2026’s Top Growing Cities (People Are Moving Here!)

0:00For investors, the market does not have to be perfect. It just has to make sense. The challenge is knowing which trends are actually changing the math.

0:13What's up, everybody? I am Henry Washington, and today I'm stepping in for Dave Meyer as the host of this week's On the Market show. And I'm also joined by my friends, Kathy Fetke and James Daynard. And today, we're going to be going over the most important headlines that we found this week. We'll be breaking down the lock-in effect and whether it's still in play or if it's starting to change a little bit. We'll talk about the current state of real estate inventory and the top U.S. cities where U-Haul says people are moving to. You're listening to On the Market. Let's jump in with our first headline.

0:47All right, my article is from Fortune, and it is about the lock-in effect. And we've talked about the lock-in effect several times on this show. When interest rates dropped to sub 3%, millions of homeowners locked in 2 % to 4 % mortgage rates. And that made it challenging for them to want to sell their properties and transition to new homes when the interest rates rose because they would be trading a very low interest rate for a very high interest rate. So that caused inventory to dry up because people were locked into their lower mortgage rates. And what this article talks about is that as of late in 2025, more homeowners have mortgage rates above ones with sub 3%.

1:29In other words, there's a shift from the pandemic era where the majority of homeowners had a sub 3 % mortgage rate. Now we've seen a shift where there are more homeowners that own interest rates higher than 3%. So the article also talks about because there are fewer homeowners that now hold these lower interest rates, That means the financial burden or the penalty for these people transitioning homes is now lessened, which means more people are willing to go ahead and put their homes on the market. And that should help inventory kind of unlock the inventory. And we start to see more transaction volume.

2:06I think that is the hope. I mean, I can say in my market that we are seeing people transacting faster. The last few homes that have gone on the market by either myself or some of the other people that work out of this office all went under contract in the first 24 hours with multiple offers. So in my market, we're starting to see some of this. But what are you guys seeing in your markets, especially you, James? There is not a lot of inventory, but I will say I was pretty surprised to see that there's more homeowners now with rates above the 3%, 3.5%. because all we talked about for like a year after rates went up was the lock-in effect that no one's moving the rates are going to stay here forever like you just don't know what's going to happen nowadays right like like everything that you anticipate to happen doesn't happen and then this goes over here it's like i never really thought that people were going to stay forever in the house just because people change their minds and a lot of people bought homes on a very quick whim.

3:04And they kind of jumped in because they had FOMO. They don't want to lose buying a home. But I don't know if this is going to really cause more inventory because we're seeing inventory shrink up. And then for the last six months, all we've heard about is inventory rose, inventory rose, it's finally coming. And then it shrinks back down. We don't know which way is going where. And what it's important for everyone to do is just not overthink it too. Like, what are you trying to accomplish? What are you trying to do? And is there more inventory or not? It doesn't matter what someone's their rate is on their existing mortgage has nothing to do with what you're doing next.

3:42Right. But I do think this shows that it doesn't matter. Americans are used to borrowing and they don't care if the rates are three and a half percent or 20 percent. They just want the money where they want it. And they're going to keep moving things forward. But this is pretty surprising that there's more mortgages locked in above the pre pandemic. I think this article also touches on something that some of us all said in previous episodes is that people don't just stay in a home or move because of the interest rate. Right. There are life events and things that happen that cause people to either need or want to move.

4:17And most homeowners are less concerned about the financial impact and are more concerned about, like, what's my lifestyle impact? Because a lot of these homeowners aren't investors. And so what the article says is like some of the big drivers in people breaking the lock-in effect now that it isn't as financially challenging for them is job changes and relocations. You know, a lot of companies are limiting remote work like that was a thing before. It's not as much of a thing for a lot of companies. Family changes or divorces, downsizing. There's people downsizing and they're wanting to sell. So normal life factors are now coming into play and it's easier for people to make the decision to sell because the financial implication isn't as harsh as it was before.

