2026 Housing Market Predictions: Seller Pain is Far From Over

0:00We did it. We made it through the first half of 2026. Despite all the negative housing news, despite all the doom and gloom about the economy, the market is doing okay, and we made it through. And today on On the Market, we're doing our mid-year update. I'm here with Kathy Feke and James Daynard. We're going to recap the first half of 2026. Then we're going to make predictions about the second half and talk about what we're looking forward to in the back half of the year. This is On the Market. Let's get to it.

0:36Hey everyone, welcome to On The Market. I'm Dave Meyer here with James Daynard and Kathy Fecky to recap the first half of 2026, which both simultaneously to me felt very eventful and also like nothing at all happened. Like there's just so much news and here we are. It's just kind of the same as it was six months ago, or at least that's how I'm interpreting. But excited to talk to you both about this. Let's just jump right into the conversation. Kathy, how would you summarize the first half of 2026? Oh, kind of like somebody who's learning how to drive stick. It's sort of like, oh, oh, oh, oh. Then all of a sudden it stalls out.

1:19Then all, you know, oh, oh. So I'm hoping the second half, like, we'll figure it out. Like, we'll be able to, like, start driving. Yeah. The clutch is burning up a little bit, but you're getting there slowly. It's okay. What about you, James? How would you describe it? You know, I felt like it was a marathon that we sprinted the first. we sprinted early too fast in the very beginning because the first part of the year I thought was great and then you know once this conflict went down everything kind of changed and moved quite a bit and uh now you just got to finish the lap and get to the end because I don't think the last six months are going to feel it but they're going to feel worse than the first six months you think so I do okay well we'll get to that in a minute that's interesting okay gloomy what are some positive things that happened to you in the first half of 26 James like anything going well yeah You know, inventory is really tight.

2:09Like as a flipper, inventory was really tight. And so we did, we got some runway and we had a really strong December, January, February, March. Those were strong months to sell. And we got some lift in our ARVs, right? And so I would think on average we were selling them for at least 2 % to 3 % more than we kind of thought we were on our underwriting, maybe up to 5%. And then once we hit that, once we hit the best month in the year, April, it just flat lines. April. Yeah. April was just a wet blanket month. April sucked. Yeah. April was, and it's not the month that usually sucks. And it was just the timing of the, the war and.

2:52And it's two in a row with the terror, like terrorists last year hit it. And now we got this and, but that's just the reality, what it is. So I guess it depends if you're a seller or a buyer. I think if you're a buyer in the next six months, things are going to be great. Oh, good. That's what I was hoping to hear. That makes me feel better about your predictions. Oh, yeah. It's both because I'm a buyer and a seller. So you get it on both. You take the stick on both ends. What about for you, Kathy? Anything go well for you in 2026 working for you? Oh, yeah. Yeah, I mean, we've got a business, what business is, where on the one hand, we have one to four unit properties.

3:31We have a gauge with 88 ,000 members at Real Wealth. And I could really get an idea of where people are buying. So I'm seeing investors buying in the Midwest. Cash flow is good there. Sort of buying in the Southeast, but investor activity overall down. But those who are buying are buying a lot. So I kind of can see from that perspective. But then also we've got our syndications where we have developments kind of all over the place. And they are completely having different experiences, different economies in these different markets. Like our Tampa subdivision selling like crazy. And then our Oregon one, just flat.

4:10Nothing. Just nothing going on there. Yeah. It's their higher price. I don't know. But that's been very frustrating. Pacific Northwest is slow right now. It's very slow. James could tell. Very, very cool. It is dead. And then our multifamily fund, the biggest challenge there has been getting the deal. You know, I keep talking about this is the time we started our fund. We're just going to clean out and be able to buy at huge discounts. And we have had a lot of trouble finding a deal still that works. So I'm a little surprised with the multifamily fund that it's been harder than I thought. And then personally, finally got the tenant out of my California rental after a year of nonpayment.

