The Nice Housing Market “Reset” Begins in 2026

Ashley:
Welcome again to a different episode of Actual Property Rookie. I’m Ashley Kehr. We’re heading into the ultimate stretch of the yr. The presents are piling up below the tree, and whereas everybody else is winding down for the vacations, we’re teaming you up for what could possibly be some of the essential market conversations of the subsequent few years. However earlier than we do this, I wish to thank the rookie viewers for one more fantastic yr collectively. To all of the company which have taken the time to share their story, successes, and classes discovered, the rookies listening wouldn’t be the place they’re as we speak with out you. I’m so impressed on a regular basis by the motion taken by you all, the honesty, the vulnerability, and the group. I can’t wait to see what 2026 brings us all. As we speak’s rerun is from the podcast On The Market. This episode options Redfin’s head of economics analysis, and he or she talks in regards to the housing market having a full reset in 2026.
Not a flashy in a single day change, however the begin of a protracted, regular ship that would lastly carry consumers the affordability and normalcy they’ve been ready for. On this episode, Chen walks us by means of 11 predictions her group believes will outline the subsequent cycle. We break down what might occur with mortgage charges, residence costs, rents, refinancing alternatives, and general transaction quantity. We even speak about how AI would possibly quickly turn into a matchmaker for American residence consumers. And if you’re an investor or landlord, listen. Hidden inside these predictions is one development that would straight affect your cashflow in an excellent approach as we head into 2026. Settle in, seize a vacation cookie and luxuriate in this well timed rerun as we glance forward as to what could possibly be the start of a brand new chapter within the housing market.

Tony:
2026 is shaping as much as be the beginning of what Redfin calls the Nice Housing Reset. A protracted, sluggish interval the place affordability improves and the market normalizes, not a fast flip or a recession. I’m Dave Meyer, and as we speak I’m joined by Redfin’s head of financial analysis, Chenzao, to unpack their new annual predictions report. We’ll dive into every of their 11 predictions and stroll by means of the headline calls from charge cuts to gross sales inching up, rents reaccelerating, and which markets are prone to warmth up or calm down. That is On The Market. Let’s get into it. Jen, welcome again to On The Market. Thanks a lot for becoming a member of us once more.

Chen:
Thanks a lot for having me, Dave.

Tony:
That is one in every of our favourite exhibits of the yr listening to what Redfin has for predictions. So perhaps simply begin by telling us form of like huge headline, what are you seeing? What’s the massive high degree narrative in regards to the market in 26?

Chen:
I’d say the headline is that we see the housing market taking a little bit of a flip. I feel it’s already beginning just a little bit this yr, however we predict goes to proceed subsequent yr. And it’s going to be a little bit of an extended, what we’re calling a reset of the housing market the place we predict affordability will begin to slowly change. And affordability actually has been the massive problem for the housing market, as everyone knows, however there’s no silver bullet, there’s no magical repair. It’s going to take some time, and we predict subsequent yr is the beginning of higher affordability for residence consumers.

Tony:
That’s music to my ears. I feel I noticed one thing you all put out that affordability was one of the best it’s been in two or three years, simply within the second half of 2025. So it looks as if that development is already rising.

Chen:
Sure. I feel we’re beginning to see the beginnings of that development within the second half of 2025. So particularly, the 2 essential components are mortgage charges and residential costs. So we all know that mortgage charges have come down just a little bit. We anticipate them to remain decrease. We will get into extra of that. After which residence costs, we all know the house costs aren’t rising as quick as they had been.This has to do with the shift from a vendor’s market to a purchaser’s market. And we are able to speak about how we anticipate that to proceed for the subsequent few years and what the underlying forces are.

Tony:
All proper, nice. Properly, I are inclined to agree with the general form of thesis right here. I feel you guys known as it the housing reset. I’ve known as it form of the good stall the place I feel costs simply sort of keep stagnant for some time, however let’s get into the precise predictions that you just all have. So what’s the first one?

