The Biggest Homebuyer Discounts in Over 12 Years | Feb. 2026 Update

0:00The full-on buyer's market is coming for real estate. Right now, homebuyers are seeing the biggest discounts in more than 12 years, and this is what we've all been waiting for. There are deals to be found right now if you're an investor. And in this February housing market update, I'll tell you how and where to find it.

0:21Hey everyone, it's Dave, Chief Investment Officer at BiggerPockets, real estate investor for 16 years, and a professional housing market analyst. And being a housing market analyst is starting to be a little bit fun again these days because there's so much going on. And these are things investors should be paying close attention to because these shifts in market dynamics mean opportunities, specifically opportunities to buy and build out your portfolio. These are the types of changes that we like to see and that we have been waiting for. So today we're doing our February housing market update.

0:57And in it, I'm going to cover the full-on shift to a buyer's market that is making deals easier to find. We'll talk about inventory news that will tell us where the market might be heading next. We'll, of course, do a mortgage rate update and my forecast for rates going forward. Plus, I'll share my February risk report where I'll share data that helps you take advantage of the opportunities that are presenting themselves without exposing yourself to the risks that can come in a buyer's market. So let's get to it. First up, we'll talk about the big picture, which is this. The housing market is increasingly a buyer's market.

1:36Now, this doesn't mean that everything is perfect, far from it, but it does mean that deals are going to be easier to find. And this isn't just my opinion or anecdotal evidence. We actually see real evidence of this in the data. First, we're going to start by talking about pricing. Home prices are up as of now about 1 % year over year, and this is right within the range we've been predicting for 2026, where I've said things would remain pretty flat, and flat is exactly what we're getting right now. But that 1.2 increase, although it is up in nominal terms, it's actually below the pace of inflation and below wage growth.

2:16And that means when you consider all those things together, that affordability in the housing market is finally getting better. This is something we've been waiting for for two, three, four years now. In fact, Zillow just put out their January 2026 market report and they found that the typical monthly mortgage payment is now 8.5 % lower than it was a year ago. That's a lot. I know people are still waiting for rates to come down, but 8.4 % lower on a mortgage rate is pretty good. Of course, it is not a solution to affordability. We have a long way to go there, but this is good news for investors and homeowners alike.

2:57Things are getting less expensive to buy. On top of improving affordability, the biggest headline in the housing market this month, at least in my opinion, comes from a new Redfin report that shows that buyers are actually scoring the biggest discounts since they started keeping this data. It's only about 12 years, so it's not going that far back in time. But still, that is really good news for anyone who's trying to build their portfolio right now. According to the report, the average buyer is now getting a 3.8 % discount off list price. That might not sound that big, but since the median home price right now is over$400 ,000, that's about a$16 ,000 discount on the average property.

3:40That means serious equity that you could just be walking right into. And this is something I feel like everyone listening right now should be paying attention to because this right here, this is the benefit of a buyer's market. It comes with some downsides, of course, like slower appreciation, but our jobs as investors, it's just to take what the market is giving us and what it is giving us is discounts. And that's something I will definitely be taking advantage of. Just consider this other finding from Redfin in the same study. It shows that for people who negotiate below list because not everyone's going to do that.

4:15But for the people who actually go out and find deals where they can get them under list, they work with motivated sellers. Those people are actually getting discounts of almost 8 % off list price. Or if you factor in the average home price, that's more than$32 ,000. This is, for me, the number one shift in tactics investors should be thinking about right now. Negotiate, being patient, finding sellers who want to move their property quickly. Because when you find them, there are significant discounts to be had, which can boost your profits on pretty much any acquisition. Now, of course, not all markets have big discounts, but most markets have at least some.

4:59The biggest discounts we're seeing are in Florida and Texas. Not a huge surprise here, but those markets are seeing 10 % plus discounts. But even in hotter markets, the markets that have and are still growing, like the ones in the Northeast and the Midwest, they're also seeing discounts. Some of the hottest markets in the last couple of years, like Milwaukee or Indianapolis, discounts off list are still three to five percent. So to me, everyone, no matter where you're offering on your next offer, you should be thinking about how do I get this significantly off list price? And even better than that, You don't just want to get it below list price.

5:36You want to get it below market comps because some of these discounts, some of the reason we're seeing these big discounts is not because home prices are actually falling. It's because sellers haven't really accepted reality. They haven't really priced appropriately to the market. So not only should you be looking under list price, but work with your agent, do your own comps if you need to, and figure out what each property is really worth. try to buy it 3%, 5%, 7 % below what current comps are, that to me is the single best way that you can protect yourself in a buyer's market while still taking advantage of the better and better deals that we're seeing.

