The 2026 State of Real Estate Investing: An “Easier” Road Ahead

0:00Real estate investing is about to get easier, much easier in 2026. Deals are getting easier to find. Homes are sitting on the market longer. Rates are actually starting to come down and buyers finally have more choices. But the average American may miss this. Many people are looking at the housing market and they don't like what they see. Meanwhile, small investors, they're buying, they're building wealth, and they're more optimistic about 2026 than ever. So what do they know that the average American doesn't? What opportunities are appearing in the market that you don't wanna miss? We're breaking it all down today in the 2026 state of real estate investing.

0:44I'm gonna give you the exact strategies that are primed to work in 2026. I'll share my vision of the housing market and where we're heading. And I'll explain why waiting for a crash may be the single most expensive mistake that you can make. The 2026 State of Real Estate Investing starts now.

1:06Hey, everyone. Welcome to the BiggerPockets podcast and happy new year. I'm Dave Meyer, investor, analyst, and head of real estate investing at BiggerPockets. It is so great to start a new year here on the BiggerPockets podcast with all of you. This is an exciting time of year. It's time to set ambitious goals, to map out your plans for the year, and to put yourself on track towards the life you want for yourself and for your family. But I want to just start by saying, I think there are good opportunities coming for real estate investors in 2026. These are better opportunities that I've seen, honestly, in years.

1:46And it just gets me excited in general to be in this industry at this time. So in our show today, that's what we're going to be covering. I'm going to run through my state of real estate investing report as I do every year. It's basically my outlook for the housing market and investing conditions for the year. I'll share my personal strategy that I am working on for 2026. We're going to talk about better inventory that's on the market, better deal flow, better cash flow possibilities out there. Yes, that is absolutely happening. We'll talk about improving affordability, the outlook for housing prices and mortgage rates, whether you should wait for a crash and more.

2:26We do have a packed episode today and I want to get right into it. But first, I just have a little bit of a teaser for you because on Wednesday's show, the next show that comes out, we have a fun announcement to make. I personally could not be more excited about this announcement. It is a huge win for this show and the BiggerPockets community. but I will say no more. You got to tune in on Wednesday. So with that, let's get into our 2026 state of real estate investing. So what is the state of real estate investing in 2026? If I had to pick just one word for it, I always try and just narrow it down to one word.

3:04And my word for 2026 is improving. Things are getting better for real estate investors after several tough years. I doubt I need to tell any of you this, but deals over the last couple of years, they've been pretty hard to find. Cash flow has been tough. Financing is hard. Uncertainty has been super high. And nothing is perfect. We still have a long way to go in the housing market to get back to normal, to get back to healthy. But it does in many ways feel like we've turned a corner, at least from my perspective. I am personally not super bothered by a modest correction in the housing market like the one I think we're in.

3:48I actually think this is a step in the right direction to a more affordable, a more predictable, a more productive housing market. And at the same time, those changes makes investing easier for real estate investors because every single market has its trade-offs. When things are going up like crazy, like it was during the pandemic, yeah, it can boost returns. That is the benefit of that kind of market. But there's also a downside to those kinds of market where deal flow was hard. Cash flow was harder to find. Now we're transitioning and we're sort of getting the opposite, right? Maybe appreciation is not going to be great over the next couple of years, and we'll talk about that.

4:29But that means at the same time, there's better inventory. Great assets are on sale right now. There's less competition. So let's look a little bit at some of these specific things that are improving for real estate investors. The first one, like I said, is deal flow. I think this is the thing that gets me really excited right now because it has been a slog looking for deals since at least 2022, maybe even earlier, even during 2020 and 2021, it was hard to find good deals. But right now, inventory is getting better. That means there are more homes for sale on the market. It's not crazy. It's not like we're seeing some flood of inventory that's going to lead to a crash, but it's getting better.

5:14That means there are more options for us as real estate investors to choose from. Affordability is going up. This one just, honestly, it warms my heart. We have had years and years of declining affordability. You've probably heard me say this on the show, but housing affordability the last couple years have been near 40-year lows. And although we still have a long way to go, don't get me wrong, housing is not affordable yet. Just this last data that we have from October of 2025, it is the best affordability we've seen in three years. As investors, this really helps. We're also seeing days on market go up.