4:59Yeah, it's just a matter of time, right? You know, every year, four million, about four million homes have been trading, have been selling. That means the people buying them are probably in those 6 % rates. In fact, some might be in much higher rates and so happy to be refinancing into a 6 % rate from eight or something. So it just is a matter of time. 6 % is not a bad rate. It's actually a really, really good rate. The problem was that home prices soared at the same time, but they have stayed relatively flat for a few years now. And that's given some time, again, for wages to rise and for affordability to increase.

5:39And that was kind of the headline of last month, which is for the first time, housing has become a little bit more affordable. And that's the combination of rates coming down just a bit and wages going up a bit and home prices staying flat. And in some areas, coming down quite substantially. You know, if you were ever wanting to buy a house in Austin, my goodness, you could get a deal. Right? Yeah, you could get a deal. And that's not just Austin. There's several markets like that. So that's part of it. And then the other part is it's just there's a lot of people sitting on massive amounts of equity.

6:11If you bought in 2020 and you're looking at all that equity. I'm about to list my house and I'm locked into a sub 3%. My mortgage rate is like 2.3%, but I have a ton of equity because I literally bought right in 2020, right before the market shifted to where things were selling like hotcakes. And now I've got a ton of equity and we're going to use that equity to build a home on 20 acres of land that we are closing on today. Oh my gosh, so exciting. And again, lifestyle change. So for you, if you actually look at the 0 % return that you're getting on that equity, and then you combine it, you're going to be making more money by putting that equity to use when you're thinking like an investor.

6:57Now, I think a lot of people don't think like investors. If they have to move or do something else, they might not want to keep that older house and rent it out, even though it might cash flow, because that's a foreign concept and a scary one. and maybe they need access to that equity. So yeah, I think it's just a matter of time. Plus one more thing, so many people kept thinking, I'm just gonna wait till rates come back down to 2%, 3%. That's when I'll buy. And I think reality has set in that that's probably not happening. I think you both make great points here because if you wanted to buy a deal or buy a property in a great market that's now experiencing some downturn, like what an opportunity, right?

7:41Like, you know, we just did the Texas Cashflow Roadshow and we were in Austin. And there are tons of people both in Austin and outside of Austin who love that area, want to invest there. But people just kept saying, man, things aren't looking good, prices are down. Yeah, that's when you should buy. Austin's cool, it's gonna come back, right? Now you get to get in at a discount. If you're a retail kind of buyer, This is a great time to buy in that area. And if you're an investor and you're looking to capitalize, you're supposed to buy low, sell high, right? This gives you an opportunity to buy low and sell high.

8:15And James, you're right. There's so many different data points. I'm sure if we dig for five seconds, we can find an article saying the exact opposite, right? But I think you're right. We have to focus on the fundamentals. If you're a flipper or a value-add investor, this shouldn't change your approach. You should still be buying undervalue. You should still be adding value, doing the best job you can in the shortest period of time and then understanding your market, your customer and providing them the product that they want, regardless of how many homes are on the market. Like it's more important now than ever to like be a fundamentally sound investor.

8:52What we aim to do is I want to be the nicest home in the area at one of the middle or lowest prices so that people have no choice but to come see my house. because if you're shopping and you see options that look worse than mine and that are priced higher than I know I'm going to get those looks like those fundamentals will carry you in any market. Austin is a head scratcher though. Like, cause it came down fast when rates shot up, just like San Francisco, Seattle, Chicago, a lot of them did. It has had no pop back though. Like none in this. I'm just totally off on that, but I've seen San Francisco rebounds.

9:26And then, you know, it like kind of does like the EKG monitor, right? Where it's like, boom, boom, boom, boom. Austin's just flatline. There has to be opportunity there. And I think that's what people have to change their brains on is when it doesn't feel comfortable is when you want to buy. Like you have to keep buying and keep going. And if a market's not rebounding like the rest of them, then that's where the opportunity is. Right. It's I should have gone out to that Austin Roadshow and have to have some properties. I know. I know. Right. We got some good barbecue and. Yeah. The barbecue was amazing.