6:16So that's big news to me. The fact that discounts are coming, affordability is getting better, this is good news for the housing market. But before we move on to talking about inventory, I want to be clear that not everything is great in the housing market. I think we all know that. I don't think we're really in a quote unquote healthy market just yet. We're moving towards it, a more balanced market in terms of supply and demand, but we're not doing very well in terms of sales volume, the total number of homes that are actually selling. In fact, in January, we went backwards. As of January, we're on pace for only 3.9 million home sales, which is below where we were in 2025, which was already a very slow year.

6:59We're basically back down to where we were in late 2024, which if any of you remember, was not a great time for the housing market. Just from December to January alone, we saw home sales drop eight and a half percent, which is the biggest monthly decline since February 2022. This isn't good. For a healthy market, we need more sales volume. I think any agent, any loan officer, any investor or seller knows that we just need more volume and activity in the housing market for it to be healthy. We want to be somewhere near 5 million, 5.5 million. That's a normal market. We're at 3.9 right now, so we definitely have a ways to go.

7:39And the thing about this is that normally, you would think since affordability is improving, we'd have some better sales volume. But I think there are probably two things getting in the way of housing market activity picking up. The first is just general consumer sentiment. It's low. If you look at any of the many ways we measure consumer sentiment or confidence in the U.S., it's not very good. People are worried about layoffs. They're worried about inflation. They're worried about AI taking their jobs. There's a lot going on. And when people are worried, they don't make big purchases like buying a house.

8:14So that is definitely one thing that's going on. But the good news is the other thing that I think is probably suppressing activity is only temporary. It may sound trivial, but I think that massive snowstorm and cold that swept over a lot of the country over the last couple of weeks definitely slowed down housing market activities. These types of events can really slow down the market. I think some of that did happen in January. My bet is that we actually see an uptick in home sales in February because people can actually leave their house. They can go on home sellings and not freeze. So hopefully get back to that 4, 4.1 million pace that we were at before January.

8:52So that's where we're at with general housing market news and pricing. And I just want to reiterate that as we've been saying for months, 2026, the most likely course it's going to take is what I call the great stall. Basically, we're going to see housing prices be a little bit flat. Well, mortgage rates come down a little bit, wages go up and affordability slowly improves. That was my thesis I presented back in September, October, I've been talking about it for a while, and that's bearing out as we speak. And I know the great stall, it doesn't sound like the most exciting thing, but I think this is positive.

9:26The gradual return to affordability, better discounts. These are positive signs. But is that going to continue for the rest of the year? To understand what happens next, we need to look at inventory and how it's trending. And we're gonna do that right after this quick break. I have an uncomfortable question for you. If your rent collection dropped to 80 % next month, how long would your cash flow hold up? What about 70 % for the next three months? Would your cash reserves cover it? I talk all the time about scenario planning. Smart investors don't just model the upside. They also pressure test the downside.

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13:36Welcome back to the BiggerPockets podcast. I'm Dave Meyer delivering our February housing market update. Before the break, we talked about how we are in the great stall, prices relatively flat, but we're seeing slow and steady improvement to affordability and big discounts, all positive news for investors. Now that we understand what's going on today, we'll start to look forward a little bit and examine inventory and mortgage rates because those are going to tell us what happens next. We're first going to dive a little bit into inventory. At the end of January 2026, overall inventory across the whole country was up 10 % over the year before.

14:14And just as a reminder, in the housing market, what we really care about is year over year data. it's very seasonal. So what happens from December to January is less important than what happens from January 2025 to 2026. And what we've seen is a 10 % increase. That's growth. Inventory going up is a sign that we're moving towards a buyer's market, but we're not in any sort of crash territory. In fact, we're still 18 % below where we were in January 2019, which is kind of the last normal housing market that we have to compare to. So definitely a softer market than we were a year ago, but well within normal range.

14:55And I dug into a little bit more of this data just trying to compare January 19 to January 26, because again, that's last normal housing market to today. And what you see for most of the country is actually that we're still well below 2019 levels. Basically, all of the Northeast, all of the Midwest, a lot of California still below where we were in the last normal market. And in fact, if you look at the Midwest, the difference is really dramatic still. Like even though you see these headlines that inventory is rising in a lot of the Midwest, you still see markets where inventory is 50 or up to 80 percent below where it was in 2019.

15:34That is not a trivial difference, and it's certainly a sign that a crash is not imminent. Now, in the Southwest, the story is totally different. If you look at San Antonio, that is the highest inventory growth, up 52 percent. Florida is up 60 percent. Denver is up 33 percent. So these are significant increases, and that's why you see prices falling in those areas. I'm bringing this up because I want everyone to remember when you hear headlines that inventory is up or it's down, it is super market specific. And what you want to look for in your own market is changes in recent inventory. If I were you and researching a market, the two numbers I would look at is the difference between inventory in 2019 and now.