Chen:
The primary one is about mortgage charges. So proper now, mortgage charges are within the low sixes, 6.2, 6.3%. We predict they’re staying right here. I feel one other approach of placing that is that we don’t anticipate mortgage charges to get into the fives, not for any sustained time frame. We all know that mortgage charges fluctuate. Typically you get just a little bounced down, however I don’t suppose it’ll keep there. We additionally don’t actually anticipate mortgage charges to get again as much as 7% both. I feel the essential factor they’re right here to concentrate on is, after all, all the time the Fed and what they’re desirous about. They usually’re all the time balancing this twin mandate that they’ve. So is it stopping excessive inflation, simply making an attempt to maintain inflation low and regular, and likewise making an attempt to maintain unemployment from going up. So proper now, the financial system is in a really delicate stability. We all know that the upper tariff charges have slowed financial progress.
Additionally they threaten to extend inflation, though we haven’t seen as a lot of that up to now. However that implies that the Fed has a extremely distinctive problem on its palms. So even for the assembly that’s occurring subsequent Wednesday, it’s a little bit of an open query. What are they going to be doing going ahead? However as a result of they’re on this delicate stability, there’s not a lot room for them to chop rather a lot, however we additionally don’t suppose they’re going to be climbing. So which means we’re form of caught right here with the place mortgage charges are. After which the opposite factor you might have to bear in mind is that there’s this huge transition occurring subsequent yr with the Fed. The president can be nominating a brand new chair of the Federal Reserve. The chair is just one of 12 votes on the FOMC. So opposite to a number of the stuff that you just see within the press, the chair of the Federal Reserve doesn’t set rate of interest coverage.
She or he is one individual on that committee, however it’s a essential individual. And that transition is one thing that we additionally need to preserve actually shut tabs on.

Tony:
Received it. Okay. So not anticipating a whole lot of motion both approach. It does appear sort of caught. We now have these twin, I assume you’d name threats to the financial system proper now the place inflation has been … We don’t have a whole lot of inflation information for the final couple of months, however inflation previous to the federal government shutdown had been ticking up just a little bit and job losses, it looks as if each print tells us a special story. So it’s simply actually exhausting to know what’s happening there. And till we get clear line of sight on a kind of issues and which one is basically going to be the larger challenge or which one will get cleared up first, I agree with you that it’s not going to maneuver a lot. I’m curious, simply the final couple days, the Fed stopped quantitative tightening. Do you suppose there’s any likelihood that the Fed does one thing extra dramatic subsequent yr to affect mortgage charges, like perhaps quantitative easing or one thing like that?

Chen:
I don’t suppose so. I feel that the communications that we’ve gotten from the Fed is fairly clear on this, that they wish to pivot away from mortgage-backed securities and pivot in the direction of a portfolio of treasury securities. And this concept that’s been floated a number of occasions, I’ve seen some op-eds about it saying, “Hey, look, increased mortgage charges is basically killing the housing business. Can we do one thing for housing? Perhaps which means the Fed buys MBS.” It’s actually exhausting to think about that they’d select to do one thing like that while you nonetheless have a lot lingering inflation danger from increased tariff charges as a result of you need to do not forget that housing remains to be the most important element after all CPI or PCE, whichever your favourite measure is. And so if you happen to had been to stoke the housing market proper now, what you’d see is that residence costs would simply shoot up.
They usually actually simply, in any case the celebs and PTSD from the previous few years with excessive inflation, I simply can’t think about that they’d actually select to do this. And Chair Powell has been requested about this a number of occasions in his press conferences, and he has stated every time very constantly, “The issue within the housing market is that there must be extra provide.” And everyone knows this very properly. We are saying it on a regular basis. That’s a really exhausting downside to resolve. And put one other approach, I feel, one other approach to take a look at it’s within the housing market, what we’d like is for costs to return down. We’re in a brand new financial period now after the pandemic the place charges are simply going to be sitting increased. I typically like to speak about this by way of individuals’s metabolisms. As you age, your metabolism modifications.
It is advisable change what you eat, and it’s just a little bit like that for the housing market. So we really do want to simply see decrease residence costs. That’s the precise solution to get the housing market again to a wholesome state.

Tony:
I agree with you there. So do you suppose that’s going to occur? Perhaps I’m skipping forward in your predictions, however do you suppose that may occur that we’ll see residence costs decline?

