Sellers Are Accepting Even Less | Jan. 2026 Housing Market Update

0:00Better deal flow, huge regional differences, new variables in the mortgage market. 2026 is already off to a newsworthy start in the housing market. And today on the BiggerPockets podcast, we're giving you the updates and the insights you need to make smart investing decisions on your road to financial freedom. This is our January 2026 housing market update.

0:27Hey everyone, it's Dave, investor, analyst, chief investment officer at BiggerPockets. And today on the show, we have our first housing market update of 2026. We do this format every single month. It is almost always our most popular episode of the month. But I particularly love doing this at the beginning of the year. It's maybe the most fun for me because we now know how everything ended up in 2025. and we're just starting to get a picture of what's in store for 2026. And even just a few weeks into it, we have a lot to talk about. In today's episode, we're gonna cover housing prices in 2025 and where they're heading, including some new winners and losers for the massive regional differences we're seeing in performance.

1:11We'll talk about inventory shifts that are changing the whole way to think about buying new deals. We'll talk about some new variables impacting the volatile mortgage market we're in. and new investor data that helps us understand how investors like you and me are planning to take advantage of new opportunities this year. So let's do it. Let's get into our January, 2026 housing market update. All right. First up, what's going on in the housing market? I'm going to start in a different place than we usually do. Because when you talk about a market, whether it's the housing market, stock market, used car market, whatever it is, there's a supply side and the demand side.

1:47And a lot of people in this industry, myself included, we talk a lot about inventory and the supply side. But I think possibly the most misunderstood part of the housing market right now is the demand side of the equation. A lot of people are out there saying there's no buyers. There's no one coming through houses. And while there is some truth to this, because sales are sluggish and there's certainly less demand than there was during COVID, which makes sense, right? Because prices are high now. Renting is often cheaper than buying. Mortgage rates are stubborn. There's a lot of uncertainty in the labor market and the global economy.

2:24It's understandable that there is less demand. But despite that, know what? Demand is up. Demand is actually up from where it was a year ago. The way that we measure this in the housing market is looking at mortgage purchase applications, the amount of people who are just applying to go out and buy a new home. It does not include refinances. This just looks at purchases and it is up. When you look at the Mortgage Bankers Association, it shows that it is about 10 % higher than it was last year. So personally, I find this a little bit encouraging because I think we're all rooting for the housing market to recover.

3:01Now, I don't know if it's gonna recover in terms of prices. I think some people would argue that prices need to drop more than they would. But when I say recover, I mean, we need more activity, right? Even if prices go down, it would be better for the housing market, for investors, for agents, for loan officers, for the whole industry, basically, if we had a higher sales volume. This past year, we had 4.1 million home sales. That's not a lot. Normally, it's 5.25. So we're like 20, 25 % below where we were normally, or about half of where we were during COVID. And so we need to see this pick up.

3:33And the fact that demand has been ticking up for basically all of 2025, I think that's a good thing. And we're gonna talk a little bit more about why that is in just a little bit. But I just wanted to start off with some good news about the housing market in 2026, demand is higher than it was a year ago, and it's been on an upward trajectory, and maybe that will continue. Next, we're gonna look at the supply side, right? We talked about demand, what's going on with supply. Now, a lot has been made about inventory of the last few years. We've had very low inventory. We have the lock-in effect. But over the last one or two years, we've started to see inventory go up.

4:10And it depends who you are, how you interpret that. Some people think that's good news. we need more inventory. I personally, I fall into that camp. I think we need more inventory in the housing market. Other people look at that and say, oh my God, the market is crashing. We're going to have so much inventory. It's 2008 all over again. Well, that's just not true. That is not what is going on. If you look at inventory, it is up, but it's only up 4 % year over year. Not a lot. So all those people saying, oh my God, inventory is growing like crazy. not really. It's actually going up less than I would personally like to see it.

