Financial Analyst Forecasts Big Drop in Home Prices

04/22/2024 07:32 pm

NEW YORK–A person once called the “Oracle of Wall Street” for calling the financial crisis of 2008-09 is now predicting home prices are likely to fall substantially, and a big reason is the habits many young men have developed.

Meredith Whitney

“You have men staying single longer…and then you have what I call a growing crisis of the young American male…they’re twice as likely to live at home than women,” Meredith Whitney told CNBC. “One out of five young men live at home with their parents, and these aren’t young men going to college and coming home for holiday breaks, these are young, grown men choosing to live at home.”

Whitney told the news outlet she believes housing prices will begin a “multi-year/decade decline, just due to supply/demand dynamics. You’ve had a demand, supply imbalance: more demand, less supply. And I think that’s going to invert.”

A Big Shift

In other words, supply is going to outweigh demand, a big shift from the current market when demand for housing remains strong and inventory remains tight.

Whitney told CNBC demographic shifts are playing a big role in her view, noting the bulk of housing is owned by people and households over the age of 40, but household formations are at their lowest point in more than a century.

The result: a demand problem.

Prices Could Drop by 20%

Whitney, who is founder and CEO of Whitney Advisory Group, further said the rock-bottom mortgage rates of several years ago led to housing inflation. But that will change.

“Normally you would think as rates go up, home prices would go down, and that hasn’t happened over the last two years,” Whitney told CNBC. “I think home prices will normalize because as more inventory, more supply comes on the market, you’ll see a true clearing price that is lower than it is today. So, I would say 20% lower than it is today.” 

Not All Forecasts Correct

It should be noted, however, Whitney has made earlier forecasts that have not panned out, or at least not yet. She predicted, for instance, that numerous municipal bond defaults were likely, but that has not been the case.