Housing expert warns Americans about a price correction that is 'worse than 2008' crisis

Housing prices have become a major concern in America as people are wary about the rising cost of living. Home market pricing correction is defined by the downturn that usually follows a period of strong growth and is defined by a decline in property prices, frequently surpassing 10% from peak values. Even if sales continue, they might vary at the city or neighborhood level and are caused by things like excessive price hikes, large inventory levels, and a mismatch with market circumstances. Housing analyst Melody Wright recently claimed that home prices might drop by 50% as early as next year, and that the U.S. housing market will experience a price correction scenario more volatile than 2008. 

“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 while appearing on "Thoughtful Money" with Adam Taggart. Although it's difficult to say whether national home prices have decreased this year, Wright explained that there is a discernible slowdown. The uncertainty around President Trump's intentions in April caused many purchasers to hesitate and put off buying a property, which Wright called "the tariff terror." As a result, the only notable sales that took place in the U.S. market in the spring and summer were for more expensive residences.

Wright stated that home prices have been declining in several U.S. metropolitan areas due to rising inventory and declining demand, especially in the Sunbelt and the South, which had strong expansion between 2020 and 2022. According to Redfin, the median transaction price in October increased by just 1.2% year over year to $439,701, indicating a slowdown in the growth of property prices nationwide. Moreover, a Zillow analysis stated that the value of 53% of American houses has decreased in the last year, the worst decrease since 2012. Due to high home prices, property taxes, insurance premiums, and high financing expenses, many Americans are still shut out of the housing market despite modest improvements in affordability. In general, housing prices are still higher than they were before the epidemic, even though price growth has slowed.

“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 said. “However, what I’ve been seeing over the last three months, and this is—I get into the dirty dirty details—underneath the covers, that $100,000-$250,000 sales price, we are starting to see incremental increases in sales in that category,” she added. According to Wright, the growth in property prices will be "flat" by year's end, with a continuing slowdown already apparent. She claimed the housing market will deteriorate in 2026 and warned of more drastic cuts.

Wright predicts a sharp drop in property values by next year, primarily as a result of investors pulling out of the market because of unprofitable homes. In contrast to Wall Street investors' action during the previous slump, she observes that present investors are expressing worry and speculating about possible government intervention as "the buyer of last resort." Additionally, Wright cautions about the degradation of assets abandoned by departing investors, pointing out that neglect could cause turmoil faster than in past cycles. According to her, property prices may drop by as much as 50% to match the typical household income of $83,730 in 2024.

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