Redfin: The Nice Housing Market “Reset” Begins in 2026

Ashley:Welcome again to a different episode of Actual Property Rookie. I’m Ashley Kehr. We’re heading into the ultimate stretch of the yr. The presents are piling up beneath the tree, and whereas everybody else is winding down for the vacations, we’re teaming you up for what may very well be one of the essential market conversations of the subsequent few years. However earlier than we do this, I need to thank the rookie viewers for an additional great yr collectively. To all of the company which have taken the time to share their story, successes, and classes discovered, the rookies listening wouldn’t be the place they’re in the present day with out you. I’m so impressed on a regular basis by the motion taken by you all, the honesty, the vulnerability, and the neighborhood. I can’t wait to see what 2026 brings us all. At present’s rerun is from the podcast On The Market. This episode options Redfin’s head of economics analysis, and he or she talks in regards to the housing market having a full reset in 2026.Not a flashy in a single day change, however the begin of an extended, regular ship that would lastly deliver consumers the affordability and normalcy they’ve been ready for. On this episode, Chen walks us via 11 predictions her workforce believes will outline the subsequent cycle. We break down what may occur with mortgage charges, dwelling costs, rents, refinancing alternatives, and general transaction quantity. We even speak about how AI would possibly quickly change into a matchmaker for American dwelling consumers. And in case you are an investor or landlord, listen. Hidden inside these predictions is one development that would instantly influence your cashflow in an excellent approach as we head into 2026. Settle in, seize a vacation cookie and luxuriate in this well timed rerun as we glance forward as to what may very well be the start of a brand new chapter within the housing market.

Tony:2026 is shaping as much as be the beginning of what Redfin calls the Nice Housing Reset. A protracted, gradual interval the place affordability improves and the market normalizes, not a fast flip or a recession. I’m Dave Meyer, and in the present day I’m joined by Redfin’s head of financial analysis, Chenzao, to unpack their new annual predictions report. We’ll dive into every of their 11 predictions and stroll via the headline calls from fee cuts to gross sales inching up, rents reaccelerating, and which markets are more likely to warmth up or settle down. That is On The Market. Let’s get into it. Jen, welcome again to On The Market. Thanks a lot for becoming a member of us once more.

Chen:Thanks a lot for having me, Dave.

Tony:That is certainly one of our favourite reveals of the yr listening to what Redfin has for predictions. So possibly simply begin by telling us kind of like large headline, what are you seeing? What’s the large prime degree narrative in regards to the market in 26?

Chen:I’d say the headline is that we see the housing market taking a little bit of a flip. I feel it’s already beginning a bit of bit this yr, however we expect goes to proceed subsequent yr. And it’s going to be a little bit of an extended, what we’re calling a reset of the housing market the place we expect affordability will begin to slowly change. And affordability actually has been the large problem for the housing market, as everyone knows, however there’s no silver bullet, there’s no magical repair. It’s going to take some time, and we expect subsequent yr is the beginning of higher affordability for dwelling consumers.

Tony:That’s music to my ears. I feel I noticed one thing you all put out that affordability was one of the best it’s been in two or three years, simply within the second half of 2025. So it looks as if that development is already rising.

Chen:Sure. I feel we’re beginning to see the beginnings of that development within the second half of 2025. So particularly, the 2 essential elements are mortgage charges and residential costs. So we all know that mortgage charges have come down a bit of bit. We anticipate them to remain decrease. We are able to get into extra of that. After which dwelling costs, we all know the house costs should not rising as quick as they had been.This has to do with the shift from a vendor’s market to a purchaser’s market. And we are able to speak about how we anticipate that to proceed for the subsequent few years and what the underlying forces are.

Tony:All proper, nice. Nicely, I are likely to agree with the general kind of thesis right here. I feel you guys known as it the housing reset. I’ve known as it kind of the nice stall the place I feel costs simply type of keep stagnant for some time, however let’s get into the particular predictions that you just all have. So what’s the first one?

