Melody Wright: Extreme Corrections are Coming in Housing Markets

Aug 7, 2025

Melody Wright, a seasoned expert in U.S. housing and mortgage markets, dives into the seismic shifts in the industry since the late 1980s. She discusses how the focus has moved from first-time homebuyers to a landscape dominated by investors and short-term rentals. Melody highlights the alarming rise of non-bank lenders, now making up 85% of the mortgage market, which poses risks in times of economic instability. Additionally, she predicts a potential market correction reminiscent of the 2008 crisis due to demographic challenges and declining affordability for younger generations.

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ANECDOTE

Melody's 2008 Crisis Experience

Melody Wright witnessed the 2008 housing crisis firsthand, starting in mortgage lending at a non-bank in 2006.
She managed over 65,000 foreclosures, gaining unique insights into mortgage origination and defaults.

INSIGHT

Housing Market's Investor Focus Shift

The U.S. housing market has shifted from serving families to investor-driven speculation since the late 1980s.
Current trends include short-term rentals, overbuilding, and a drop in first-time homebuyers to historic lows.

INSIGHT

Risks of Non-Bank Mortgage Lenders

Non-bank lenders now control 85% of U.S. mortgage lending and rely on borrowing funds rather than deposits.
This dependence exposes them to liquidity risks during rising delinquencies and reduced loan originations.

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Tom welcomes a new guest Melody Wright to the show. Melody is an expert on the complex dynamics of the U.S. housing and mortgage markets. Her background in macro economics and mortgage lending provides her with a unique perspective on the housing market’s evolution and potential risks.

She argues that the housing market has fundamentally transformed since the late 1980s, shifting from a focus on first-time homebuyers to an investment-driven ecosystem. The average household size has dramatically decreased to 2.5 people, reflecting significant demographic changes. She highlights how the market has become increasingly dominated by investors, short-term rentals, and speculation, rather than serving traditional family housing needs.

A critical concern is the rise of non-bank lenders, which now comprise 85% of mortgage lending. These institutions lack the financial cushioning of traditional banks and are potentially vulnerable to economic shifts. Wright warns that the current housing market is facing multiple challenges, including overbuilding, misallocated inventory, and declining affordability for younger generations. Demographics present another significant challenge. The United States is not maintaining population replacement rates, with an aging population of baby boomers who own the majority of homes.

Melody predicts a potential significant market correction, potentially as dramatic as the 2008 financial crisis, where home prices could realign more closely with median household incomes. The discussion emphasizes the complexity of the housing market, pointing out systematic issues like securitization, government intervention, and misleading data reporting. She advises consumers to be cautious about taking on debt and to conduct thorough personal research before making significant housing decisions.

Ultimately, Wright suggests the housing market may be heading toward a period of correction, where prices could dramatically realign with economic fundamentals. She recommends skepticism toward mainstream narratives and encourages individuals to carefully evaluate their personal financial circumstances before committing to major housing investments.

Timestamps:
00:00:00 – Introduction
00:00:48 – Melody’s Background
00:07:33 – Real Estate Overbuilding
00:11:25 – How Housing Has Changed
00:17:28 – Lower Rates & Inventory
00:19:19 – Age & First Time Buyers
00:21:18 – Non-Bank Mortgages?
00:27:24 – U.S. Economic Outlook?
00:34:25 – Fed Data & Anomalies
00:38:48 – Other Warning Signs
00:41:40 – U.S. Demographics
00:44:02 – Canadian Markets
00:47:08 – Housing Market Forecast
00:51:52 – Short-Term Recovery?
00:54:16 – Gov’t Policy Mitigations?
00:57:40 – Concluding Thoughts

Guest Links:
X: https://x.com/M3_Melody
Substack: https://m3melody.substack.com/
YouTube: https://www.youtube.com/@m3_melody
Spotify: https://creators.spotify.com/pod/profile/m3-melody/

A 24-year BFSI veteran, Melody was recently named as one of Mortgage Women Magazine’s Women of Technology and is a contributing writer to multiple publications. Her 2023 article in HousingWire entitled “Debunking the Housing Inventory Myth,” created controversy and sparked debate in the industry and amongst the investor community as housing analysts attributed low sales to inventory issues. Wright presciently argued that the depressed housing market was due to affordability issues and changing trends in how people buy and sell homes.

Melody Wright began her mortgage career at GMAC ResCap (RFC) in 2006 and helped manage the historic ResCap bankruptcy. After leaving ResCap and before joining the FinTech revolution, she focused on operational effectiveness at multiple large, nonbank mortgage companies. Melody launched her own strategy and technology company in 2022, Huringa, which assists the investor and industry community with navigating the ever-changing macroeconomic landscape utilizing market data and comprehensive, integrated technology solutions.