5:52This leads to better negotiating leverage. When sellers are seeing their properties sit on the market longer and longer, it makes them more likely, more willing to cut a deal that also benefits us as real estate investors. The next one might surprise you, but cash flow is actually getting better. If you think about a correcting market like the one that we're in, even if home prices in your local market are staying stagnant, but rents are continuing to grow, which on a national level they are. Most of the forecasts I've seen for rent expect modest rent growth in the next year. That means that cash flow prospects are getting better.

6:30Now, I'm not saying it's back to 2019 levels. It's slow, but they're starting to get better. And competition is going down because there's just more homes on the market. Demand actually hasn't come down that much, but since there is more supply on the market, that means relatively there is less competition. All of these things combined, these are things that we can and should be celebrating. It is a reason, in my opinion, for optimism. And I am not the only one here. I look at these things and I don't see, oh man, the housing market might be flat. Maybe it will decline a couple of years and think, oh, this is risky.

7:06I don't see this so much as risk as I see it as opportunity, reason for optimism. Now, again, not everything's great. Like with any market, there are trade-offs and this market is no exception. Prices are pretty stagnant. Prices might fall in some places. So appreciation is going to be lower. I personally think the risk of a crash is relatively low. Affordability, even though it's getting a little bit better, it's still pretty rough out there. And rent growth, although I think, you know, most forecasters are saying it will go up a little bit, probably not going to be a banner year for rent growth in 2026.

7:45So given these trade-offs, right, the fact that deal flow is getting better, but there are some downsides to the market, how do we invest? How do we move forward in a market where there is both opportunity and there is risk? What do we do? Should we wait to get more clarity? Some people might advocate for that, but personally, I don't think that's the right strategy. First of all, and this is kind of always true, no market is without risk. That's just not how it works. That's not how investing works. There is always risk. So just remember that you can't wait for a perfect market because it's never going to happen.

8:21And the second thing is that financial freedom isn't going to find you. It's not going to present itself all, you know, wrapped up in a perfect package. You have to go out and get it. And in my opinion, now is as good a time as any. So waiting, especially because I don't personally think there's going to be a crash, is not really going to help you. Instead, what you got to do is focus on what tactics and what strategies are going to work well in 2026. So we're going to pivot our conversation to that, what works well in 2026, but we do need to take a quick break. We'll be right back. As a real estate investor, the last thing I want to do, or the last thing I have time for, is playing accountant, banker, and debt collector all at once.

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12:14Welcome back to the BiggerPockets podcast. I'm Dave Meyer, delivering the state of real estate investing for 2026. Before the break, I talked about why I feel like real estate investing is getting a bit easier. Deal flow is better. There are opportunities out there for investors who are willing to study the market, to learn from what has worked historically, and to apply that to their own investing decisions and portfolios here in 2026. So let's do that. Let's talk about what's going to work. Now, you've probably heard me say this before, but I think the housing market is in what I call the great stall.

12:52Affordability, although it's getting a little bit better, is still pretty low. And to me, this is the major thing that drives the housing market. I talk about this all the time, but affordability is the big thing driving what happens in the housing market. Now, some people point to low affordability and say, oh, this is the reason the market is going to crash. That hasn't happened yet. Affordability has been low for three years now, and that hasn't happened yet because there is an alternate way that affordability gets back to the market. And that's what I call the great stall. Rather than seeing something dramatic or crazy like a crash in housing prices, you actually see a slower restoration of affordability through a combination of things happen.

13:38Number one, prices remain kind of flat for the next couple of years. Now, they could be up one percent. They could be down one percent in the next year. But that's I call all of that relatively flat. I think the main thing that we need to look at here is whether on paper they go up 1 % or down 1%, they are going up slower than wage growth. And that is happening in the market right now. Wages are growing faster than the prices of homes. And that brings back affordability, right? Because if prices stay flat, but people are making more money, that slowly brings back affordability. That's not something that's going to happen super quickly because wage growth is something that happens relatively slowly.

