According to the report, baby boomers own more homes than Millennials and Gen Z, creating a “generational divide” in the housing world. Meredith Whitney, “Prophecy of Wall Street” who predicted the Great Financial Crisis.
Boomers don’t sell and that’s a problem. “They don’t sell because they’re getting older, because they can’t afford to go anywhere else,” Whitney said last week in the magazine an interview with CNBC. “Until they sell, you will have real confrontation between sellers and buyers.”
So what will it take? Yes, house prices must fall; Whitney said prices need to be reduced by about 20%. But that price drop would only take us back to where prices were three or four years ago before the pandemic and its corresponding housing boom. Plus, people will still have plenty of equity in their homes, Whitney explains, so this won’t be a housing crash.
At this point, it doesn’t make sense for many people to sell their homes because they have them locked inside Low mortgage rates or they own their home right. Giving up that could mean much higher mortgage rateand a much more expensive house. Considering that older generations are reluctant to sell, it causes younger generations to buy fewer homes; In some cases, homes for sale are unaffordable as prices continue to rise due to tight supply – and mortgage interest rates are higher than people are used to seeing.
In some cases, people list their homes at exorbitant prices and sell if they receive an offer or stay if it doesn’t meet their expectations, Whitney says. Sales are depressionespecially in the middle and lower tiers of the market, while luxurious Made possible by all-cash incentives, she added. “There has to be something offered in the mainstream market,” Whitney said. “I think you’ll start to see home prices go down.”
“To get affordable homes, that’s going to have to happen,” she added. Whitney said she wrote a letter to whoever wins the presidential election, telling them they have to let home prices fall, and it won’t be the end of the world, because “demand is there.” may be exaggerated”. (She did not provide any other details in the letter).
IN an interview with Luck Earlier this year, Whitney said she saw home prices drop 30% in part because young, single men were living at home and playing video games.
“Unless you are building a household, there is no reason to buy a house,” she told me at the time.
That was just part of her prediction. Another phenomenon that can reduce house prices is the phenomenon silver tsunamirefers to baby boomers and the millions of homes expected to flood the market over the next decade as they age and downsize and their homeownership rates decline. The two combined mean more supply, less demand and lower prices, Whitney said. But in her mind, it won’t be a housing crash. Instead, it’s almost a reversal of pandemic-induced price spikes and once-extremely low mortgage rates, she argued.
But here’s the thing: home prices almost never go down. And in our current housing cycle, housing shortages, numbering in the millions, are driving that trend. If the situation reverses itself as Whitney predicts (because supply is greater than demand), then it is reasonable that home prices could decline. But others in the industry have dismissed the silver tsunami, suggesting that incoming supply has been released by baby boom generationwill not be overwhelming and will be offset by younger generations who want and need housing.
