Next Big Downdraft For Housing Market To Start Soon | Melody Wright

**Melody Wright** (0:00)
We're seeing upwards to 50% of people failing out of these plans. And so that will keep your seriously delinquency rising from here. So we're going to round the corner to Q4, and we're going to have a lot more distress cells than we've seen previously.

**Adam Taggart** (0:22)
Welcome to Thoughtful Money, I'm the Thoughtful Money Founder and your host, Adam Taggart, welcoming you here for another discussion on the housing market with housing analyst, Melody Wright. Hey, Melody, thanks so much for joining us.

**Melody Wright** (0:34)
Thank you for having me, it's always my pleasure, Adam.

**Adam Taggart** (0:36)
Oh, it's always my pleasure, Melody. I do owe you a special debt of thanks here though, because you are doing this, having just had some dental surgery, and I know it must not be super fun for you to talk, I appreciate you soldiering through that for us.

**Melody Wright** (0:53)
Sure thing, thank you.

**Adam Taggart** (0:55)
Okay.
As always, Melody, I've got 1,000 questions for you, but let's just get to the punchline quickly. What's your latest assessment of the housing market here in the US.? And the last couple of times you and I have talked, you have said, hey, you think the trajectory is downwards, and you have said for a number of reasons, you think that this correction that the housing market will go through, and again, this is not going to happen in the next month or quarter. It's going to probably take a number of years. But you think that kind of peak to trough, it's going to be more painful than what we saw during the global financial crisis. Is that still true as well?

**Melody Wright** (1:38)
Yes, I still believe that because there's no buyers. There's no buyers. And so the general state of the housing market right now is that the selling season was an extreme disappointment for everyone. And the housing market remained frozen again. We kind of came into the year with a little bit lower rates. There were some excitement. And then that, of course, all stopped on February 28th, when we went to war with Iran. So what's happening in the housing market is, again, those that are transacting are the ones that can, meaning it's the higher priced homes, as well as anybody that can get in the door of one of these FHA or Fannie Mae Freddie programs, that maybe can necessarily afford it, but they're still getting in, but that's not a lot of people.
And so you're seeing in many places where you actually have volume. And it's kind of a bifurcated market, where in the south and the west, you are seeing year over year increases in sales, Adam, but not in the northeast, in the midwest. And so where you are seeing an increase in volume of sales, you're seeing price decline, you're seeing actual price discovery, where you're seeing prices still either float, and that's what I'm kind of calling it now, because they're not going up like this. They're just kind of drifting higher.
They don't have sales. Like the northeast was down in June 7 percent, year over year in sales and as was the midwest. And that's why those medium prices are still sticking where they are. But yes, I do believe that this will be likely worse than what we went through because of our demographics and because the institutional investors, you know, kind of bailed us out last time by buying up those homes to do long-term rental. So now who's going to be the buyer? It's certainly not the millennials or the younger generations. They simply can't afford it. So likely what's going to happen is the government will have to come in and buy some of these homes and probably then offer them through some sort of affordable housing program.

**Adam Taggart** (3:41)
Oh, my goodness. Okay. I want to talk with you about that as well as a number of things you mentioned. I forgot to say at the beginning here that folks, in this video, I will reveal why I have surefire intelligence of exactly when the housing crisis is going to really get turbocharged here. I can pinpoint, with a lot of specificity, how this is going to happen, but I'll save that for the end of this discussion. And Melody, I think you already know what I'm talking about. Okay, so of everything you said, what to pick first?
I guess first is, people look at the national average home price. It really hasn't rolled over all that much.
Is it even down on a 12-month basis?

**Melody Wright** (4:35)
Well, it just depends on which series you're looking at. So for instance, like median list price, that is down year-over-year, and it's been down year-over-year for about eight months. And so that's the prices that are listed out there today. Look at something like Case Schiller.