4:45I'd like to see inventory go up even more. And that is not a level where we have to be concerned about a crash. Now, I'm not saying a crash can't happen, but if you're going to see a crash, you're going to see inventory go up way more than 4 % year over year. And that's what we got in 2025. And that's actually a lower growth rate than we've seen in years. So just to be clear, inventory is up, but it's going up by less than it was a couple of months ago. And the reason this is happening is because we're seeing new listings drop. Now, these are two similar metrics, two important parts of the housing market.

5:22New listings and inventory, they sound similar. They're a little bit different. New listings is actually how many people go out, put their home on the MLS and list it for sale. Inventory is how many properties are for sale at a given point in time. So inventory is impacted by new listings, but it's also impacted by demand because you could have a lot of new listings. And if demand's really high, those get sold really quickly and inventory stays low. But the reason that inventory is moderating right now is not because demand is spiking. It's gone up a little bit, but it's not because it's spiking and eating up all those new listings.

5:58It's actually because new listings as of December, 2025, the last month we have dated for, it's at the lowest point in two years. So fewer people are saying, hey, it's a good time to sell. And this is perfect characteristic of a correction and not a crash. We have been in a market that is worse and worse for sellers and better and better for buyers. Actually, there is a study that just came out from Redfin. It's a pretty amazing chart. I'll throw it up for people who are looking on YouTube that it is the strongest buyer's market on record. Now, take this with a grain of salt because Redfin doesn't go back in time.

6:34Their data only goes back to 2013. So this is not during the great recession. But, you know, for the last 12 years, we're in the best buyer's market that we have seen. And when sellers see that and say, hey, buyers have all of the power in this market, they're like, I don't want to sell right now. I'm not going to get a good price. I'm not going to get good terms. And therefore, I am not choosing to list my property for sale. And so when you take these things into account, when you look at both demand being, you know, up a little bit, when you see inventory going up, but not that much, you get a pretty balanced market, right?

7:09If you have a relative balance between supply and demand, you're going to see a pretty flat market. And that's exactly what we saw. I actually said in the beginning of last year, about one year ago, that we were probably going to have a pretty flat market back in 2025. And that's exactly what happened. We have a pretty balanced market. We actually get the final numbers here from Redfin. They're kind of the first people to issue this. We hear from other sources like Case Shiller and Zillow a little bit later. But Redfin says that last year, year over year growth was just 0.5%. That's as darn close to flat as you can pretty much imagine.

7:43And so we had a flat year in the housing market in 2025. This is part of the thesis I've had about being in the great stall. Just to remind everyone, I think we are going to be in a flat market for several years, barring some black swan event or some crazy geopolitical thing that happens or quantitative easing. If we stay on the path we're on, I think that we are going to have several flat years in the housing market. Last year, that proved correct. And so far in 2026, when we're looking at this supply and demand data that I've been talking about, it looks like we're staying on that trajectory.

8:17Now, of course, there are huge regional differences. We've seen this for the last couple of years, but during COVID, everyone got used to every market going up. That's not normally what happens in the market. We still have some markets that are growing like crazy. Detroit up 9 % year over year. Newark, New Jersey, 8%. Warren, Michigan, 8%. New York City, 5%. Cincinnati, Pittsburgh, places in Wisconsin, all up above the pace of inflation. We have several markets, a couple dozen markets basically that have real price growth. That's inflation adjusted price growth. But the number of cities that are seeing corrections is growing.

8:52Dallas now takes the spot. Austin, its neighbor just a few hours away. We were just there on the Texas Roadshow. Dallas now takes the spot for the biggest declines in pricing in the country at negative 8 % year over year, followed by Oakland, California at 6%. Austin still up there, still top three worst performing markets at minus 4%. San Jose, Miami, all there. Basically, you know, when you look at the top 10, top 20 worst performing markets, they're all in California, Florida, and Texas, three of the biggest population and landmass states in the country. I don't know what to make of that, but those are the worst performing markets right now.