Chen:
We’re already beginning to see it this yr. So we began the yr with residence costs rising about 5% yr over yr. We’re all the way down to about two, three-ish %, relying on precisely the way you wish to measure it, what particular metrics you wish to take a look at. So it’s come down rather a lot, and it got here down rather a lot as a result of the change of residence consumers to residence sellers has modified. So Redfin has this proprietary metric that we put out that we name lively consumers and sellers. So sellers is very easy. It’s simply quantity of stock out there. The variety of consumers is one thing that we impute from a few of our proprietary information the place if we are able to see what number of houses are promoting and we all know how lengthy it takes individuals to search out houses and the way lengthy it takes to promote houses, we are able to put all that collectively in a mannequin and say, “This means that there are this many consumers within the housing market actively trying proper now.” And what we noticed was that that hole obtained actually giant within the spring of this yr.
There was about 37% extra residence sellers than residence consumers throughout the nation, and most housing markets had been tipping from being vendor’s markets to being consumers markets. In order that ratio of sellers to consumers has a really shut relationship to residence value progress with a lead of about six months or so. So what we’re seeing is that that shift has led to residence value depreciation actually slowing down. And it’s exhausting to think about as we proceed to comply with this metric and that hole continues to be traditionally giant, that it’s exhausting to think about that residence value progress will speed up once more. After which particularly if you happen to layer on high of that, what we see occurring with demographics. So we all know that immigration into this nation has had been roughly halted. We additionally know that the underlying demographics of the nation implies that there’s going to be smaller populations going ahead, that it’s actually exhausting to think about that residence costs will really be appreciating that quickly within the close to or medium time period.
However then again, it’s additionally troublesome to think about that residence costs will actually be falling dramatically as a result of as everyone knows, individuals don’t need to promote their houses. You possibly can select to hire it out, you may select to proceed to reside in it. And we really put out a report, I consider it was final week, de- listings, and we noticed that the fraction of houses which are being de- listed in 2025 was about 5.5%. That was up from about 4.8% final yr, which doesn’t sound like an enormous improve, however that fraction has been very fixed, like under 5% for the final eight to 10 years. In order that implies that that improve is definitely significant. It doesn’t sound like an enormous quantity, but it surely’s a reasonably significant improve. And what we noticed was that the houses which are being de- listed are individuals who purchased extra not too long ago.
They don’t wish to promote the place consumers are prepared to pay proper now. So consumers and sellers are simply form of far aside. And so so long as residence sellers aren’t prepared to go the place consumers want them to go, it’s really very exhausting for costs to additionally fall.

Tony:
Yeah. I really, we did a complete present on that report about de- listings as a result of I feel it’s tremendous attention-grabbing. And to me, it simply displays that sellers are responding appropriately to the market as a result of I feel a whole lot of the crash narratives that you just hear about are there’s going to be panic promoting or there’s going to be this form of downward spiral of accelerating stock, however what you’re seeing is a standard response. Individuals don’t wish to promote at a loss, and so they don’t need to. There’s no compelled promoting happening, in order that they’re simply selecting to not promote. I feel it’s personally, I’m curious to see if they arrive again on within the spring, as a result of I’ve a whole lot of buddies who’re home flippers, a whole lot of them are pulling them off and we’ll do it within the spring. However I feel that to me is an indication that you just’re appropriate that it’s going to be form of a boring yr price-wise for the housing market.

Chen:
Yeah. I imply, we’re going to proceed to publish this de- listings information fairly repeatedly, and we may also be publishing who’s de- itemizing and are they relisting the house? So we must always see that within the spring if they’re coming again in the marketplace. It’s boring, I assume in some sense to say, look, residence costs are going to perhaps rising 1% or 2%, one thing very low. However it’s really a significant change for consumers as a result of what which means is that residence costs are rising slower than wages. And that’s what consumers really want. They want time for wages to catch as much as the place residence costs are. As a result of residence costs aren’t going to be falling, that is the one mechanism that we now have with a view to get to this place the place we have to go the place houses are extra reasonably priced for individuals the place their incomes really are.
And that’s what we predict can be occurring subsequent yr.

Tony:
So that’s your second prediction, proper, for subsequent yr?

