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Legendary Investor Meredith Whitney Just Issued a Big Housing Market Warning

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  • Meredith Whitney, sometimes known as the “Oracle of Wall Street,” has issued a warning about the U.S. housing market.
  • Whitney expects home prices to start falling in 2024.
  • Investors might back off of stocks that are particularly sensitive to housing market fluctuations.
Housing market - Legendary Investor Meredith Whitney Just Issued a Big Housing Market Warning

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Mortgage interest rates are elevated and mortgage application volume is down. Some sellers have lowered the list prices on their homes. Could an imminent housing market crash be brewing in the final months of 2023?

One notable expert in real estate and the financial markets is indeed sounding the alarm on America’s housing industry. However, the catalyst for a potential housing slowdown probably isn’t what you think it might be. Moreover, your response as an investor doesn’t have to be panic-selling your stock holdings.

The ‘Oracle of Wall Street’ Foresees a Housing Market Slowdown

Meredith Whitney is a former analyst with Oppenheimer who predicted the 2008 financial crisis and thereby earned the unofficial title of the “Oracle of Wall Street.” Nowadays, Whitney envisions a different threat to America’s economy and housing market.

In particular, Whitney expects that demographic shifts could topple the supply-and-demand dynamic within the U.S. housing market. Some onlookers might assume that high interest rates would be the primary catalyst for a potential housing crash, but there’s another factor at work in the 2020s.

Believe it or not, Census data reveals that, in 2021, just 10% of U.S. homeowners were below the age of 35. This refutes the idea that Millennials and Generation Z have completely taken over the market with new home purchases.

Whitney drew some demographics-driven conclusions from her observations. “If you look at the percentage of homeowners that are 50 and up, that’s a staggering amount. And if you look at it historically, 50% of those over 50 typically sell and downsize, and that’s expense-driven,” she stated.

Thus, Whitney anticipates a “silver tsunami” of baby boomers downsizing their living quarters in the coming years. If there aren’t many young buyers, the downsizing baby boomers might simply choose to sell their homes at reduced prices. All of this could — if Whitney’s argument proves correct — result in severe negative pressure on the U.S. housing market.

What You Can Do Now

It’s fine to listen to Whitney’s argument and pay attention to her observations. After all, demographic changes could very well impact the U.S. housing market in 2024 and beyond.

However, as far as I can tell, Whitney isn’t recommending to panic-sell your home or your stocks. Still, if you choose to cut back on stocks that are especially sensitive to housing market fluctuations, that’s understandable. Examples of these kinds of stocks include Realty Income (NYSE:O) and Rocket Companies (NYSE:RKT).

So, in lieu of panicking, the most sensible strategy may simply be to rebalance your portfolio if necessary and, as always, stay alert for future housing market developments.

On the date of publication, David Moadel did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

David Moadel has provided compelling content – and crossed the occasional line – on behalf of Motley Fool, Crush the Street, Market Realist, TalkMarkets, TipRanks, Benzinga, and (of course) InvestorPlace.com. He also serves as the chief analyst and market researcher for Portfolio Wealth Global and hosts the popular financial YouTube channel Looking at the Markets.


Article printed from InvestorPlace Media, https://investorplace.com/2023/11/legendary-investor-meredith-whitney-just-issued-a-big-housing-market-warning/.

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