4:53Wait, hold on, Kathy. The craziest part of this story, I think, is that she was, oh, Kathy's friend wasn't paying and then finished out the garage and was renting out the garage to someone else, collecting rent herself and not paying Kathy. Not paying. That is insane. It's unbelievable. I'll say, you know what? I feel like it's been a bright spot. I know it's always boring, but like, at least in my investing, like I've been really happy. I put a lot of my money in lending recently. It just, there's just no problems with lending. Well, I mean, there can be problems, but man, it's such a good way to make money right now.

5:30I just, I'm very happy with it. It is the best, most consistent thing I do. Yeah. And like, there's really good ways to get into it now. There's a bunch of companies where you could put like 500 bucks, a thousand bucks, 10 ,000 bucks into lending and just get a 10%. Most of them, it's like somewhere between seven, 12 % cash on cash return. It's way better than rentals right now for if you want cashflow, like you don't get the tax benefits, you don't get the amortization. Like there are trade-offs, but as part of a portfolio plan, we're like, I'm kind of trying to simultaneously buy rentals for the longterm, but they don't throw off a lot of cash right now.

6:05So if you pair that with lending, that's working right now. Like to me, that's like a strategy i'm pretty into it well overall first half of the year i've i feel fine about it like it didn't get better like the market's not significantly better than 2025 but i think i've been encouraged by the fact that despite rates going up we're seeing positive mortgage demand we're seeing positive pending sales and the market's not collapsing like could we see less demand if layoffs get worse. Yeah. But labor market data has been like, okay. And so I think we're in for more of the same, but I think that's good given where we are this year.

6:48There's so much negativity about the war, about rates, about AI stealing everyone's jobs, about inflation. And there are real challenges. Don't get me wrong. But the fact that the market's holding up despite that, I think halfway through 2026, I think we take that as a win right now. It's not glorious, but it's better than it could have been. Things could have gone a different way, I think, over the last year. And I think that's encouraging. So that's the first half of the year. We're going to take a quick break, but when we come back, we're going to make our predictions about the second half of the year.

7:19I want to hear your doom and gloom prediction, James. And then we're going to talk about deals that we're looking to do and things we're excited about in the second half of 2026. Stick with us. We'll be right back. Summer bookings sound great until someone slips by the pool, gets hurt on your dock, or damages your property during a long holiday weekend. A lot of short-term rental investors don't realize their standard policy may leave gaps when it comes to short-term rental activity. That's why investors use Steadily. They offer landlord insurance built for real estate investors, including short-term rentals.

7:52And if you're a BiggerPockets Pro member, you'll also get 5 % off your landlord insurance premiums. Visit biggerpockets.com slash landlord insurance to learn more. Some listeners may wonder why their insurance quote only took 30 seconds. Some listeners may wonder why their insurance quote took 30 seconds. A better question is, how long will that policy actually hold up when you need it? At NREG, the goal isn't just getting coverage in place. It's making sure your investment property is properly protected when a real claim happens. That's why they take time to evaluate each property's unique risks and build coverage design for the realities investors face.

8:34Because anyone can sell a policy. NREG focuses on standing behind it. Visit nreig.com slash bplc to learn more. Investing in real estate has always been smart, but it hasn't always been simple. Now it's both, thanks to the Fundrise Flagship Fund. The Fundrise Flagship Fund launched more than five years ago with a mission of delivering low-fee access to blue-chip private market real estate. Today, the Fundrise Flagship Fund has grown to manage more than a billion dollars of real estate on behalf of hundreds of thousands of investors, making it one of the largest funds of its kind. For those who believe real estate has an important role to play in their portfolio strategy, the Fundrise flagship fund has positioned itself as both a simple and a smart option.

9:24Whether you're starting with$10 or$10 ,000, the Fundrise flagship fund makes adding real estate's unique potential for both passive income and consistent growth. Just visit fundrise.com slash pockets to make your first investment today. Carefully 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.

9:56Welcome back to On the Market. James, Kathy, and I are here talking about 2026, what happened so far. Let's talk about our predictions for the second half of the year. James, you hinted at something scary, so terrifying. Yeah. What is it, sad clown? It's just the history repeats itself. And I think people have really still haven't gotten used to the seasonal slowdowns. Like they just have not. It's like that's always been the thing, right? You sell at the wrong time. Things take a lot longer. And right now with the buyer, like a lot of doom and gloom, a lot of instability. and we're in the summer months, which is typically slower in most markets.