Chen:
Sure. Basically that residence costs are going to be rising slower than wages. And that is the step that you just want for affordability. However importantly, this type of progress may be very sluggish. So it may not even be very noticeable to a whole lot of consumers after the primary yr. We don’t anticipate affordability to rapidly soar again to the place it was earlier than the pandemic. It’s going to be a sluggish course of, perhaps 5 to 6 years. It’d take some time for consumers to truly discover, “Hey, affordability has gotten higher.”

Tony:
That is smart. And only for everybody who’s listening, we’ve been speaking about this on the present not too long ago, however what Chen is speaking about additionally displays the distinction between nominal and actual residence costs as a result of Chen stated costs would possibly go up one to 2%. That’s the worth you see on Redfin if you happen to had been going to go look. However while you really examine that improve to inflation to wages, they’re really destructive. And I do know that sounds destructive to some individuals, however which means affordability is bettering. That’s how we’re really getting affordability. And proper now it’s child steps in the direction of affordability, however we are able to get again in the direction of significant enhancements in affordability over time. If actual residence costs keep sort of flat and wages continue to grow, that’s a standard approach that we get affordability again into the housing market. All proper. So we’ve gone by means of our first two predictions from you, which was first about mortgage charges dipping into the low sixes, however staying there.
Prediction two, residence shopping for affordability will enhance as wages develop quicker than costs. What’s the third one?

Chen:
The third one is about gross sales. So we predict that gross sales will inch up simply barely subsequent yr. So we’re desirous about present residence gross sales very particularly. It’s been about 4.1 million. It’s going to be 4.1 million once more this year-ish. Subsequent yr, we’re forecasting 4.2 million. It’s not rather a lot. Traditionally, it’s very, very low really. It’s solely up about 3% from the place we predict we’ll finish this yr. I feel that the elevated affordability means you simply get just a little bit extra exercise out there, however by and huge, what we’re describing with consumers and sellers actually simply being on the stalemate implies that you’re not going to get this big pickup within the housing market subsequent yr.

Tony:
I hope you’re improper about this, however I agree with you. I simply suppose for this complete business, it will be nice if we had extra gross sales quantity. It simply feels prefer it’s been so sluggish and sluggish. And for anybody who’s a lender, an agent, it’s been a troublesome slog. And hopefully although, a minimum of this can be a check in the precise path. It’s obtained to backside out in some unspecified time in the future. And perhaps which means that we’re transferring in the direction of higher residence gross sales quantity, perhaps not in 2026, just a little bit higher, however perhaps within the years after that, we’ll begin getting in the direction of a extra regular degree of gross sales quantity. Chen, what’s the fourth prediction Redfin has this yr?

Chen:
It’s about rents. In order everyone knows, rents have been actually flat to barely declining for a variety of years now. We predict that subsequent yr, rents will begin to tick up just a bit bit, in all probability in the direction of the again half of the yr. We all know that multifamily building has actually slowed. There’s additionally elevated demand from individuals not shopping for a house for renting. So the mix of these two issues implies that we in all probability simply get the smallest uptick in rents. It’d imply that you just had been speaking about this distinction between nominal and actual value progress. Proper now, rents are falling on an actual foundation when you alter for inflation. By some metrics, they’re really falling on a nominal foundation. We predict we’d get to someplace the place it’s flat on an actual foundation. So rents are maintaining with inflation in different phrases.

Tony:
And that’s primarily based on principally simply the availability glut that we’ve form of been in from multifamily dissipating.

Chen:
Precisely. I feel that’s the primary motivation right here, however we additionally suppose that this continued affordability problem, that simply doesn’t take a very long time to work by means of on the acquisition aspect means you simply get increased demand nonetheless. We additionally know that the financial system has gotten rather a lot weaker. The labor market’s weaker. We’re form of on the sting of a recession, in all probability received’t fall right into a recession, however that may preserve sufficient individuals renting quite than shopping for.

Tony:
That’s attention-grabbing as a result of I seen the identical factor. I noticed some stat that the unemployment charge for individuals below 25 is like 9% proper now. These sorts of numbers that I don’t know if we go right into a recession or not, but it surely made me surprise if it is going to weigh on family formation as a result of I feel you’re proper, we’ll have a better share of individuals renting, however for rental demand to maintain up, we’d like family progress, however I’m curious in case you have any ideas on that, if that’s going to decelerate or the place that may go.

