The War Has Changed the Housing Market | April 2026 Update

0:00How is the war in Iran affecting the housing market? I've been saying for years that a black swan event can always dramatically shift real estate dynamics. Well, here it is. In the last month, the war has reshaped the trajectory of mortgage rates, inflation, consumer sentiment, and more. And of course, all of these factors will impact home values. And spoiler alert, the impact is probably not good. But that doesn't mean you can't invest right now. In fact, some of the best times to build your portfolio are when all of the headlines about housing are negative. You just need to adjust your buy box for a changing market.

0:37You're probably going to see better properties become available. Sellers will even be more willing to negotiate. And other buyers are probably going to be scared off. And in today's April 2026 housing market update, I'll explain how you should be shifting your strategy to take advantage of these shifting market conditions.

1:00Hey, what's going on, everyone? It's Dave Meyer, Chief Investment Officer at BiggerPockets, housing market analyst, real estate investor of 16 years now. Today on the show, we're going to talk a little bit more about current events than we normally do. And we're going to specifically be focusing on how the war in Iran is impacting the housing market. So let me just get to the point. The war in Iran is likely going to have negative implications for the housing market. Now, I'm not saying a crash, and we'll talk about that in a minute. But if you look at what has happened in just the last month, I think we are going to see slower home sales.

1:38We're going to see mortgage rates up. We've already seen them go up half a point, and I think they're going to stay elevated. And I think we're probably likely going to see reverses in affordability and reverses in demand. Now, that does not mean that there's a disaster. And actually, as we're going to talk about towards the end of this episode, that could spell really good buying opportunities for real estate investors. But I think we need to actually just break down how this works, because that's going to help you understand where the opportunities lie and where the risks lie in this housing market, because there are going to be both.

2:13In short, the war is going to push up inflation. And actually, as of today, April 10th, when we're recording this, we just saw the first inflation print since the war started, and it wasn't a good one. It was ugly. We saw the CPI, the consumer price index, go up from 2.4 percent to 3.3 percent in just a single month. I do believe that inflation is going to stay higher than it was before the war for the foreseeable future. I'll explain that in a minute. But let's just talk about why inflation hurts and why I think it's so important to the housing market. First and foremost, it impacts consumer spending, right?

2:51If people are getting stretched by paying more at the gas pump, they have less money to spend other places. The second thing is input costs for housing and other goods, right? We've already seen in the last year, the price of construction on the average price home has gone up between$10 ,000 and$17 ,000 per home, depending on who you ask. That's probably going to go up more in the near future because oil prices are up. That means it's not just gas, right? When oil prices go up, you also see everything that goes on a ship go up, right? They use diesel. That's oil. So if you are importing appliances from China, you are importing timber, copper, aluminum, whatever it is, those prices are likely to go up with oil prices as well.

3:37That's going to make input costs for housing go up as well. Construction becomes more expensive. But the really big one, the big thing that inflation impacts more than anything when it comes to the housing market is mortgage rates. And this is why over just the last month, we have seen mortgage rates after dipping so briefly, we got it, we touched it. We touched 5.99 for the average mortgage rate at some point in February. Now they're back up to about 6.3, 6.5. They're hovering in that range the last couple of days because even before this inflation print came out on April 10th, everyone knew inflation was going up.

4:16You could see it in the oil prices, right? Oil is such a big part of the economy that seeing that gas prices went up more than 50 % since before the war started, of course, inflation was gonna go up. So that's why mortgage rates have gone up. Now, before we go on, I just wanna be clear that when I say inflation is high and getting higher and I think it's gonna stay bad for a while, I'm not talking 9%. Like, we're not talking about COVID 2022 levels where they were printing money and there was supply shock and there was all that going on. Right now, I'm saying we were getting close to the Fed's target of 2%.

