House prices set to plummet for the first time in over a DECADE, claims analyst once dubbed the ‘Oracle of Wall Street’ – as she reveals four states expected to see values decline

House prices are set to 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 research report sounding the alarm about risks Citigroup was taking before the financial crisis.

But as warning bells are going off again about the health of the U.S. economy, Whitney said Insider she did not fear another recession thanks to robust consumer spending bolstered by low unemployment rates.

Instead, her focus is on US home prices, which she expects to fall for the first time in more than a decade. That marks a sharp reversal of a pandemic-inspired trend that saw home values ​​rise 42 percent since March 2020, according to CoreLogic.

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

However, Texas could do much better – having experienced a large influx of Californians who migrated there in search of a cheaper cost of living.

She said: ‘It’s state specific. And so I expected it to happen. With 10 years plus – 12 years – of data, I can now look at it and know that it actually happened and it is happening.’

Whitney, who is now the CEO of investment research firm Meredith Whitney Advisory Group, said declines are being driven by an aging Baby Boomer population that is likely to downsize and free up their homes for buyers.

She told Insider: ”I’m always data-driven, so it’s just the math. When you look at the percentage of homeowners who are 50 and older, it’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.”

Figures from the National Association of Realtors show that the average age of a first-time home buyer is now at a record high of 36 years old.

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

Whitney speculates that the boom in Boomers downsizing will ease housing shortages — which have been blamed for 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 overnight, but it will be interesting to see the repercussions.’

Her comments come as buyers face a perfect storm of high home prices and increased mortgage rates.

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

But the majority of American homeowners struck a deal when rates were between two and three percent as recently as 2021.

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

Some 82 percent of prospective homebuyers recently told Freddie Mac they feel “locked in” in their current properties.

But despite the stagnation in demand, prices have remained artificially high thanks to limited housing stock.

In August, housing affordability hit its weakest level since 2006, according to figures from the Atlanta Federal Reserve.

But new data suggests the tide may be turning, as Whitney predicts.

Zillow economist Jeff Tucker said last week that buyers are in a “sweet spot” this fall, as 9.2 percent of new home listings lowered their asking prices in the week to Sept. 23.

This was an increase of 6 percent in April and 7.9 percent in the same week in September 2019.