- Meredith Whitney accurately predicted the 2008 financial crisis
- Now he says the U.S. housing market is in the midst of a major shift.
- Marks a reversal of the pandemic-inspired real estate boom
The U.S. housing landscape is in the midst of major upheaval that will make homes more affordable for first-time buyers, says a former Oppenheimer analyst.
Meredith Whitney earned the nickname “Oracle of Wall Street” after accurately predicting the 2008 financial crisis.
It now claims house prices are on the brink of collapse after the pandemic inspired a housing boom that saw the value of the average property soar more than $100,000 in less than four years.
However, he said the trend will be geospecific and that New York, New Jersey and Ohio will be the most affected. By comparison, housing in Texas, Tennessee and Utah are among the states that will remain strong.
The shift will be driven by an increase in Baby Boomers moving into smaller properties, freeing up inventory and reducing costs for first-time buyers, Whitney said.
Meredith Whitney, pictured, earned the nickname “Oracle of Wall Street” after accurately predicting the 2008 financial crisis.
In the year through November 2023, home prices in Detroit rose 8.2 percent, according to the most recent data from the main measure of U.S. housing prices.
A recent report from CoreLogic shows how property prices have skyrocketed in certain US metropolitan areas.
She told DailyMail.com: ‘Around 90 per cent of the housing stock is owned by people over 40, while 74 per cent is owned by people over 50.
‘It makes logical sense that many of these owners will begin to downsize in the next decade. There are almost 35 million homes; That’s a huge number to get through the system.
“My advice to owners is: if you want to sell, you better do it as soon as possible.”
During the pandemic, the median US home price skyrocketed from $303,465 in March 2020 to $402,045 in December 2023. red fin The figures show it.
Many families were caught up in the so-called “race for space” as they looked for larger houses and gardens to spend the confinement. A widespread shift to working from home also freed workers from their city center properties.
But home prices have remained elevated since then, even though mortgage rates soared in response to the Federal Reserve funds rate hitting a 22-year high.
The average rate on a 30-year mortgage is currently around 6.77, about double what it was two years ago, figures from government-backed lender Freddie Mac show.
In a normal market, this would be enough to curb demand for housing and therefore crush prices. However, several experts have noted that a widespread property shortage in the United States has kept home values artificially high.
Whitney told DailyMail.com: “My advice to homeowners is: If you want to sell, you better do it as soon as possible.”
The average rate on a 30-year fixed home loan hit 6.77 percent, up from 6.64 percent last week, according to figures from government-backed lender Freddie Mac.
Redfin data shows that the typical U.S. homeowner now spends twice as much time in their properties as they did in 2005.
Today, a homeowner can expect to spend 11.9 years on the same property, compared to 6.5 years two decades ago.
Whitney insists there will not be a “crash” in house prices, but rather a delayed correction.
It notes that homeowners have built up $21 trillion in equity in their homes over the past decade, so any price decline is unlikely to seriously hurt them.
And some markets will do much better than others.
She said: ‘Every 60 years we see a similar type of seismic change in the American economy from an economic point of view.
‘Today we are seeing businesses move to tax-friendly states across the Sunbelt and into Texas, Tennessee and North Carolina. These are the real estate markets where growth will persist.
“But New York, New Jersey, Ohio and Illinois will see an outmigration of their populations, which means there will be no growth in their housing markets.”