Big Drop In Home Prices Coming Next Year | Melody Wright

**Melody Wright** (0:00)
By June of next year, I believe we're gonna see material delinquency. And so 2025 is where I think we'll see the biggest drop in home prices, followed by probably subsequent years of minimal, but still persistent drops in home prices.

**Adam Taggart** (0:23)
Welcome to Thoughtful Money. I'm its founder and your host, Adam Taggart. Well, the Fed's now cut its benchmark interest rate by 75 basis points, and yet mortgage rates have risen, back up near 7% for the average 30-year fixed mortgage. Now, this has not been good news for the housing market, which has been frozen transaction-wise at record levels of unaffordability for the majority of aspiring purchasers. It's been often asked on this program, how long can the housing market remain broken like this? Well, we may be finding out the answer to that. In a growing number of metros, inventory is rising, substantially in many cases. Prices are coming down, and long-standing real estate barons are starting to break their cardinal rule to never sell. Is this growing trickle of motivated sellers that we're now seeing as more and more regional housing markets start to thaw likely to soon become a flood? For answers, we're fortunate to hear today from mortgage expert and housing analyst Melody Wright. Melody, thanks so much for joining us today.

**Melody Wright** (1:23)
Thank you for having me, Adam. It's my pleasure.

**Adam Taggart** (1:26)
Well, it's such a pleasure always to have you on, Melody, but particularly now. I think we talked about this in your appearance in Thoughtful Money's conference a few weeks ago, but I don't think we've talked about it on this public channel yet. You live, sadly, right in some of the worst of the path of the Hurricane Helene, correct?

**Melody Wright** (1:51)
Correct. Yes.

**Adam Taggart** (1:52)
Yeah. And that was very devastating for many, many communities that really never imagined they'd have to experience a hurricane. There's a tremendous amount of rebuilding that's having to go on there. First, I'm just glad you and your family are safe. And I know that you've been very involved in the efforts there to help people start to rebuild their lives from that. So anyways, thank you so much for the altruism and just the good Samaritan ship that you're showing.

**Melody Wright** (2:17)
Thank you, Adam. I feel like it's my duty. So, but thank you.

**Adam Taggart** (2:22)
The world needs more Melody Wrights. And actually, I'll just say, folks, like maybe we talk about this at the very end, Melody, but folks, if you're looking for ways to help some of the victims of recent hurricanes, go check out Melody's Substack. There are ways that you can help there. All right. Well, look, I asked a big question here in the intro, Melody. So let's dig into it together here.
Maybe we'll start with a general question and get specific. What is your current assessment of the US housing market?

**Melody Wright** (2:48)
Well, Adam, it's about to get really interesting. And we've seen so much has really happened over the summer to change things, including those upticks in delinquency. We're seeing the lowest activity, the lowest sales, excluding 2010 for a September since 1999 And that's the data series that I have. And that's a combined sales with new home sales as well, which is just absolutely remarkable because that's not adjusted for population either. And so this is, yeah, this is, it's remarkable, right? What we're going to see, just so everybody understands this next month, is we're going to see a pop in sales month over month. And the reason that is, is because many closings were canceled at the end of September due to Milton, a big part of that, as well as these other communities that were impacted. So we will see a month over month pop, but it's still going to be from very, very low levels. And that's also when rates were down a little bit. As you mentioned, to most people's minds, including the realtors out there, this shouldn't be happening, right? The Fed shouldn't have cut rates and rates, mortgage rates went up. But I think you and I have talked on your channel many times about the mortgage rates. They don't follow the Fed funds. They follow the 10-year treasury. And that, to everyone's consternation, is not behaving like they want it to. And everybody has a reason, be it from the Trump trade to the Japanese. I mean, but that is really what mortgage rates follow. And so what we're about to see is, this reminds me very much of October 2022, but we're going to see that little activity we got in the summer is going to grind to a halt because people...