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The housing crash of 2008 was brutal—home values plummeted, millions of Americans were forced into foreclosure, and trillions in household wealth evaporated. Now real estate analyst Melody Wright is warning that the next recession could be even worse.
In a recent interview with Adam Taggart on “Thoughtful Money,” Wright said the U.S. housing market is headed for a significant correction.
“I think, Adam, we’re going to correct to a point where the median household income matches the median house price. And so that’s going to be worse than 2008,” she said (1).
Wright noted that during the last crash, prices were on their way to that equilibrium — where median incomes and median home values line up — but “Wall Street came in to buy them,” effectively halting the decline. This time, she argues, big investors may not step in.
The disconnect between house prices and household income is striking. According to Federal Reserve data, the median sales price of a US home reached $410,800 in Q2 2025 — a 42% increase over the past decade.
Realtor.com estimates that a typical household now needs to earn about $118,530 per year to afford a median-priced home (2). Real median household income in 2024, when was the latest data available? Only $83,730 according to the Federal Reserve Bank of St Louis. This is a big gap.
When asked how much prices would have to fall to restore balance, Wright didn’t mince words: “It will be close to 50% – and much higher in some areas (1).”
It’s a scary prospect. Given how much U.S. household wealth is sitting in equity — and how much leverage many recent buyers have — a 50 percent drop would be devastating.
There are already signs of change. Zillow recently reported that 53% of US homes lost value in the past year – the highest share since 2012 – with an average reduction of 9.7% (3).
Wright believes the coming correction could take several years to fully take effect, but he believes the recession could start as early as 2026.
“I think we could start in earnest next year with prices coming down and see a fairly large decline historically, but I still think it could take a few years to play out,” she told Newsweek (4).
She is not the only one raising alarms. Treasury Secretary Scott Bessent recently stated that the housing market is already in a “recession” due to Federal Reserve policy (5). And Rich Dad Poor Dad author Robert Kiyosaki has warned that the “biggest crash in history” is beginning – adding that “residential real estate is collapsing” in this scenario as well.
If you share these concerns, now may be a good time to start preparing.
When storm clouds gather over the markets, gold often claims the spotlight.
Long seen as the ultimate safe haven, gold is not tied to any country, currency or economy. It cannot be created at will by central banks like fiat money, and in times of economic turmoil, market turmoil or geopolitical uncertainty, investors tend to hoard it – increasing its value.
Over the past 12 months, gold prices have increased by more than 50%.
Ray Dalio, founder of the world’s largest hedge fund, Bridgewater Associates, has repeatedly emphasized the importance of gold in a resilient portfolio.
“People typically don’t have an adequate amount of gold in their portfolio,” he told CNBC earlier this year. “When times are bad, gold is a very effective diversifier.”
One way to invest in gold that also offers significant tax advantages is to open a gold IRA with the help of Thor Metals.
The Gold IRA allows investors to hold physical gold or gold-related assets in a retirement account, which combines the tax advantages of an IRA with the protective benefits of investing in gold, making it an attractive option for those looking to protect their retirement funds against economic uncertainties.
To learn more, you can get a free informative guide that includes details on how to get up to $20,000 in free metals on eligible purchases.
Read more: Warren Buffett used 8 solid, repeatable rules to turn $9,800 into a $150 billion fortune. Start using them today to get rich (and stay rich)
The housing crash of 2008 didn’t just destroy equity, it affected the entire economy. Layoffs rose, the unemployment rate soared, and families across the country found themselves suddenly vulnerable. If another major correction is coming, it pays to strengthen your safety net before the ripple effects occur.
One of the most effective ways to do this is to have a cushion of cash readily available. If your income takes a sudden hit, that buffer helps you stay afloat without taking on expensive debt or being forced to sell investments at the worst possible time.
So how big should that safety net be?
Personal finance expert Dave Ramsey suggests having an emergency fund that can cover three to six months worth of living expenses. What matters most, though, is consistency—adding little by little until the safety net starts to take shape.
To get started, a high-yield account like a Wealthfront Cash Account can be a great place to grow your emergency fund, offering both competitive interest rates and easy access to cash when you need it.
A Wealthfront cash account can offer a base variable APY of 3.50%, but Moneywise readers can get an exclusive 0.65% increase in the first three months for a total APY of 4.15% offered by the program’s banks on your uninvested cash. That’s more than nine times the national deposit savings rate, according to the FDIC’s September report.
With no minimum balances or account fees, as well as 24/7 withdrawals and free domestic bank transfers, you can ensure that your funds remain accessible at all times. Additionally, Wealthfront Cash account balances up to $8 million are FDIC insured through program banks.
At the end of the day, everyone’s financial situation is different – from income levels and investment goals to debt obligations and risk tolerance. And when the economic outlook is uncertain, these differences matter even more. If you’re not sure where to start, now might be a good time to get in touch with a financial advisor.
With Vanguard, you can connect with a personal advisor who can help you assess how you’re doing so far and make sure you have the right portfolio to meet your goals on time.
Vanguard’s hybrid advisory system combines advice from professional advisors and automated portfolio management to ensure your investments are working to achieve your financial goals.
All you have to do is fill out a short questionnaire about your financial goals, and Vanguard advisors will help you set up a personalized plan and even help you stick to it.
Once you’re ready, you can sit back while Vanguard advisors manage your portfolio. Because they’re fiduciaries, they don’t earn commissions, so you can trust that the advice you’re getting is unbiased.
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This article provides information only and should not be construed as advice. Offered without warranty of any kind.