10:00Houston did have the best barbecue that we tried on this trip. I'm not saying Houston has the best barbecue in all of Texas. Don't come at me in the comments. But put a pin in that thought, James, about Austin and about Texas. All right. Well, that's great information about the impact of the lock-in effect. We've got more amazing headlines for you when we come back. 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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13:03All right, we're back with on the market. Let's dive into our next headline. I want to move on to the next article that Kathy brought, and I think it may have something to do with real estate in Texas. Mine is the U-Haul growth index report. This is just, you know, go to U-Haul and they track where the trucks are going and where they're coming back from. And if there's a lot of demand for where they're going, prices go up. If there's not a lot of demand, prices go down. So California, once again, bottom of the list, fewer people coming. So if you want to rent a U-Haul to California, you're going to get a great deal.

13:45No surprise that the top U-Haul growth markets, where the most U-Hauls were going, number one, number one, Dallas, not a surprise, been investing there for 22 years for this reason. That's where people are going. That's because the job market is on fire. It has been for 20 years. Second is Houston, and it's because of their barbecue. Everybody's just going to get more barbecue. Third, Austin. I think people are realizing I can go have barbecue and live for pretty cheap because they're probably just giving away apartments at this point. They did overbuild. It looks like A-class apartments, especially in Austin.

14:25Then Charlotte, Phoenix, Nashville, Charleston. So, you know, you could see a trend here. Still the Southeast and Phoenix. It's where people are moving despite what you hear in the news. And this is why you have to be so careful. When I talk to people about our single family rental fund, for example, where we're focused on Dallas, they're like, oh yeah, but there's all these vacancies. And it's like, yeah, in the areas where they overbuilt, but not in the areas where we're buying, not where the jobs are going. Companies are moving to the Dallas area and obviously to Houston and Austin because it's much more affordable and the laws are in their favor.

15:02And there's tax credits many times for these businesses to move. And that's going to drive workers to be there. But the employers want to make sure that their employees can live well. So they move to the areas that are more affordable within there. If you go to downtown Dallas, not affordable, but you kind of go out into the outskirts. That's where the businesses are going. And that's where we're investing too. I think recently McKinney, Texas, which is just outside of Dallas, was ranked as like one of the top, if not the top real estate market in terms of rent to price ratio, in terms of appreciation.

15:38And that's literally like just a stone's throw outside of Dallas. That's been our focus for about a decade and it's paid off. And, you know, as we look at what's going to happen in real estate over the next three to five years, I think it's really important to see what's going on in politics and the local regions. Because the reason people are leaving and businesses are leaving is because of all these taxes. California has what? That billionaire tax up in the air right now where they want to tax more billionaires. Washington is in front of the Senate right now and they're going to vote on it. They proposed a 9.9 % income tax on anybody making more than a million dollars in Washington.

16:19And that means stop too, right? And there's a lot of tech that's coming into Washington. This is where all of a sudden businesses go, wait a second. Yeah. What the heck? You know, there's a lot of San Francisco tech coming up to Washington because there's benefits. We have lower properties. I mean, we are expensive, but it's not we're not San Francisco expensive and there's no income tax. And then what happens is you hit that breaking point and you go, no, you know what? This ain't worth it anymore. Yeah. And now I got to go elsewhere. Seattle's proposing other taxes on businesses for income like in.

16:49These are the things that are making people go to Texas. They're going to Florida and they're going to more friendly states for businesses. And this is not going to stop. This is a trend that started during the pandemic and people really started moving. If these states don't smarten up, people are going to leave. You know, that's something I'm watching closely in Washington, because if a 9.9 % income tax goes through on a millionaire, the next thing is 700 grand, then 500 grand on earnings. And the income tax is going to be a real expense. Washington has higher expenses than a lot of other states.