Chen:
We do suppose that the slower financial progress will weigh on family formation just a little bit, however the financial system, there’s a whole lot of headlines proper now in regards to the destructive jobs information that we’re seeing. The federal government shutdown implies that we simply haven’t gotten nice official jobs information, so we nonetheless want to attend for that. And the truth of the labor market is that it has slowed down rather a lot, but it surely’s nonetheless staying afloat and the financial system remains to be staying afloat. In order that makes me suppose that we received’t get a huge effect but on family formation, however housing prices stay excessive. So we do suppose there are going to be some impacts on issues like family formation and likewise on issues like individuals deciding to begin a household. So our fifth prediction is that affordability means individuals have extra roommates, we are saying fewer infants, that means that perhaps you wish to get into an even bigger residence earlier than you begin to have youngsters, however you’re discovering that to be actually difficult.
So that you’re going to delay that for a short while. And as I used to be saying earlier than, we do suppose housing affordability will enhance, but it surely’s going to take a variety of years. So that may weigh on a few of these components for households.

Tony:
Received it. Okay. I imply, that is smart to me. I do suppose persons are stretched and it’s going to be exhausting for individuals to exit and type a brand new family. Only for everybody is aware of, family formation, it’s just a little bit totally different than inhabitants progress. It’s mainly measuring the full demand for housing models. So for instance, if two roommates live collectively, then they every determine to exit and get their very own condo. Doesn’t change the inhabitants of a metropolis or the nation, however that provides another family and that provides another unit of demand. That would occur when an adolescent strikes out of their dad and mom’ home or if two individuals break up up and so they determine to have two houses. In order that’s what we’re speaking about. And that’s simply an ongoing query I’ve, notably because it pertains to rents. So we really, we obtained a twofer on that one.
We did prediction 4 and 5 on the identical time. So what’s prediction six?

Chen:
Prediction six is about coverage. So housing affordability has turn into the paramount challenge in coverage. I feel for what we noticed within the final election cycle is that it’s the decisive challenge really, or it will likely be in a whole lot of elections. And I feel each events know this and candidates who’re working for workplace additionally know this. So our prediction is that there can be a whole lot of severe proposals introduced ahead. It’s, as is all the time the case in coverage, a few of them can be helpful and a few of them will not be that helpful on the finish of the day. We all know that with a view to actually tackle housing affordability, you need to construct extra provide, however that’s actually, actually exhausting to do as a result of it’s managed by hundreds of native jurisdictions. A great portion of the inhabitants has a vested curiosity in not permitting there to be extra provide.
So this can be a very difficult downside to resolve and it’s going to require actually modern coverage options as a result of fairly frankly, nobody’s actually solved this downside. And it’s been an issue for a very long time. We all know that the nation is brief, many thousands and thousands of housing models, however throughout the nation while you’re election outcomes, you may see that this actually is the primary challenge that’s on the minds of voters.

Tony:
Properly, I hope you’re proper. I do hope that we begin to see some smart insurance policies right here. I used to be getting interviewed the opposite day and I used to be saying, I really feel like the true exhausting factor right here is that insurance policies that really assist aren’t rather well aligned with the election cycles in america as a result of including provide takes years. We might begin now and it might take three years, it might take 5 years, it takes seven years. And politicians, either side of the aisle, they’re making an attempt to get reelected each two years or each 4 years. And so oftentimes I feel what frustrates me is the options that get essentially the most traction are the short-term ones that may perhaps make a dent within the brief run, however aren’t actually sort of going after the availability challenge. I’m curious in case you have any ideas on what’s some good insurance policies or any examples of insurance policies that would really assist right here?
As a result of I completely agree this can be a big downside for the nation and must be mounted.

Chen:
To me, I feel there are native jurisdictions which have made some progress by making it simpler, taking away pink tape, perhaps introducing ADUs or manufactured housing, all these various kinds of innovation to attempt to add some provide. It’s not a silver bullet and it’s not sufficient provide, though we shouldn’t low cost that there’s some progress being made. I feel to ensure that there to be a consolidated federal push, the issue is that the federal authorities is concerned within the housing market totally on the financing aspect. It’s not on the availability aspect. However the federal authorities has a whole lot of sticks and carrots that it will possibly use when speaking to native jurisdictions as a result of native governments get a whole lot of funding from the federal authorities. I feel if there was a approach to make use of these carrots and sticks and ties and funding to outcomes in native jurisdictions, that could possibly be a extremely promising resolution.
I don’t know that this has been tried very a lot in a form of significant approach, however that may be one thing to discover. A lot of the proposals that get put ahead are on the demand aspect. And as everyone knows, that’s not really what is useful. We simply have to deal with what is definitely occurring on the availability aspect.