9:28A couple other things to note just about housing market conditions that can help inform your decision making is that the typical home days on market actually spent 60 days on market. That is the longest it has taken to sell a home in more than a decade. I'm sure anyone who's flipping a house is feeling that right now, and that hurts, but for anyone who's looking to buy a house, that's really good news. This is one of the things that we are seeing in the market that you as an investor should be taking advantage of, right? If you're seeing homes sit on the market longer, that is an invitation for you to bid below asking price, right?

10:03We already seeing a flat market. We are seeing homes sit on the market longer. These are conditions where sellers, if they want to move their home, they are often going to have to sell below list price. And this isn't just me saying that, This is actually a measurable thing that you see in the data. The average home right now is selling for 2 % below list price. So you as an investor, that means you should be offering at most 98 % of what the list price is. And that's average. That's for homebuyers. As an investor, you should be thinking, how do I get even more equity out of this deal? How do I buy this thing for 5%, 7%, 10 % below list price?

10:42And frankly, you should not just be thinking about list price. one of the main tips I've been giving people, and you should remember for buying in this kind of market, is buy below comps. Don't just take what the seller wants for their property and say, I'll get 2 % below that. Figure out for yourself with your agent or doing your own comps, figure out what the property is really worth in today's market, not 2022, not 2023, what is it worth today, and get a discount on that. That is the best way to invest in a flat market, right? Because you're still getting equity because you're buying below current comps.

11:18You're not waiting for the market to grow for you. You're getting your equity through negotiation. And the fact that properties are sitting on the market for 60 days means that you have leverage in that negotiation. All right, so that's the big picture stuff that's going on in the housing market. But we obviously wanna turn our attention to what's gonna happen in 2026 and if this trend is going to continue. And as we've talked about a lot on this show, I think because affordability is so low, the direction of the housing market is really going to be dictated by the direction of mortgage rates.

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15:39Welcome back to the BiggerPockets podcast. I'm Dave Meyer. This is our January 2026 housing market update. Before the break, we talked about basic housing market conditions that are going on. And now we're going to turn our attention to what happens from here, because mortgage rates are our big predictor of the market this year. Now, that's not some hot take. I'm sure everyone is saying that. But if you haven't listened to some of these shows before, I'll just briefly give you my thesis about the housing market. All comes down to affordability is too unaffordable to buy homes in most of these markets.

16:10And so we need something to get better in terms of affordability if we're going to see the housing market increase in terms of volume and pricing. Now, there are three parts of affordability. Home prices, which we've said are flat. Wages, which are going up, but that takes a really long time. And mortgage rates. So if we're expecting something in affordability to change dramatically in the next year, it's probably going to be mortgage rates. I'm not saying that's what's going to happen. It just has the biggest potential to change out of any of those three variables. So I really think we're going to need to watch mortgage rates closely this year.

16:46We want to understand the housing market. Now, we started this year, 2026, with mortgage rates around 6.25%. Which doesn't sound amazing to people, but just want to call out, that is a full percentage point below where we were a year ago. That's worth celebrating. The reason why I said demand was up over the last year, it's because affordability got better. Prices were flat. Wages went up. Mortgage rates went down modestly. That's a combination for affordability getting better. Not a lot better. We got a long way to go, but it's still better than where it was a year ago. And that's really good news.

17:22Now, we've had some interesting moves in terms of mortgage rates since the beginning of the year. Now, if you looked at the exact right second, you probably noticed that the 30-year fix, The average mortgage rate on a third-year fix actually dropped under six for just a minute. If you blinked, you probably missed it because it was at 5.99 for just a single day. It was beautiful. Well, it lasted, but it did not last. As of today, it is back up to 6.2%. Now, the reason it dropped down was because the Trump administration announced$200 billion of mortgage-backed security buying by Fannie Mae and Freddie Mac.