10:41And last summer was terrible. Last June, July was not great to sell a house. And what happens is the debt kind of arose these deals out. And so, you know, you have to be prepared for the long haul. And I think that's where people just as long as you set your expectations, right? I'm not expecting. I have a massive amount of homes coming to market right now because we just finished up the season. I got to drop 10 and I already got some on, but I have to be prepared to wait and price well, because even if you price well, you still have to wait today. There's just less velocity in certain price points in the market.

11:16And so I think the name of the game is to be proactive. How can you cut your costs down? How can you cut your debts down? But you have to have the right expectation to either burn the deal out or be prepared to wait. And that's where you're going to feel the pain is because when you got high interest loans on short-term investments, it will beat you up. And I think that's where we're going to hear a lot of the pain right now. Because if you look at syndicators, flippers, what's the problem? The problem is the debt. And that's what we're seeing because the margin, they end up still selling for around what you think.

11:52You just misjudged your debt costs by 30 % to 40 % sometimes on these deals. And so, you know, I think that's what we're going to see is it's going to be a long, slow summer in the upper echelon price points. It is not going to go well. So pain for anyone who's selling. But buys are good. They are like, and so that's what you got to focus. You got to have the glass is half full. Exactly. And I mean, I will say the thing I'm most excited about for the six months, I'm not excited about what I got that I have to sell, but we got to get rid of it. But what I am excited about is, man, builders are locked up and they are not buying.

12:31Land? Land, yeah. The land pricing has fallen so much in at least our market. And actually, look in Phoenix, same thing. Even in Newport Beach, I've seen lots selling for 15%, 20 % less. That creates a lot of opportunity when you take a segment out of the market. Builders are really locked up. I'm not seeing a lot of velocity in builder funding right now. Well, especially for land, there's just a limited pool of buyers in the first place. Yeah, or what it does, though, it creates opportunities that as flippers, you know, like I love when people are like flippers don't take all the inventory. We don't take all the inventory.

13:02A lot of inventory gets taken by from us, from builders. Right. They they're they're aggressive. They're moving. And because they're on the sidelines now, it's created so much more opportunities that I wasn't I'm not used to buying the last 12 to 24 months. Yeah. And land pricing has really came down. So that's what I'm really excited about, getting dirt and keeping dirt, especially for like burr opportunities. flipping, it can give you a really good product to sell. And that's what we want. What is sellable and sellable is your property has all the amenities, no weirdness. And when you have a gap in the market and there's less buyers, you can get better product and better opportunities to buy.

13:39Yeah, that's we literally just tied up some land in Truckee, California, very, very hot market. Oh, nice. Yeah, it's cool. It's very difficult to get anything at a good price in an area like that. And we did. So I couldn't agree more that builders are a little exhausted. And it is a good time if you've got a good business plan. And in this case, we're not going to build which is entitling and selling it to a builder who wants to take that risk. Well, so James, you said you think it's going to be tough. So your kind of prediction is it's going to be tough for sellers. It's going to be better for buyers.

14:13You're looking at dirt. Is there anything you're like staying away from in the next couple of months, next six months? I don't want anything weird. Like bad layouts or like you want mass appeal when you sell. Yeah. So it did recently and on paper, you're like, oh, it's a no brainer. And then you look at it like, wait, this is a pie shaped lot. I'm on a corner here with busyness. I got a lack of parking. And even though it was a very thrifty place for a great neighborhood in Seattle, I was like, there's no way I'm buying this because not that it wasn't a good price and not that it couldn't be worth what the ARV that they're proposing.

14:50It's, it could take six months to sell this because you've got to wait for one buyer. That's okay with all these weird things. Yeah. Yeah. And, and so I don't want any of that because I don't want to slow down the velocity and, and so get in and out of deals and try not to take on stuff that if it's missing amenities and there's lack of, there's a lot of issues with the site. I just don't want anything to do with it. Like you can't get stuck with things that aren't controllable in this kind of market. All right. So that's James' outlook for the second half of the year. Kathy, let's move on to you.

