‘Oracle of Wall Street’ who predicted 2008 crash sees trouble in US housing — and the problem is demographics

Sat, Sep 6, 2025, 12:16 PM 6 min read

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Meredith Whitney earned her “Oracle of Wall Street” nickname by calling the 2008 financial crisis before it hit. Now, nearly two decades later, she sees fresh trouble brewing in the U.S. housing market.

“Existing home sales are tracking under 4 million on an annualized basis and that’s the worst in over 25 years. Buyers are looking for steep discounts and sellers are not willing to make those discounts,” Whitney said in a recent interview with MarketWatch [1].

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The problem, she explained, has to do with demographics. Roughly 60% of homes are owned by people over 55 and for many of them, downsizing isn’t realistic. Lower-cost alternatives are scarce and the financial hurdles of moving are steep.

“So either these folks have no mortgage or a small mortgage and the capital gains that they have to take and the costs that are required to move are prohibitive,” she noted, adding that baby boomers may not be as wealthy as many think.

That tax bite is no small thing. If you sell your primary residence, the IRS lets you exclude up to $250,000 in capital gains ($500,000 for joint filers) [2]. But that threshold was set back in 1997 — when home prices were far lower.

“Given the fact that 60% of homes are owned by seniors, that is the clear issue with affordable housing, because there’s just an inventory lock,” Whitney remarked.

She’s not the only one raising red flags. Last September, Federal Reserve chair Jerome Powell admitted the housing market is “in part frozen,” with many homeowners reluctant to sell because they’re locked in at lower mortgage rates [3].

The consequence? Persistently high prices on inventory that does exist. Combined with elevated interest rates, that makes homeownership harder than ever to achieve.

According to Realtor.com, a typical household would need to earn $118,530 annually to afford a median-priced home of $402,500 in the U.S. — more than 52% higher than the current median household income of about $77,700 [4].

At the end of the day, the rise in home prices also reflects the steady march of inflation over time. When inflation goes up, property values often climb as well, reflecting the higher costs of materials, labor and land. Meanwhile, rental income tends to rise, providing landlords with a revenue stream that adjusts with inflation.