18:04And I talked about this in detail. If you want to listen and understand this in detail, back in December, I did a mortgage rate prediction for 2026, and I talked about mortgage-backed securities and how the government can actually move mortgage rates down without the Fed because the Fed, as you've seen, when the Fed lowers rates, it does not move mortgage rates right now. Sometimes they are related, but they're not directly correlated. They are not linked in lockstep. Mortgage-backed security buying is different. When the government buys mortgage-backed securities, mortgage rates almost always go down.

18:38And that's what we're seeing,$200 billion of that, not enough to move the market significantly. But experts say that that alone has taken 0.25 or 25 basis points off your mortgage rate. So that's what brought us from 6.25 at the beginning of the year down to 6%. So although there has been some encouraging signs, I don't think we have seen the magical piece of either policy or economic news or anything else that is really going to move mortgage rates beyond my predictions. I said last year, I think the range is going to be five and a half to six and a half. Sticking with that. I said the average for the year is going to be around 6.1%.

19:19We're probably about that for the year right now. It's going to be volatile. It's going to go up and down, but that's where my average is for the year. And unfortunately, I think that means we are only going to get modest improvements for affordability in the housing market this year. What we've seen is wages keep growing. I think they're going to compress a little bit, but I'm optimistic that wages are going to keep growing this year. I think we're going to have another flat year of housing prices, maybe a little bit down. And so I do think affordability is going to improve this year, but it's going to be very modest.

19:50It's certainly not getting back to COVID levels. It's not getting back to 2010 levels. I don't even think it's getting back to historical levels, but this is what I mean by the great stall. This is going to take time. I've literally been saying this since 2023. These are the things that have to happen for three, four, five years before the housing market becomes healthy again. We're three years into it, and I think we have two or three years more unless something crazy happens. Now, will something crazy happen? I don't know. The world feels a little crazy to me right now. Like, we might get quantitative easing this year.

20:21That's literally the trillion dollar question for 2026. But as long as things stay in the realm of normal, I think we're staying for a boring year in the housing market, slow sales, flat to modestly declining prices, but modestly improving affordability. So before we move on from mortgage rates, though, I do wanted to say one other quick thing. You know, a lot is made in the media about delinquencies and foreclosures. Personally, I think it's a lot of fear mongering at the current rate. Because if you actually look at it, delinquencies across the board, the number of people not paying their mortgage, probably the number one indicator for a market crash, delinquencies, they went down last month, both for 30 days and 90 days.

21:04So I know people say it takes a while for them to work their way through the courts. If you look at it at almost every level, delinquencies are actually down. Active foreclosures are actually up. They're up 20 % from last year because we did see the ending of certain programs, FHA and VA loans. There is a moratorium on foreclosures for a while that was up last year. So they naturally went up, but they're already starting to level out according to the data that we're seeing. And I just want to call out, even though foreclosures are up 20 % year over year, you're going to see that on social media.

21:36I promise you someone who's trying to sell you something or to scare you is going to tell you that foreclosure rates are up 20 % year over year. But remember this, they are still 40 % below pre-pandemic levels. No one was freaking out about foreclosures in 2019. Maybe you weren't investing then, but no one was talking about foreclosures because it wasn't a problem. And we are still 40 % below that. So just keep that in mind if you hear this news. I just want everyone to know there is no forced selling. We're seeing new listings at the lowest point it's been in two years, and we were seeing delinquencies down.

22:13Those are two signs that the market is not going to crash. Right now, there is no evidence of a market crash, the slow recovery of affordability, the slow recovery of the housing market. It's not the sexiest thing. That's why not a lot of people talk about it, but it is the most likely scenario, and it's exactly what's playing out right now. So for the immediate future, just to summarize, things look on track for forecasts. We're going to take a quick break, but after that break, I'm going to share some insights into how the BiggerPockets community, all of you listening to this podcast, our community here, is planning to take advantage of the many opportunities that are seen in the market this year.

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