4:48We're moving in the wrong direction. Could inflation stay in the 3 % to 5 % range for the next year? I think so. I think that is unfortunately something that we are going to have to contend with. So yeah, inflation is not looking great. And I just want to call out, we've only had one print for the Consumer Price Index, which is the one that makes most of the media, and that was not good. But if you look at other measures of inflation, they're also not good and maybe even arguably worse. If you look at the PCE, which is actually what the Fed looks at, we've actually seen three consecutive months of much higher inflation.

5:25That was even before the war. We were seeing 0.4 % monthly growth three months in a row right now. If you annualize that, that means that measure could get up to 4.8%, even just staying the way it is right now. This is why I'm saying, could inflation go back to three to five percent. Yeah. I mean, there's evidence of that. And this just sucks, right? It sucks for everyone in America, for you, for me, for everyone. But specifically, when we talk about the housing market, it's going to keep mortgage rates higher. That is the unfortunate news for anyone who's working in the housing industry, because we talk about this a lot.

6:03But let's just review how mortgage rates actually work. It is not the Fed. It is not the federal funds rate. That is one factor in mortgage rates. But the real thing, the closest correlation to mortgage rates are yields on 10 year U.S. treasuries. Treasuries are bonds. It's basically how the U.S. government funds all of the debt that we have. Thirty nine trillion dollars in debt that is funded by issuing bonds. Treasuries. Right. And the yield is basically the interest rate that the government pays investors, people who lend money to the U.S. government. And this number, bond yields, they fluctuate a lot based on all sorts of complicated economic activity.

6:45But inflation is one of, if not the biggest variable in bond yields. I'm not going to get into all the details today, but what you need to know is that mortgage rates and bond yields super highly correlated. And when inflation goes up, bond yields go up. This is just one of the ways that the economy works. And as long as we have higher inflation, we're going to have upward pressure on mortgage rates. This is why they've gone from six to six point three, six point five over the last couple of weeks. And it's why I personally think that we're not getting back towards six, at least in the next couple of weeks and maybe for months or more.

7:22And I should mention, I am not the only one who sees this. We actually do this survey at BiggerPockets called the BiggerPockets Investor Pulse, where we just basically take the temperature. of residential retail real estate investors, people like you and me, and what people are thinking. And the amount of people who are expecting lower mortgage rates has basically just plummeted. In Q1, so in the first couple of months when we did this survey, I think it was back in January, about 30 % of people were saying that lower mortgage rates were gonna be a big opportunity this year. That's dropped to about 12%.

7:58When we did the pulse last time, the median, And what most BiggerPockets community members were expecting were mortgage rates to be somewhere between 5.5 and 5.99%. Now that has gone up to 6 to 6.5 % with a huge surge in people actually expecting them to go up even higher. About 27 % think that this is going to go higher up to 6.5, maybe even up to 7%. So people not particularly excited about where mortgage rates are going. So that's my read of the situation. Inflation is up, probably gonna stay elevated. Again, not 2022 levels, but elevated from where we have been the last couple of years. I think mortgage rates are gonna stay high and this is going to impact the housing market.

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13:08Welcome back to the BiggerPockets podcast. I'm Dave Meyer talking about the realities of how the war in Iran is likely to impact the housing market. We've already talked about the stuff that we know. Inflation has gone up. I personally think it's likely to stay elevated for the foreseeable future. Again, not 2022 levels, but higher than where we were. And I think mortgage rates are going to stay in the mid sixes. They could even go up from here, depending on what happens next. But even knowing what we know now about inflation, about mortgage rates, about recent trends in the housing market in general, we can start to project what is likely to happen in the housing market.

13:47And the main thing I think that we are going to see is a slower housing market. Now, if you're thinking, man, the housing market is already really slow. Yeah, it is. We had one of the slowest prints ever on record in January, 3.9 million annualized existing home sales. That is super low. It could go slower. Now, there's this whole thing about seasonally adjusting it. But I just I think we are going to see a really reluctant market when there are times of uncertainty. And although I feel like I've said this every year for the last six years, that uncertainty is high, man, uncertainty is really high right now.

