Could We See a 50% Crash in Housing 🏚️

It was supposed to be a quiet week heading into Thanksgiving, until it wasn’t 🔥🦃

Newsweek grabbed a soundbite from a podcast where a housing analyst predicted a 50% market correction. Suddenly that one quote became the storyline. It was all I heard about for days while I’m over here trying to decide if I’m making mac & cheese from scratch this year.

So… is a 50% housing correction even on the table? What would that kind of drop look like in the real world? And do I buy the idea?

Pull up a chair—let’s dig in. 🍽️🏡

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Read time: ~5 minutes

Rates ended LOWER compared to last week, and volatility was HIGH. Rates are in the mid-6% range for most loan types without paying discount points. Paying discount points can get you in the high 5’s - low 6's.

Could We See a 50% Crash in Housing 🏚️

Kreg got me hooked on a podcast called Wealthion years ago. It was hosted by Adam Taggart and it was the perfect companion to listen to while at the gym or a car ride to work. Adam eventually created his own podcast, now called Thoughtful Money. The same professionalism and excellent guests gave me the level of detail I wanted about the financial markets. On a regular basis, he brings on housing experts and that’s when we lean in.

However, lately, Adam’s brought on a few housing “experts” that just seem like doomers. Never optimistic, always calling for a housing crash and sadly I’m starting to think I need a new podcast to lean on. Not because I don’t want to hear from doomers. Kreg and I try to remain as neutral as possible, we like to hear both sides. But lately it’s been nothing but doom and gloom.

Adam’s most recent guest last week was Melody Wright, a writer and strategist, is the queen of doom. For the last several years, she’s called for recessions and/or housing crashes. Her latest prediction is that 2026 will see the spark of a major pricing correction in the housing market “worse than 2008.”

Wright believes median home prices will fall to a point where they will MATCH household median income. As a note, median home prices are currently $410,800 whereas median household income is ~$84,000. That’s like an 80% decrease in home prices 🤦‍♂️

“I see it happening over several years with the potential to deteriorate faster than in the last cycle.”

What Does the Queen of Doom Predict?

Wright believes it starts with investors. It is her belief that investors aren’t making the money the expected so they’ll start to unload in droves. This would increase supply, which is necessary for a steep decline in prices.

She also believes investors won’t be taking care of these homes (cutting grass, removing mold, winterizing homes) like the banks did in 2008. The quality of homes will be far worse. Unattractive supply would certainly help prices decline faster.

Rates are still elevated, property taxes have pumped nationwide, insurance is still trending higher and the cost-of-living pressures have all become a burden on potential buyers. Wright believes this would reduce demand significantly. A reduction in demand would pull prices down.

In the last cycle, Wall Street came to the rescue and bought up a lot of distressed homes. That might not be the case this time. Again, a reduction in demand would draw prices down further.

Why a 50% Housing Price Drop is Extremely Unlikely

One of the major levers to sink prices is supply. Currently, the US has a massive shortage of homes for sale. Different economists have varying ranges of the short supply, but JP Morgan Chase suggests there is a 2.8M unit shortage.

There is little incentive for owners to sell as over half are enjoying sub-4% interest rates. Additionally, builders are still gun-shy from the global financial crisis and are underbuilding. When supply is structurally short, prices don’t collapse 50%. Remember, in 2008 there was record oversupply of inventory.

Today’s borrowers are some of the strongest in US history. After the global financial crisis, lending standards improved significantly. No more “stated income loans”. Subprime loans make up a very small portion of loans vs. 20-25% leading into 2008. A collapse in prices would come from forced selling but highly qualified, fixed-rate borrowers don’t default in aggregate. This acts as another headwind against increased supply.

While foreclosures have increased in the last few years, they are no where near the record-setting levels around 2008. Over 40% of US homes are owned free and clear. According to ICE Mortgage Technology, about 1.6% of US mortgages are underwater as of October 2025. Compare that to the GFC which negative equity hit above 20% in many markets.

Lastly, pent-up demand is hard to quantify but seems to be loading like rocket ship ready for launch. The last 2 years we’ve seen existing home sales hovering around 4 million units. Historically, that is very low. We also see the age of first-time buyers hitting 40 years old according to NAR, up from early 30s just a few years ago. Younger adults are primed and ready to buy. If inventory spikes and rates continue to draw down, millions of buyers re-enter the pool and demand strengthens which won’t allow prices to sink in a meaningful way.

Unless gravity suddenly forgets how housing markets work, a 50% crash isn’t just unlikely…it’s a fantasy untethered from today’s supply, borrower strength, and the tidal wave of demand waiting for its moment.

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Mark Your Calendars 📅 The big event will be on Thursday February 5th, 2026

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