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- Housing expert warns Americans about a price correction that is ‘worse than 2008’ crisis (marketrealist.com)
Housing Expert Sounds Alarm: Brace for a “Worse Than 2008” Market Correction
Americans are already feeling the pinch of rising living costs, and now, a prominent housing analyst is delivering a stark warning about the future of the housing market. Melody Wright predicts a drastic price correction, potentially “worse than 2008,” with home values plummeting by as much as 50% as early as next year.
A housing market price correction is characterized by a significant downturn following a period of rapid growth, often seeing property values drop by more than 10% from their peak. These corrections are typically triggered by factors such as unsustainable price hikes, an abundance of available homes, and a disconnect between market conditions and pricing.
“I think we’re going to correct all the way to a point where household median income matches the home price, the median home price. And so that is going to be worse than 2008. This could devolve a lot faster than last time,” Wright stated during an appearance on “Thoughtful Money” with Adam Taggart.
While a nationwide decrease in home prices this year remains debatable, Wright notes a clear slowdown. She attributes a period of buyer hesitation in April, dubbed “the tariff terror,” to uncertainty surrounding former President Trump’s intentions, which led to a lull in sales of all but the most expensive homes through the spring and summer.
Wright points to a decline in home prices across several U.S. metropolitan areas, particularly in the Sunbelt and the South – regions that experienced robust growth between 2020 and 2022. This downturn is largely due to increasing inventory and flagging demand.
Data from Redfin indicates that the median transaction price in October saw a modest 1.2% year-over-year increase, reaching $439,701, signaling a nationwide slowdown in price growth. Furthermore, a Zillow analysis revealed that the value of 53% of American homes has decreased in the past year, marking the most significant decline since 2012.
Despite some minor improvements in affordability, many Americans are still locked out of the housing market by high home prices, rising property taxes, escalating insurance premiums, and steep financing costs. Overall, housing prices remain elevated compared to pre-pandemic levels, even with the recent slowdown in growth.
“You have this bifurcated housing market, but the majority of folks transacting are in these upper tiers, so your median [home price] is going to be higher,” Wright explained. However, she noted a recent uptick in sales within the $100,000-$250,000 price range over the last three months, a detail she highlighted as significant.
Wright anticipates “flat” property price growth by the end of the year, with the current slowdown continuing. She warns of a further deterioration in the housing market in 2026, predicting even more drastic cuts.
The analyst attributes the projected sharp drop in property values by next year primarily to investors exiting the market due to unprofitable holdings. Unlike the previous slump, current investors are expressing concerns and even speculating about potential government intervention as a “buyer of last resort.”
Wright also cautions about the rapid degradation of assets abandoned by departing investors, suggesting that neglect could accelerate market turmoil faster than in previous cycles. She projects that property prices could fall by as much as 50% in 2024 to align with the typical household income of $83,730.