Home Prices Will Be Heading Lower For Years | Melody Wright

**SPEAKER_1** (0:01)
Lowe's knows that no matter your paint project, saving is at the top of your list. That's why when you shop today, you can buy one, get one free. Select Valspar and HGTV Home by Sherwin Williams, one coat coverage interior paints via rebate. Shop these deals in store or online today at Lowe's. We help, you save. Selection varies by location, while supplies last. Discount taken at time of purchase. See sales associate for details. Offer valid 821 through 93

**SPEAKER_2** (0:30)
This episode is brought to you by Greenlight. Get this, adults with financial literacy skills have 82% more wealth than those who don't. From swimming lessons to piano classes, us parents invest in so many things to enrich our kids' lives. But are we investing in their future financial success? With Greenlight, you can teach your kids financial literacy skills like earning, saving, and investing. And this investment costs less than that after school treat. Start prioritizing their financial education and future today with a risk-free trial at greenlight.com/spotify. greenlight.com/spotify.

**Melody Wright** (1:00)
It will continue grinding down until we make that correction that I do believe is going to be worse than the GFC, but we'll have to just keep watching. But the trend from this point is really going to be down over the next 18 months.

**Adam Taggart** (1:22)
Welcome to Thoughtful Money. I'm Thoughtful Money Founder and your host, Adam Taggart. We've got a special treat today. We are joined by Melody Wright, Housing Analyst extraordinaire. Melody, how are you?

**Melody Wright** (1:33)
I'm doing well. Adam, how are you doing?

**Adam Taggart** (1:35)
I'm good, and it's good to see you again, Melody. You're one of those people that, when too much time goes by since your last appearance, the emails start coming when Melody's, when's Melody coming back? Started getting them enforced this week because I interviewed housing analyst Ivy Zellman a few days ago, and as respected as Ivy is, I suspect that you perhaps might have a different outlook as she, and hey, that's what makes a market, so that's what makes all this interesting. And I also want to note too that we'll talk about a couple of topics today, but you are going to be providing the housing analysis for Thoughtful Money's upcoming fall online conference, and at the end of this video, I'll tell folks more about that because I'm sort of officially announcing that pretty much with this video.
So folks, if you want to sign up for that and lock in the early bird price, you can do so by going to thoughtfulmoney.com/conference, but okay, let's get to the meat of things here, Melody. So if I remember my notes from our many conversations leading up to this one, you have been increasingly confident, I guess I'd say, that the housing correction is on and that 2025 will be a down year, the first down year nationally in a long time. So gravity is finally starting to take hold of average prices nationally in America. Now, it's still very much a tale of two markets, very bifurcated. You've got some markets that are really correcting hard, Texas, Florida, at the top of the list, but you've told us the infection is creeping into places like California and a number of other states, largely driven by inventory finally coming on to these markets. Now, we still have a bunch of other states, especially in the Midwest and the Northeast, that are a different story. But net net seems like this year, like I said, gravity is starting to win and we'll start to see negative year over year national housing prices. So, let me know if I described that correctly and more importantly, what has your attention most right now in the housing market?

**Melody Wright** (3:50)
Yeah, you described it really well, Adam. And these things just take an inordinate amount of time. And I know that can be very frustrating for people. But this market, when you don't have any transactions, and again, it is truly shocking to me. And I've said it on your program so many times, I feel like people must be sick of me saying it. But these are the worst sales we've seen in 30 years, worse than the GFC. And we've increased population by 20%.
Explain that to me. So what's happening is that the only people that are really trained are really what happened in 24 And 23 and 24, I mean, this is all very, when you look at those trend lines, very similar. What happened is only those that could afford it or were subsidized by the government to pay these higher prices were transacting. And that kept your median price up. But as you say, and you and I started talking about California very early, but I think we scooped it. I don't know if you've seen on ex Twitter when I shared for July the 20 plus cities that had both year over year and month over month price declines. And why this is important is because, you know, this pricing prices have a seasonal pattern, and it is typical that we would start to see, and especially in the southern states, declines from this point forward through the end of the year until the next spring selling season. But when you look at that chart, it's California, California, California. And, you know, I think, Adam, you probably have something to say about why people may be leaving California. I do. I do. We'll get to that. So but, you know, what I'm really looking at right now, honestly, are the builders because and some that I'm going to share in my next update, once we have prices was we should get right now, new home prices are way below existing home price, that medium. And before last year, that had only happened one other time in 2005 and June. But we've started to see this persistently. But what I'm going to do is I'm going to take the average between Lennar and all these other builders, which are saying they're giving price concessions, or concessions of about $45,000 on top of price reductions, which would even increase that price even more, Adam, to the tune of like $80,000 less than existing median home price, which is just bananas and cannot persist. And so last month, very interestingly, we saw new home median price come in around $400,000. We saw existing median price come in at like $435,000, et cetera. And some people are saying, you know, oh, that's because of the square footage. They're building smaller. That argument, no one's ever been able to show me the math on that. And I don't think with such a large gap, you know, historically since 2012, new home prices average $53,000 more each month than those existing homes. So I'm really watching that carefully because I think that they are signalling what is coming. The other thing is, you know, we are, Las Vegas, I just want to, they've been all over the news, but they're always a bellwether for this kind of thing. And honestly, you know, I just, when I was there in 2023, I can't believe it took this long for all of this inventory to start even coming to market. And I know that there's more, but you were just seeing that market get hit. And you know, that's a big tourist market. We know tourism is down. And so what you're really, you know, the 85 cities that I track, people may wonder half the time, why are you tracking Portsmouth, New Hampshire, or something like that? I was tracking a lot of vacation towns because I knew that those Airbnbs would start to trigger issues as they have. And so you can kind of see this really weird thing that like even in the Northeast, you're seeing vacation towns where those prices are coming down. And so this all takes time. And then what I'm hearing from my followers right now, and you can see it in places like Westchester County, the Northeast is starting the accumulation of inventory that's going to drive those price declines. And already I'm seeing them in some New Jersey cities, you know, year over year and month over month. So it just takes time. And I'm trying to decide, is it going to be the Northeast or the Midwest that's going to be last? Because I think in terms of making the turn because of that accumulating supply, because typically the Midwest, because Ivy, honestly, I mean, on several of her quarterly updates, I remember her talking about Ohio over and over is kind of the last place you could get really an affordable home price. And so all the investors sort of descended on the Midwest. But hearing from followers there as well, that's really starting to turn. And you're seeing that in Cleveland home prices down year over year. So it's all beginning to happen. It just takes time. And people are and there are still markets that are just topping right now. Adam, I just wrote about Bentonville, Arkansas. It is just now seen its top.