"Oracle of Wall Street" says US housing prices set to plummet
October 12, 2023 5
"It's just a matter of time," said American businesswoman Meredith Whitney, regarding a potential crash of the hot housing market in the US. "It's not something that happens in one fell swoop, but it'll be interesting to see the repercussions of that."
The second part of the comment referred to a phenomenon she prognosticated in the interview, which she gave to Business Insider. Namely, she expects a glut of larger and nicer homes to hit the market because of the concentration of baby boomers yet to downsize their living spaces, which she said historically tends to happen.
"The percentage of homeowners that are 50 and up, that's a staggering amount. And if you look historically, 50% of those over 50 typically sell and downsize, and that's expense driven.
Since March 2020, the housing market has seen a 42% leap nationwide. The climb continued until recently, even into the teeth of rising interest rates. The latest data from government-backed lender Freddie Mac shows the average rate on a 30-year fixed rate mortgage is hovering at 7.49 percent.
Older Americans have been reluctant to move because most secured interest rates between two and three percent. As a result, a Freddie Mac survey revealed 82 percent of would-be homebuyers feel "locked into" their current properties.
Even as demand in the housing market fell, as it continues to do, limited supply has kept the market high ... perhaps artificially. This phenomenon Whitney expects will soon change and send average selling prices tumbling.
Prices already now are falling. According to Zillow, almost 10 percent of listings were seeing their initial asking prices slashed in September, up more than three points from where it sat in April.
What does it mean for tax appeals and Cook County homeowners?
If your property was recently reassessed, your home's tax value is based on the inflated market. Should the bubble start to deflate, assessments will be frozen at the level of the high market.
That means opportunities to appeal for tax savings will grow.