. But pressure is building. The average 30-year fixed mortgage rate is once again above 6%. Home prices, meanwhile, have not corrected downward; the S&P CoreLogic Case-Shiller index still shows year-over-year gains of about 3% as of 2025, even after years of sharp increases.
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Schiff says that when defaults start rising, it won’t be limited to marginal borrowers. As price cuts spread and equity erodes, even more “solid” homeowners might find themselves trapped. In his view, what begins as isolated distress could spiral into broader market weakness.
The crux of his argument is: rising rates didn’t automatically reset home values. And when the dust settles, many who bought at peak prices will find that their homes are worth far less than their monthly payments, and even less than what they still owe. In that gap, Schiff sees a possible repeat — though not identical — of 2008’s default wave, only this time fueled not by exotic loans but by the weight of interest rates meeting overinflated prices.
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This article Peter Schiff Says People Are Going to ‘Mail In Their Keys’ If Home Prices Finally Adjust To Match High Mortgage Rates, Triggering A Housing ‘Emergency’ originally appeared on Benzinga.com