Tony:
Yeah, that makes a whole lot of sense as a result of simply for instance, demand aspect insurance policies, if you happen to subsidize consumers otherwise you decrease mortgage charges or to determine a way to assist individuals purchase, that may be useful for a minute, however then it simply pushes the worth of houses up and you continue to have the identical long-term structural affordability challenges, proper?

Chen:
Precisely. It makes the issue really worse in the long term. It’s very myopic and it’s actually actually the very last thing that we’d like. I typically do, after I’m desirous about housing coverage and the affordability challenge, we now have to take our drugs. You possibly can’t have your cake and eat it on the identical time. Sooner or later, you need to take your drugs. And I feel that’s the actually exhausting half as a result of nobody actually does as a result of most individuals who personal houses, the vast majority of their wealth is of their residence.

Tony:
So it’s exhausting. Yeah, I get that. Individuals need extra affordability with out making their residence go down in worth. That could be a difficult factor to tug off. I’ve stated this on the present a number of occasions. I like your saying, take your drugs. We’re in an unhealthy place within the housing market, and to get again to well being, there’s going to be some ache someplace. You don’t get a magic redo. And so I personally suppose the sluggish, you guys are calling the good reset or name the good stall, I feel that’s sort of a superb stability personally. If we are able to add extra provide step by step, if wages can go up, this can be a tolerable approach for affordability to get restored with out the underside falling out of the market and householders dropping a ton of fairness and wealth. And so I’m inspired by a number of the market dynamics, however I do suppose the coverage factor remains to be the lacking piece.
There’s no coherent coverage from anybody. I’m not blaming one get together or the opposite. There isn’t a coherent coverage from anybody about how we’re going to do higher.

Chen:
Yeah. And it’s an extremely difficult downside to resolve.

Tony:
All proper, let’s transfer on to our seventh prediction. What do you bought?

Chen:
So our sum of the prediction is that extra individuals will refi and rework. So once we take into consideration refi, I feel we’re desirous about it in two other ways. One is just that over the previous few years, really lots of people have purchased houses at actually excessive mortgage charges. So proper now about 20% of people that have a mortgage have a charge above 6%. In order charges fall into that under sixes, you even have a wholesome quantity of people that can be within the cash for a refi. So we do anticipate that refi quantity will improve about 30% subsequent yr. Oh, wow. So it’s off a really small base, so we now have to do not forget that. However that’s significant as a result of 6.3% mortgage charges sounds fairly excessive. However if you happen to do not forget that we had been at 6.8%, then 6.8%, then I feel this yr was 6.6% in all probability common for the yr.
We’re coming down very, very slowly and it’s sufficient of a change that you’ll have people who find themselves going to be within the cash for a refi. The opposite is simply that, as everyone knows, lots of people have a whole lot of fairness of their houses, however they’re additionally nonetheless caught. They’ll’t afford to maneuver on to an even bigger home. So a whole lot of them in all probability will begin to, in the event that they haven’t already, faucet into that residence fairness. I feel renovation will proceed to be a sizzling subject the place persons are going to be making an attempt to make the house that they’ve work for them.

Tony:
Let’s preserve transferring. Chen, what’s prediction quantity eight?

Chen:
So prediction quantity eight is about totally different areas of the nation. So we predict that the markets which are going to be sizzling in 2026 are actually a whole lot of these suburbs round New York Metropolis that proper now are a few of our strongest markets. Additionally, a number of the metros within the Midwest, that are among the many extra reasonably priced locations. On the flip aspect, we predict that the locations that we’re actually seeing which are amongst our weaker markets within the Sunbelt in Florida and Texas, these are going to proceed to be the weaker markets in 2026. So there’s this again to workplace return to workplace development that’s simply persevering with to occur. It’s, I feel, going to be extra of a development in a weaker housing market as a result of employers simply have extra of the higher hand. Proper now, people who find themselves searching for jobs are having a extremely troublesome time discovering jobs.
So after they say three days is now 4 days, 4 days is now 5 days, otherwise you simply need to … I feel there’s going to be extra of that occuring, however nonetheless some individuals will stay hybrid. So not everybody’s going to be trying to transfer to Manhattan, however lots of people are going to be trying to transfer to Lengthy Island and New Jersey or Westchester. And so these are the markets which are sellers markets, though many of the nation is made up of purchaser’s markets at this level.