16:18You can look this up on Redfin, by the way. It's free. Just Google Redfin Data Center. You can go check this out. And then the difference between inventory between last year and this year, year over year data. That's what's gonna tell you what's going on in your market. If inventory is climbing fast, that means better deals and bigger discounts, but it also means prices could drop, right? There's a bigger chance that prices fall in areas where inventory is going up. That's how a buyer's market works. And of course, the opposite is true if inventory is shrinking. Yet fewer deals, harder to find things that pencil, but if you find something that works, you probably will get more appreciation.

16:56Just as an example, San Francisco actually has falling inventory, right? Probably because of the AI boom, it's minus 6 % in the last year. Prices are going up there. Whereas in Seattle, inventory is up 30%. Housing prices here are pretty flat or declining just a little bit. Now, there's no reason you can't invest in either type of market, but it should change the way that you're underwriting your deals. Because if I'm buying a deal in Seattle, I'm going to be looking for steep discounts and I'm going to underwrite for low appreciation. On the other hand, if I'm buying in Jacksonville, Florida, also showing inventory declines, I will underwrite for better price growth, but I'm going to have to be more aggressive in my offers because there's going to be less motivated sellers.

17:42So these numbers, inventory numbers, the number one thing you want to look at if you want to understand where your market is heading and how to formulate your strategy based on current market conditions. The other thing we need to look at, of course, if we're trying to figure out where the market's going for the rest of year is mortgage rates. This isn't really regional, but because of where we are nationally with affordability levels, rates are going to provide a lot of headwinds or tailwinds to pretty much every market, depending on which way they move. So we're going to talk about this just a little bit.

18:15As of today, rates are sitting around 6.1 % for a 30-year fixed rate mortgage, right where I predicted the average would be for 2026. Now, I know for some people, this might not feel like the most inspiring number out there, but I want to remind people that we are down a full 1 % since last year. It was above seven just a year ago. And that change just 1 % in mortgage rates means that in an average deal, you're probably getting hundreds of dollars in better cashflow. And that really can make the difference between certain deals penciling or not. So overall, that is positive news. Affordability, again, is getting better.

18:56But to be real with all of you, and you probably already know this, I don't think rates are coming down that much more anytime soon unless something really dramatic happens in the economy. I do believe the Fed will cut rates again some point this year, maybe not that soon and maybe not that much. But even if they do, there's just a lot of other things, a lot of uncertainty in the economy that will prevent rates from falling much more. My prediction for the year is not changing. I said at the beginning of the year that rates are probably going to stay between five and a half and six and a half percent per year, and they would average around 6.1 percent.

19:32That is still my forecast, and that is still OK. In fact, I believe the fact that rates are more stable is just a good thing, right? The fact that we aren't thinking every single month our rate's going to shoot up or go down is good news for investors because it allows us to predict what's going on. It means you're not sitting around wondering, should I go out and pull the trigger on this deal or a rate's gonna be a quarter percent or a half percent lower in a month? They were staying relatively stable. And for me, whether we're talking about pricing or mortgage rates, stability breeds the right conditions for making good deals, for good underwriting.

20:08And so I am relatively happy that mortgage rates aren't swinging wildly anymore. And yeah, sure, I wish they were a little bit lower. that would probably breathe some life into the housing market. But I just want to remind everyone that relatively high rates, they're not even that high by historical standards, but higher than we've had, you know, they're definitely high compared to the last 10 years or so. Relatively higher rates can help prices move down, which improves affordability in its own right. And arguably, I would say that it improves affordability in a more sustainable way. Because if rates come down fast, We'll just see ourselves in another affordability crisis in a few months or years because prices will just go up.

20:50And even if we have lower rates, affordability, that will be sort of a moot point. So just overall with mortgage rates looking forward, probably not much of a change in my opinion, meaning what you see is what you get. Look for deals given where rates are today. Analyze them using the BiggerPockets calculators and find one that works right now. The market is steady, which means you're in a good position to underwrite accurately. And that's exactly what I recommend you doing. As I mentioned before, there is opportunity right now because we are in a buyer's market. But there's always a risk that a buyer's market turns into a crash, right?

21:28When inventory starts to go up, when there's potentially less demand, it's a balance that you need to keep an eye on. So I'm going to share with you my monthly risk report that examines exactly what risks exist in the market so you can help mitigate them and avoid them. And we'll get into that right after this break. For decades, real estate has been a cornerstone of the world's largest portfolios. But it's also historically been sort of complex, time-consuming, and expensive. But imagine if real estate investing was suddenly easy. All the benefits of owning real, tangible assets without the complexity and expense.

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22:39Carefully consider the investment objectives, risks, charges, and expenses of the Fundrise flagship fund before investing. This and other information can be found in the fund's prospectus at fundrise.com slash flagship. This is a paid advertisement. Did you know your house gets bored when you leave? I can't actually prove that, but it probably misses out on the action, the footsteps, the late night fridge raids. Yeah, when you're gone, your place is basically on unpaid leave. It's sitting there in the dark thinking, I could be contributing right now. Your side room wants a side hustle. Even your Wi-Fi is like, we could be networking.

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