14:17but that is going on right now. And hopefully that's what's going to continue into next year. On top of that, we've seen mortgage rates come down. I know not everyone's super excited about it, but one year ago in January of 2025, rates were at seven and a quarter. They're 1 % lower now at six and a quarter. And that's obviously way higher than they were during the pandemic, but that is a significant improvement. That brings millions of people back into the housing market. And this dynamic of slowly improving affordability in the housing market is what I think we are in for in the next year or two.

14:55This is why I call it the great stall, because I don't think it's quick and I don't think it's going to be dramatic. I think prices are kind of just going to stall out for another year or two, might be even three. I can't predict that far out, but I wouldn't be surprised. Let's just put it that way. I wouldn't be surprised if we saw real home prices, inflation-adjusted home prices, kind Kind of be slow, kind of be flat for the next couple of years. Now, what is happening? This great stall could be called a correction. I have often called it that because when real home prices are down and have been for a few years, I think that's a correction.

15:31But before we get into what strategies work in the great stall, because there are tons of strategies that work in the great stall, I think we have more options now as investors that we have. This market actually works for a lot of different strategies, and we'll talk about that in a minute. But I do want to address the crash fear because there's so this narrative is just constantly out there. So I understand this narrative because the last time we had a correction in the housing market, it was a crash. Like that's what happened in 2008. But that is not normal, right? And since the Great Depression, we have had one time where the market has really crashed.

16:05That's in 2008. But corrections where real home prices go flat for long periods of time, that is not just something that's possible. It's actually quite normal. If you can Google this, but you can go look at real home prices over time. Seeing periods of flat home prices is the normal way where affordability is restored to the market. So I just want to say that there is precedence for this. The other thing I want to say is that there is just no evidence right now that a crash is going to happen. If you look at inventory levels, they were rising last year. They've kind of leveled out for right now.

16:41New listings, those have leveled out. there about even year over year. Delinquencies, a crucial predictor of a crash, remain below pre-pandemic levels. Foreclosures remain below pre-pandemic levels. Credit quality for the average American homeowner is high right now. People are paying their mortgage and demand is actually resilient. The last reading we have for it's back into 2025 showed that demand for housing is actually up year over year. I know people say, oh, there's a crash, no one's buying. That's not true. We actually had an increase in home sales in 2025 over 2024. The reason I'm telling you this is that the fundamentals of the market are holding up.

17:25They're not supporting rapid appreciation. I'm not saying that. But the idea that the bottom is going to fall out of the market is not supported by any data. It's not supported by any information. It is fear that is driving those ideas. And as investors, we can't make our decisions based on fear. We have to base it on data and information and experience. And that's what we're going to do. So we are in a correction. And yeah, some people might see that as negative, but I don't. I think it means we're getting assets at better prices, right? And although the risk of a crash is not zero, it's pretty low and prices will eventually recover.

18:02And that's why I see this as a buying opportunity. I think we're in a good time to start acquiring assets if you are a long-term buy and hold investor. If you're a flipper, there's going to be some risks, right? Because selling right now is a little bit hard. But if you are a buy and hold investor, I see this as a good time. And I am not the only one here. So if you're sitting there thinking about 2026, feeling optimistic, feeling like it's the time to buy, that it's a great time to get into real estate, you're not alone. The aggregate BiggerPockets community is feeling the same way. I am feeling the same way.

18:37I get to talk to professional real estate investors all the time, and they are feeling the same way. But we got to talk about how you do this right. How do you grow in 2026 in a way that moves you towards those goals, that takes advantage of these opportunities, but while still respecting and recognizing some of the risks that are out there? Because you got to respect the current market, and you got to take what it's giving you. And here's what I think that looks like. I've been using a framework or playbook that I've been talking about for a little while now, and I want to share it with you. It basically combines four basic principles.

19:14It's what I've been doing since 2025, and it worked for me in 2025, and I think it's gonna work for me in 2026, so I'm gonna keep doing the same thing. No need to change it up if it's already working. Number one is, yes, the market is uncertain. There is chance that it will decline a little bit. There's chance that we'll have a melt-up. But I think the most prudent decision right now is to plan for the great stall. You got to plan for slow or no appreciation and rank growth in the next few years. Now, I know that doesn't sound exciting, but if you plan for it, it's totally fine, right? The worst thing you can do is go out and invest, assuming that we're going to have amazing appreciation and rank growth and basing your underwriting and investing decisions on that.

