The end of the pandemic housing bubble! Analyst once dubbed ‘the Oracle of Wall Street’ predicts house prices will FINALLY fall – but only in these states

America’s real estate landscape is in the midst of a major upheaval that will make homes more affordable to first-time buyers, claims a former Oppenheimer analyst.

Meredith Whitney earnt the nickname the ‘Oracle of Wall Street’ after accurately predicting the 2008 financial crisis. 

Now she claims house prices are on the brink of decline after the pandemic inspired a real estate boom that saw the average property shoot up over $100,000 in value in less than four years.

However, she said the trend will be geo-specific with the likes of New York, New Jersey and Ohio worst-affected. By comparison, homes in Texas, Tennessee and Utah are among the states set to remain strong.

The shift will be driven by a surge in Baby Boomers downsizing into smaller properties – freeing up inventory and bringing costs down for first-time buyers, Whitney said. 

Meredith Whitney, pictured, earnt the nickname the ‘Oracle of Wall Street’ after accurately predicting the 2008 financial crisis

In the year to November 2023, property prices in Detroit increased 8.2 percent, according to latest data from the leading measure of US house prices

A recent report by CoreLogic shows how property prices have shot up in certain US metros

She told DailyMail.com: ‘Around 90 percent of housing stock is owned by over 40s while 74 percent is by those over 50.

‘It makes logical sense that lots of these owners will start to downsize in the next decade. That’s almost 35 million homes – it’s a huge number to go through the system.

‘My advice to homeowners is: if you want to sell, you’re better off doing it sooner than later.’

During the pandemic the median US house price ballooned from $303,465 in March 2020 to $402,045 by December 2023, Redfin figures show.

Many families were embroiled in a so-called ‘race for space’ as they looked for bigger homes and gardens to spend lockdown. A widespread shift to working-from-home also unchained workers from their city center properties.

But house prices have remained elevated ever since – despite mortgage rates soaring in response to the Federal Reserve’s funds rate reaching a 22-year high. 

The average rate on a 30-year mortgage is currently hovering at 6.77 – around double what they were two years ago, figures from Government-backed lender Freddie Mac show.

In a normal market this would be enough to dampen demand for homes and thus quash prices. However, several experts have noted that a widespread property shortage in the US has kept home values artificially high.

Whitney told DailyMail.com: ‘My advice to homeowners is: if you want to sell, you’re better off doing it sooner than later’

The average rate on a 30-year fixed home loan reached 6.77 percent, up from 6.64 percent last week, according to figures from Government-backed lender Freddie Mac

Data from Redfin shows that the typical US homeowner now spends twice as long in their properties as they did in 2005.

Today an owner can expect to spend 11.9 years in the same property, compared to 6.5 years two decades ago.

Whitney insists that there will be no house price ‘crash’ but rather an overdue correction.

She notes that in the last decade homeowners have built up $21 trillion in equity in their homes – so any price falls is unlikely to seriously harm them.

And some markets will fare much better than others.  

She said: ‘Every 60 years we see a similar kind of seismic shift in the US economy from an economic standpoint.

‘Today we’re seeing businesses shift into those tax-friendly states across the Sunbelt and in Texas, Tennessee and North Carolina. These are the housing markets where growth will persist.

‘But New York, New Jersey, Ohio and Illinois will see an outmigration of population meaning there will be no growth in their housing markets.’