17:19It makes it unaffordable. That's where property values go down. I think this is going to continue because these states are pushing hard. and you know i'm gonna be curious to see if there's a fallout in those states like i mean anybody who's buying in these less business friendly states you got to watch out like i'm i'm heavily into seattle and i'm like whoa if this goes through i'm gonna be making a shift into some other spots for sure yeah kathy you had mentioned phoenix on this list where on the list phoenix fall phoenix was number five that's cool again i think that's one of those situations similar to what we were talking about with Austin because Phoenix real estate values have been flat and or coming down over the past few years.

18:00But if it's now on this list or it's data is showing that people are still moving there, businesses are still moving there. Again, that seems like a formula for an opportunity if you're an investor because you can get in now while prices are low. And if you hold through, you now know that businesses are moving there, which means businesses are going to pour money into those communities. They're going to create jobs in those communities and more people are going to be living there, that creates a scenario where appreciation can happen again in the future. There's also a second part of this article that's U-Haul growth cities.

18:30The one I just said was the metro area, because like I said, with Dallas, if you just focus on Dallas alone, not as interesting as the Dallas metro area, because so many of the businesses are moving actually outside of Dallas into areas like McKinney, like you said. But the U-Haul growth cities, the number one is, and most of these are in Florida, actually. So the metros are Dallas and that's because so much of the growth is actually in the suburbs. In Florida, the number one city is Ocala. And once again, my company has been focused on Ocala for a couple of decades, seeing the growth there. I was shocked to see it's the number one, but then it's North Point, Florida, Myrtle Beach, South Carolina.

19:12Remember you were looking at that, James? You like that town? Just Florida, Florida. And then McKinney is number six. So yeah, yeah. The bottom line is that Texas and Florida have gotten a lot of headline news about vacancies, but you have to dig in a little deeper. We also just did a mastermind with the teams that we work with across the country. And the Florida guys were like, every time someone, an investor calls, the first thing they said is insurance. We don't want to buy here because of insurance. And I get it. Like I'm in California. I know the problems with insurance. But they said it's not as bad as people think.

19:49And I looked at our portfolio and I'm like, yeah, look at Rich. Has our insurance gone up much? And he goes, not a little bit, but also the houses have doubled, if not tripled in value. So of course the insurance has gone up. That's the piece people aren't maybe looking at. It's not necessarily all related to storms. It's that the values have gone up. No, Kathy, we want low expenses, low insurance, but we want high values. We want our cake and eat it too. Yes, I agree. All right. Thank you, Kathy, for sharing that article. We do have to take a quick break, but when we return, we will be talking with James Daner about inventory increases or not.

20:28We'll be right back. 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. That's the power of the Fundrise Flagship Fund. Now you can invest in a$1.1 billion portfolio of real estate, starting with as little as 10 bucks. The portfolio features 4 ,700 single-family rental homes spread across the booming sunbelt. They also have 3.3 million square feet of highly sought-after industrial facilities, thanks to the e-commerce wave.

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22:14But imagine if real estate investing was suddenly easy. All the benefits of owning real, tangible assets without the complexity and expense. That's the power of the Fundrise flagship fund. Now you can invest in a$1.1 billion portfolio of real estate, starting with as little as$10. The portfolio features 4 ,700 single-family rental homes spread across the booming sunbelt. They also have 3.3 million square feet of highly sought after industrial facilities, thanks to the e-commerce wave. The flagship fund is one of the largest of its kind. It's well diversified, and it's managed by a team of professionals.

22:48And it's now available to you. Visit fundrise.com slash bpmarket to explore the fund's full portfolio, check out historical returns, and start investing in just minutes. 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. Tax season reminder for all the real estate investors listening. If you own rental properties, short-term rentals, commercial buildings, basically anything that's not your primary residence, you need to know about cost segregation.

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