15:19Do you have any bold predictions about the second half of the year? Yeah, I think it's going to be a real boom time. Really? What's booming? The American economy and what comes with that. People want it all. And unfortunately, you can't have it all. You can't have low interest rates in a booming economy. You get low interest rates in a slowing economy. But what we've been seeing is job growth, which is kind of resulting in higher, probably the Fed is going to keep rates high or raise rates. And that's what happens in an inflationary sort of booming economy. But with a job growth, with more jobs tends to be wage growth.

16:03And wage growth is totally what's needed in this housing market because you're not going to see home prices come down necessarily. you're not going to see mortgage rates come down. So the thing that has to change is wage growth. And so if we're seeing that, that's going to help unlock the market a little bit. So I don't know. I feel very positive. And I think this has a lot to do with the AI boom. And love him or hate him, Trump is definitely supporting that industry and wants America to be number one in AI. And I think that's a part of what's happening is the energy grab to kind of be the leader in AI.

16:40So I don't know. And then you've got AI that's just making the world improve faster. I think we're going to see massive change and advancements in everything. Healthcare, just how you construct properties. Investors are going to get smarter. I don't know. I'm positive. I'm excited. But I'm also in California where a lot of this is happening. Interesting. Well, all right. I like that take. I disagree. And I will tell you, So you're much more optimistic than I am, but I like the optimism. I hope you're right. Well, so if that's your thesis then for the second half of the year, like what kind of deals are you looking to do?

17:16You know, we are looking, like James said, we love the land entitlement because you can negotiate on land right now. I'm looking at international real estate. I know we've talked about that before. And just also the population growth is still heading to the southeast. So it's on sale and people don't follow the crowds. Don't follow the crowds and be afraid. This is the time to follow the demographics, to follow the growth and realize that prices are down in the southeast right now. And it's an opportunity. And I think it's going to rebound. I don't know when it'll rebound, but it will. I agree with you there.

17:55I think that this is like what we were talking about this on the show recently, like areas that are on a discount where population and job growth are, like, come on. Go get it. Opportunity. Yeah, exactly. It makes so much sense. Yeah. Awesome. Well, that makes a lot of sense to me. And I, you know, even regardless of like the economic outlook, I think what you're talking about, the kind of deals just make sense regardless of what happens. So I like that a lot. All right. Well, we're going to take one more quick break, but we'll come back and I'll share with you some of my predictions about the second half of the year and what I'm looking to do with my portfolio.

18:27We'll be right back. There's a point where basically every investor realizes traditional financing stops scaling with you. At first it works. You qualify with your income, your job, your tax returns. But as you grow, that model starts to break. Now, it's not really about your personal income. It's about the income from your properties. That's where DSCR lending comes in. And it's why a lot of investors end up working with lenders like Host Financial. Host Financial qualifies deals based on property income, not personal income. So you're not dealing with W-2s or tax returns or DTI constraints. And with 80 to 85 % LTV, you can stay more flexible as you scale.

19:09It's just a different framework, one that tends to align better with how investing actually works. If you're buying rentals, refinancing, or growing your portfolio, go to hostfinancial.com. That's H-O-S-T financial.com and see what you qualify for.

19:50You don't have to. In some cases, investors even receive 50 to 75 % of their down payment back at closing. And their interest rates as low as 3.75%. They've been trusted partners with BiggerPockets for over a decade. And if you want to learn more, visit biggerpockets.com slash retirement. My family and I were recently planning our summer getaway. And as always, half the adventure started long before we left. We found ourselves mapping out flights, searching for great restaurants, picking activities, and imagining all the moments that make traveling so memorable. This particular trip took me to the East Coast for my 71-year-old dad's wedding.

20:28It wasn't your typical wedding weekend, but in many ways, it was even more meaningful. Brought together friends and family I hadn't seen in years, gave me the chance to spend some quality time with my nieces and nephews. Those shares meals, conversations, and unexpected moments are what make travel so special. But planning this trip got me thinking about something I hadn't really considered before. While we're away making memories, our home would just be sitting there empty. So what if we could make use of our space even while we're away? That's one reason Airbnb's co-host network caught my attention.