Tony:
And the way do you see the unfold right here? During the last couple years, we’ve seen dramatic variations. In the event you checked out 24, 25, there are markets like Milwaukee had been up seven, 8%, there’s Austin down 78%. That was a reasonably large unfold between the highest and backside performing markets. Do you see that consolidating just a little bit?

Chen:
Sure. I imply, there are locations, particularly in Florida and Texas, these are your weakest markets proper now. If you examine them to what’s occurring on Lengthy Island, they’re worlds aside proper now. However what we’re persevering with to see in locations like Florida and Texas is that a whole lot of these metros have 100, 150, typically 200% extra sellers than there are consumers.

Tony:
Oh my

Chen:
God. And as I used to be saying, that metric tends to be forward-looking by about six months. In order that implies that in all probability over the subsequent six months to a yr, if we proceed to see this unfold between consumers and sellers being so huge, these markets are going to proceed to be fairly weak.

Tony:
And what in regards to the hotter markets? Is that this modest progress, two, 3%, or one thing increased than

Chen:
That? It looks like these markets, if something, are literally heating up just a little bit. Not a ton. Demand is sort of sluggish generally.That’s an overarching factor in every single place, but it surely’s nonetheless, comparatively talking, they appear to be heating up. And a whole lot of these markets like Boston or Lengthy Island round New York Metropolis, these are locations the place you’re nonetheless sustaining a wholesome distance the place there’s extra consumers than sellers. And in order that feels prefer it’s one thing to maintain the worth progress that we’re seeing.

Tony:
Properly, this can be an attention-grabbing one to observe as a result of the market is … We speak on the present on a regular basis in regards to the nationwide market, however clearly as Chen simply identified, we now have very totally different markets. And as an investor or house owner, you want to be what’s happening in your particular person market to formulate your technique. All proper, let’s go to our ninth prediction. We’re flying by means of these. Which one’s that, Jen?

Chen:
It’s about local weather migration. So we predict that that is going to be extra of a neighborhood story than a cross-metro story in 2026. So we all know that with local weather change, that this has turn into extra on the minds of consumers. So persons are listening to local weather information after they see it on actual property portals. We all know that insurance coverage has turn into an actual challenge relating to affordability within the housing market. However when consumers are desirous about the place to reside, they’ve so many alternative points that they need to deal with. They give thought to the place’s your loved ones? The place are the roles? So as an alternative of claiming individuals aren’t going to be dwelling in Florida, perhaps they have to be in Florida for another cause. They is perhaps desirous about, I have to reside on this a part of town quite than this different a part of town, which is perhaps extra vulnerable to catastrophe danger.
So I feel that feels, I feel, extra practical for residence consumers who need to deal with a variety of various factors after they’re desirous about the place to purchase a home.

Tony:
How do you measure that? How have you learnt persons are … In the event you see somebody transfer inside a metropolis, how have you learnt it’s due to local weather danger?

Chen:
I feel one actually great way to do that, and it’s exhausting to have all the information in place with a view to actually do that evaluation properly, is to take a look at insurance coverage prices as a result of actually when speaking about local weather danger, it’s manifested by means of insurance coverage prices. So I feel if you happen to had been ready to take a look at insurance coverage prices after which tie that to housing market exercise, and we now have a reasonably good measure of demand within the housing market proper now by means of our consumers and sellers metric, that would make it easier to to see this relationship clearly even inside a broader metro space, I feel.

Tony:
And I’m curious, you stated you see this occurring simply in 2026. Do you suppose there’s potential for cross-metro migration sooner or later or do you not have that data?

