House prices will fall for the first time in more than a decade, claims analyst once dubbed the ‘Oracle of Wall Street’ – as she reveals four states expected to see values ​​fall

House prices will fall for the first time in a decade, claims a former Oppenheimer analyst dubbed the ‘Oracle of Wall Street’.

Meredith Whitney is known for sending an accurate investigative report that raised the alarm about the risks Citigroup faced before the financial crisis.

But now warning bells are ringing again about the health of the US economy, Whitney said Insider she did not fear another recession thanks to robust consumer spending, which was supported by low unemployment rates.

Instead, she is focusing on U.S. home prices, which she expects will fall for the first time in more than a decade. It marks a stark reversal of a pandemic-inspired trend that has seen house prices rise 42 percent since March 2020, according to CoreLogic.

She predicts that Pennsylvania, Connecticut, New Jersey and Illinois are most at risk of falling prices due to migration trends.

Texas could do much better, though — after a huge influx of California residents migrated there in search of a cheaper cost of living.

She said, “This is state specific. And so I expected this to happen. With over ten years – twelve years – of data, I can now look at it and know that it did indeed happen and it is still happening.”

Whitney, who is now CEO of investment research firm Meredith Whitney Advisory Group, said the declines were driven by an aging baby boomer population that is likely to shrink, freeing up their homes for buyers.

She said Insider: ”I’m always data-driven, so it’s just the math. If you look at the percentage of homeowners who are 50 years or older, that is a staggering amount.

‘And if you look at it historically, typically 50% of those over 50 are selling and downsizing, and that is cost-driven.’

Figures from the National Association of Realtors show that the average age of a first-time homebuyer is now at an all-time high of 36.

Similarly, census data shows that only 10 percent of homeowners are under the age of 35.

Whitney speculates that the boom in downsizing among Boomers will ease housing shortages, which are keeping the market red-hot despite rising mortgage rates.

She added, “It’s only a matter of time. Again, it’s not something that happens all at once, but it will be interesting to see the ramifications of that.”

Her comments come at a time when buyers are facing a perfect storm of high home prices and high mortgage rates.

The latest data from government-backed lender Freddie Mac shows the average interest rate on a 30-year fixed-rate mortgage hovering at 7.49 percent.

But the majority of American homeowners made a deal in 2021 when interest rates were still between two and three percent.

It means many are reluctant to move because it could add another $1,000 to their monthly payments.

About 82 percent of potential homebuyers recently told Freddie Mac that they felt “trapped” in their current properties.

But despite declining demand, prices have remained artificially high thanks to limited housing stock.

Last week, Zillow economist Jeff Tucker said buyers were in a sweet spot this fall, as 9.2 percent of new homes had their asking prices reduced in the week to September 23.

Housing affordability reached its worst level since 2006 in August, according to figures from the Atlanta Federal Reserve.

However, new data suggests the tide could be turning, as Whitney predicts.

Last week, Zillow economist Jeff Tucker said buyers were in a sweet spot this fall, as 9.2 percent of new homes had their asking prices reduced in the week to September 23.

It marked an increase from 6 percent in April and 7.9 percent in the same week in September 2019.