21:03If you've ever thought about listing your space on Airbnb while you're away, but felt intimidated by everything involved with hosting, you can hire a local co-host to help. Co-hosts are experienced hosts who help create your listing, manage reservations, message guests, provide on-site support, and more. What I like is that it feels simple and practical. Instead of leaving your home unused while you're traveling, you have the opportunity to earn a little extra cash that could go towards your next vacation, home project, or whatever matters most to you. If you've been curious about hosting but weren't sure where to begin, a co-host can help make that easier.

21:40Find a co-host at airbnb.com slash host. New year, clean slate, and maybe a vacancy that needs to get filled fast? That's where Avail comes in. With Avail, rental listings can be published to 24 top rental sites with one click, completely free. That includes places renters are already searching, like Realtor.com, Apartments.com, Redfin, and more. No copying and pasting. No juggling multiple platforms. Just one listing that shows up everywhere. If getting rentals organized and filled fast is on the list this year, start with Avail. Sign up for free at avail.co slash biggerpockets. That's A-V-A-I-L dot C-O slash biggerpockets.

22:21Welcome back to On the Market. I'm here with Kathy and James today. We're talking about what's happened in 2026 and where we're going. We've heard conflicting views so far. James, doom and gloom for sellers. Great opportunities for buyers. Kathy sees a big economic boom and is looking at international and southeast real estate. Right. Kathy, I honestly, I don't like disagree with you because like I have some super insight. I wish I could be as optimistic as you are. I'm just not. I don't I I see these just like two different economies going on. And like there's this AI economy, which is totally separate from everything else.

23:00And like all this GDP growth is going to AI data centers that frankly, no one knows if they're going to work. No one knows how long they're going to last. Like even if they work, they might need to replace them every five years and like throw a trillion dollars. It's super uncertain. At the same time, it's hard for me to ignore the red flashing signals around American consumers. Maybe I'm wrong, but it's just like you look at credit card debt, you look at student loan defaults, you look at the savings rate declining, you look at negative real wage growth. I'm not saying things will necessarily get that much worse.

23:41I just have a hard time imagining them getting better. I just really can't imagine. I'm struggling to figure out what takes us from where we are today to Americans, the average American consumer being in better position to go out and buy and stimulate the economy and get in the housing market. And I just don't see it. So I don't know. I'm gloomy, to be honest, about the economy in general. So much of that inflation was, I hate to use the word, but I will, transitory. Transitory. Oh, you can't say that word. That is a risky position. It's a dirty word. It's a terrible word. It's a dirty word, but it is true.

24:23We need oil for everything. Oil transports everything. And when prices of oil go up, then costs go up because it costs more for everything to be transported. That was predicted. If oil prices come down and they have, we're going to see that reflected, I believe, in prices. So, yeah, I actually think inflation will come down, but it will not come down to 2%. It's because of the economy. So, expect inflation, just not runaway inflation. And inflation is, guess what inflation is good for, guys? Real estate. Real estate is the winner with inflation. So, go get it. Go get your real estate. you're you are again more optimistic than me i i think inflation will come down but it's going to take a little while i think it's kind of like the warm we'll have warm inflation i i think it will peak i actually did an episode on this the other day i think it will peak in q3 like i think in the near term it will but it will take a long time to come down not like years but like i don't know if it's getting below three in 2026 you know like which is terrible right but electricity in the u.s is up 6 % year over year just because of AI data centers.

25:39Food costs are going up. Some of it's related to the Strait of Hermes. Some of it's not. So I just think there's going to be frustrating inflation. Again, nothing close to where we were a few years ago. It might go up one more month and then start to come down, in my opinion. So I'm with you on that. I guess I just don't know if people care? Like at the end of the day, does an American consumer, like the fact that it goes from four to 3%, is that fundamentally going to change their spending behavior? Like, I don't think so. I think people are stretched. I think they're stretched. And like, that's what I'm trying to understand is like, how does that get better?