Chen:
I feel if you happen to’re pondering additional out while you’re desirous about catastrophe danger or insurance coverage prices, that is, I feel, one lingering huge danger for the housing market. It’s just a little bit exhausting to know precisely the place it goes many, a few years from now although. I feel it actually will depend on what we really see occurring in insurance coverage markets, what mortgage firms determine to do by way of desirous about the dangers and who’s proudly owning the danger for the properties which are mortgaged and have this catastrophe danger. So it’s just a little bit more durable to see, however actually I feel it wouldn’t be out of the query for there to be a cross-metro migration.

Tony:
Thanks. All proper, we now have two extra predictions to go. What’s quantity 10?

Chen:
So quantity 10 is basically in regards to the business. We predict that with so many MLSs on the market, the Nationwide Affiliation of Realtors goes to simply take just a little little bit of a step again, let the MLSs set extra of their very own guidelines. That is one thing that’s actually already beginning to occur. So it’s extra of a continuation prediction than a change. And NAR is basically going to, for its half, really spend extra time on advocacy as an alternative.

Tony:
Oh, okay. Attention-grabbing. Do you suppose it’s simply given a whole lot of challenges NAR has confronted within the final couple years, they sort of have to choose and select the place they’re going to spend their power?

Chen:
Sure, I feel so. I feel it is smart as a continuation of the turmoil within the business that we’ve seen over these previous couple of years.

Tony:
I feel that is smart, simply being an off-the-cuff observer of how a lot … Yeah, such as you stated, there’s been a whole lot of turmoil within the business. In order that brings us to our final prediction, quantity 11. What do you bought?

Chen:
Properly, quantity 11 is about everybody’s favourite subject, AI. Can’t

Tony:
Escape AI, proper? Sure, obtained to speak. I can’t undergo a podcast with out speaking about AI.

Chen:
In fact. Yeah. So 11 to prediction is that AI will turn into an actual property matchmaker. We’re already beginning to see this. AI is infiltrating mainly each facet of our lives. We predict that AI is basically more and more going to assist individuals determine the place to reside, which houses to purchase. It’s simply going to begin to play an even bigger function. Redfin has conversational search now on our web site. We’ve seen that a whole lot of the customers who’re utilizing it are actually pleased with the outcomes as a result of it implies that as an alternative of going by means of the search filters, you may have a dialog and describe what you need in your house search. And that’s very interesting to lots of people. Persons are additionally going to make use of AI to simply do analysis and look into which cities or which cities have the traits that our household is searching for. So that is nonetheless know-how that’s very a lot in its early levels, though it looks as if it’s dominating the information on a regular basis.
However over the subsequent few years, it’s exhausting to think about that AI wouldn’t play a a lot larger function in actual property search.

Tony:
I feel so too. I feel the search half actually makes a whole lot of sense. That appears proper up AI, Zali. I’ve seen some predictions that persons are saying they’re going to assist negotiations or coordinate transactions. What do you consider that aspect of issues?

Chen:
That looks like if that occurs, it needs to be additional down the highway. As a result of while you carry AI into a task like that, I feel there’s additionally a little bit of a belief challenge the place individuals … If you’re desirous about what’s the distinction between AI and a human, most people will in all probability say, “Properly, I belief one other human greater than I belief AI.” Like I used to be saying, the know-how remains to be in its early days. There’s a lot for us to study it proper now. So the search element looks like the apparent place the place it will possibly actually make a constructive change proper now, however a number of years down the highway, who is aware of?

Tony:
I agree with you. Lengthy-term, in all probability going to disrupt every little thing. However proper now, I feel lots of people are form of saying AI can do issues that may’t but, a minimum of not in a dependable approach. However I feel search, analysis, gathering information, these sorts of issues it’s already fairly good at. And so this makes a whole lot of sense to me. All proper. Properly, thanks a lot, Chen, for being right here. It is a lot of enjoyable. It’s all the time enjoyable speaking by means of these predictions and seeing how they play out by means of the remainder of the yr. Thanks for being right here and for all of the wonderful analysis you and your group at Redfin put out. We’re all the time speaking about your work right here on On the Market.

Chen:
Properly, thanks a lot. It’s all the time enjoyable approaching right here, so thanks for having us.

Tony:
Completely. And thanks all a lot for listening to this episode of On The Market. We’ll see you subsequent time. I