19:56Maybe I'm wrong. Maybe that will happen, but basing your decisions on that optimism is not what I would do. I'm optimistic about the market because I think there's better deal flow, but I am not particularly optimistic about appreciation or rent growth in the next couple of years, and that's totally okay. We have to mitigate that risk. We do it up front. We do it as we're looking for deals. We do it in our underwriting. If you address it right up here and say, hey, appreciation is probably going to be slow, then it's okay. You just don't want to be caught flat-footed in a year or two and say, oh my God, I bought this deal assuming there was going to be appreciation and there isn't, and now I'm in a bad spot.

20:36You can avoid that. You don't need to take on that risk by planning for the great stall and assuming that appreciation and rent growth are going to be slow. We can absolutely invest around that. That's what we're talking about right now. So that's pillar number one, plan for the great stall. The next pillar of investing in 2026, the framework I'm using, is to have modest short-term expectations. I personally think that even in the last couple of years, before things started to get better, the biggest challenge in real estate has not been the market or deal flow or high mortgage rates. It has been expectations.

21:12People have been chasing returns that are not coming back. Sorry to say it, but the deal you can do in 2018 or 2021, it's probably not coming back and that's fine, right? That was a magical time. I call it the Goldilocks era because everything was perfect during that time. And just because we've moved from perfect to normal does not mean that you can't invest. So what I want people to remember is that having modest cashflow in the first year of your portfolio, that's normal. Having modest appreciation on an average year, that's normal. The average appreciation rate in the United States is 3.5%, whereas inflation is 2%, 2.5%.

21:53So when you look at the average of appreciation compared to inflation of long-term, it's like 1%. That is normal. And these are the expectations that we need to have. And if you're thinking that's not good enough, well, real estate investing has worked for decades, for centuries with exactly these kinds of conditions. And even with these modest short-term expectations for returns, they're still going to beat the stock market. They're probably still going to beat what else you can do with your money. It's still the best way to pursue financial freedom. So I encourage people to adjust their expectations in the short term, but keep your long-term expectations high.

22:30So those are the first two parts of the framework, probably in for the great stall, and have modest short-term expectations, but keep your long-term expectations high because that's the game. That's what we're actually going for. The third pillar here is to underwrite conservatively. I've been saying this a lot recently, but I know a lot of people say you shouldn't play scared. I think you should right now. I think that it makes a lot of sense to be very, very picky. This is part of planning for the great stall. But I am underwriting with no appreciation next year. I'm going to underwrite for probably no rent growth, no market rent growth.

23:05If I do a renovation and bring markets up to market rent, that's a different story. but I am not assuming that there are going to be macroeconomic conditions that are going to, you know, give me this tailwind to boost my rent. And that's okay. There are deals that work with these conservatively underwritten ideas. And those are the ones you want to buy. For me, that's what gives me confidence in this kind of market because we're in a market that's correcting. Prices could go down next year. They could go down one or 2%. Vacancies could go up this year. Rents might not grow. And again, all of those things are okay if you bake them into your assumptions.

23:42If you go into that and say, my business plan is to buy a great asset. And even if rents don't grow for a year or two, I'm okay because I'm still getting cashflow and it's going to be a great asset in five to 10 years. That's the right mindset. This is not the market to go in and have rose tinted glasses. You don't want to go into this and say, oh my God, you know, there was this one comp that's getting$2 ,600 a month. I think I can get 2 ,600 a month too. No, don't do that. If everyone else is renting a 23 or 24, put your expenses, underwrite a 23 and 24, be conservative in your underwriting.

24:18This is the way that you protect yourself against downside risk that is in the market, but still take advantage of the inventory, the deal flow, the negotiating leverage that's going to give you good deals this year, that to me is absolutely crucial. The last pillar of my strategy is to focus on upsides, right? I'm not just doing this to get average deals with conservative numbers, right? I am comfortable with those deals because they still make me money. If I underwrite conservatively and I'm doing this right, even in a bad year, quote unquote, bad year in the housing market, I'm still earning a positive return with those conservative deals.