14:28We don't know what's going to happen with the war. We don't know what's going to happen with AI. We don't know what's happening with all of these other things in the economy. And I think that is going to slow down buyer behavior in the housing market. You see this data across the board, like people just don't make these kinds of decisions, but specifically residential real estate investors are not feeling very good about it. In our survey that we did in April, BiggerPockets members, we asked, what impact do you expect the Iran war to have on the real estate market in the next three months? And basically no one, less than 5 % of people combined said positive or very positive.

15:06About 30 % were neutral. Over 50 % said it's going to have a negative impact. And 15 % said a very negative impact. So just saying investors tend to be on the more optimistic side of housing market participants, and they're all pretty negative. So you got to imagine how homebuyers are feeling in this market as well. And this isn't just psychological. The psychological part is important, but affordability is going to get lower, right? We started to see nine months in a row up until February, we saw improved affordability because mortgage rates were starting to come down. Prices were flattening out, but we're probably going to reverse those gains, right?

15:45Because mortgage payments are now going up. And if you combine uncertainty with less affordability, how do you get more demand? Like where the home buyer is going to come from in that market where people are uncertain, they're worried, and things are more expensive. It's just, I just can't see it. I think we're not going to see a lot of demand. Now, again, I am not saying there is going to be a crash. And in fact, back in October, when I made my predictions, I already thought prices were going down this year. Just as a reminder, I said, I think we'll get national home prices somewhere between negative 4 % and plus 2%.

16:24And I still think that range is probably close to right, maybe towards the lower end of that. Like if you ask me today, I don't think we're seeing positive home price growth. I'd say maybe negative two, maybe negative three percent, something like that. And that's not that different from what I was projecting six months ago, even though the war is happening. And I know that this sounds scary, right? No one in this industry likes to see home prices go down. But I do want to call out it has pros and cons. There are tradeoffs to this kinds of market. And as a savvy investor, there are things that actually benefit you about this kind of market.

17:04The cons we know, right? Appreciation is going to be slow, right? If you have an existing portfolio, some of your properties could and likely will go down in potential value, but let's just call out that that's potential value, right? We're talking about a paper loss. If you don't sell it, you don't actually lose anything. And most people, if you've owned your portfolio for a while, the values of those properties have gone crazy. So it's not like you're actually losing money. you might have just made a little bit less money, if you know what I mean, right? So those are the obvious downsides of this.

17:37But the pros are there too, because this does mean that there will be better deals, right? Because even if supply comes down a little bit, there are going to be more motivated sellers in this kind of market. I feel very confident about that. There is going to be less competition in this market, right? And so even if inventory is not skyrocketing, the number of properties that are gonna sit on the market for a long time, they're going to go up. I feel very strongly that days on market are going to go up. You're going to have less competition. And that means that if you are a savvy investor and you adapt to these market conditions, you're going to find better deals than have been available in several years.

18:16Like that is really good news if you were trying to build a portfolio. So don't mistake what I'm saying about the housing market to mean that you shouldn't be buying. You can buy in any market. But it does mean you need to be careful. You need to follow the advice I've honestly been giving for at least two years now on the show about investing in a correction. And just as a reminder, what you got to do to buy in this kind of market is number one, buy under market comps. If prices are going to go down two, three, 5 % this year, maybe not. But if you're worried about that, you have to buy something seven, eight, 10 % under market comps.

18:55And you actually can do that because you have negotiating leverage, because there's going to be motivated sellers, because things are going to be sitting on the market longer. Now, it doesn't mean everyone's going to accept your deals, but if you're patient about this and diligent about it, you will be able to do that. So that's rule number one. Rule number two, don't buy anything that doesn't cash flow. Just don't. In this kind of market, you need to be defensive. Cash flow is a defensive mechanism. You absolutely should be doing that. Number three, get fixed rate debt. I know it's higher. Mortgage rates are higher.

19:27They could go up more. We don't know. We just saw that. Literally everyone other than me and some other people, but most people have been saying mortgage rates are going to go down. Mortgage rates are going to go down. But trying to tell you that that might not happen. And look what happened, right? Mortgage rates have gone back up. Thankfully, they're not at 8 % again, but it just proves that no one really knows what's going to happen with mortgage rate. Fixed rate debt on a property that cash flows that you buy under market comps that works in any market. Other two things to think about protecting against downside.

19:59Right. You don't want to buy anything super risky in this market. Buy a great asset in a great location. That is really important right now. Don't buy in the edge of town. Don't buy something that isn't going to have high rental demand, even if it has some upside. Protect against your downside first. Then you focus on upsides. Once you found a deal that you feel is rock solid and is not going to be risky in this kind of market, then you look for the upsides that we always talk about in the upside era. This is stuff like zoning upside, rent growth potential, being in the path of progress, doing value add.

20:33Those things all work. So even though I really believe that some of the dynamics of the housing market are going to change by what's going on with the war in Iran and rising inflation, the formula for what you should be doing right now hasn't changed. That is still the formula for what works. And if you're nervous about the housing market, all you got to do to keep buying is adjust your own expectations, how much under market comps you're willing to buy. If you're worried about what's going on, maybe you only buy something 10 % under market comps or 15 % under market comps. Means you're gonna have to do a lot more outreach, probably gonna have to make more offers.

21:12But if that's what makes you comfortable, fine, do it. You'll be able to get good deals. You'll get cash flow and you'll enjoy the many other benefits like amortization and tax benefits, all that that you get from real estate. But you can protect yourself against the one risk that is really out there, which is prices going down modestly in the next year. Now, I know people are probably thinking to themselves and asking the question, doesn't inflation push up housing prices? Right. You've probably heard this. Isn't real estate a great inflation hedge? There is actually truth to that. If you measure this like a nerd, like I do, the correlation between housing prices, inflation is really high.

21:54But there is actually a lot of nuance to this. It is not as simple as saying when there is inflation, housing prices go up, right? We've seen inflation above the Fed target for the last couple of years. Real home prices are down for the last couple of years. And that is because there's actually two different types of inflation. There is something called demand pull and there's something called supply push. And what happens with the housing market really depends on the type of inflation that there is. So demand pull is kind of the inflation that most people are used to. It's basically when the market runs too hot, right?

22:31People describe this form as inflation as too much money chasing too few goods. This is an example of what happened during COVID, right? People were flush with cash. They were getting stimulus checks. We were printing tons of money. And what happens when you print more money is people have money to spend and they want to go and spend it. But if there is not a proportionate increase in the amount of stuff to buy, prices go up, right? I think cars were a really good example of this during COVID, right? Used cars. People had a ton of money. They were going out and buying stuff. But there weren't all of a sudden more used cars to go buy.

23:08So people bid up the prices of that. This is what happened in the housing market during COVID, right? People had a lot of money. Mortgage rates were low. That increases demand. This is why it's called demand pull. And the demand pulls prices up. Now, there's another kind of inflation called supply push inflation. And this comes when the input cost to build and make stuff goes up. And unlike demand pull, which is associated with a hot market, Supply push is associated with a slower market, right? This is when the cost to make a car, the cost to build a house, the cost to ship things from one country to another goes up.

23:51And because the producers and the infrastructure is more expensive, that stuff gets passed along to consumers. But it's not because there's more demand. And so this kind of inflation is often associated with slower economy, maybe even a recession and slower real estate prices. And this is what we're at risk of today. I want to be clear that when we look at the two types of inflation and the inflation we're seeing right now, we are seeing supply push inflation between tariffs, between the war of Iran. It is getting more expensive to make stuff, and that is getting passed on to U.S. consumers, which slows down demand, not just for cars.

24:33It slows down demand for everything, including housing, right? If people can't afford housing, it's at a 40-year low, right? If they're already stretched for affordability in the housing market, and then other things in the economy start to get more expensive, they're not going to all of a sudden bid up the price of housing, right? That's why this kind of inflation is not associated with real estate prices going up. Now, one more thing I just want to mention, because I'm not trying to scare you all. I just want to be real with you about what I see in the market. You know, my job here is not to rah-rah everything about the housing market.