Chen:The primary one is about mortgage charges. So proper now, mortgage charges are within the low sixes, 6.2, 6.3%. We expect they’re staying right here. I feel one other approach of placing that is that we don’t anticipate mortgage charges to get into the fives, not for any sustained time frame. We all know that mortgage charges fluctuate. Generally you get a bit of bounced down, however I don’t assume it’ll keep there. We additionally don’t actually anticipate mortgage charges to get again as much as 7% both. I feel the essential factor they’re right here to deal with is, after all, all the time the Fed and what they’re fascinated about. And so they’re all the time balancing this twin mandate that they’ve. So is it stopping excessive inflation, simply attempting to maintain inflation low and regular, and likewise attempting to maintain unemployment from going up. So proper now, the economic system is in a really delicate steadiness. We all know that the upper tariff charges have slowed financial progress.In addition they threaten to extend inflation, although we haven’t seen as a lot of that to date. However that implies that the Fed has a very distinctive problem on its palms. So even for the assembly that’s occurring subsequent Wednesday, it’s a little bit of an open query. What are they going to be doing going ahead? However as a result of they’re on this delicate steadiness, there’s not a lot room for them to chop loads, however we additionally don’t assume they’re going to be mountaineering. So meaning we’re kind of caught right here with the place mortgage charges are. After which the opposite factor you’ve to remember is that there’s this large transition occurring subsequent yr with the Fed. The president might be nominating a brand new chair of the Federal Reserve. The chair is just one of 12 votes on the FOMC. So opposite to among the stuff that you just see within the press, the chair of the Federal Reserve doesn’t set rate of interest coverage.She or he is one particular person on that committee, however it’s a crucial particular person. And that transition is one thing that we additionally should preserve actually shut tabs on.

Tony:Acquired it. Okay. So not anticipating loads of motion both approach. It does appear type of caught. We have now these twin, I suppose you’d name threats to the economic system proper now the place inflation has been … We don’t have loads of inflation knowledge for the final couple of months, however inflation previous to the federal government shutdown had been ticking up a bit of bit and job losses, it looks as if each print tells us a special story. So it’s simply actually laborious to grasp what’s happening there. And till we get clear line of sight on a kind of issues and which one is actually going to be the larger situation or which one will get cleared up first, I agree with you that it’s not going to maneuver a lot. I’m curious, simply the final couple days, the Fed stopped quantitative tightening. Do you assume there’s any likelihood that the Fed does one thing extra dramatic subsequent yr to influence mortgage charges, like possibly quantitative easing or one thing like that?

Chen:I don’t assume so. I feel that the communications that we’ve gotten from the Fed is fairly clear on this, that they need to pivot away from mortgage-backed securities and pivot in direction of a portfolio of treasury securities. And this concept that’s been floated a number of instances, I’ve seen some op-eds about it saying, “Hey, look, greater mortgage charges is actually killing the housing business. Can we do one thing for housing? Perhaps meaning the Fed buys MBS.” It’s actually laborious to think about that they’d select to do one thing like that while you nonetheless have a lot lingering inflation danger from greater tariff charges as a result of it’s a must to do not forget that housing remains to be the most important part after all CPI or PCE, whichever your favourite measure is. And so if you happen to had been to stoke the housing market proper now, what you’d see is that dwelling costs would simply shoot up.And so they actually simply, in any case the celebs and PTSD from the previous couple of years with excessive inflation, I simply can’t think about that they’d actually select to do this. And Chair Powell has been requested about this a number of instances in his press conferences, and he has stated every time very persistently, “The issue within the housing market is that there must be extra provide.” And everyone knows this very properly. We are saying it on a regular basis. That’s a really laborious downside to unravel. And put one other approach, I feel, one other approach to take a look at it’s within the housing market, what we want is for costs to come back down. We’re in a brand new financial period now after the pandemic the place charges are simply going to be sitting greater. I usually like to speak about this by way of folks’s metabolisms. As you age, your metabolism modifications.You’ll want to change what you eat, and it’s a bit of bit like that for the housing market. So we truly do want to only see decrease dwelling costs. That’s the correct approach to get the housing market again to a wholesome state.

Tony:I agree with you there. So do you assume that’s going to occur? Perhaps I’m skipping forward in your predictions, however do you assume that can occur that we’ll see dwelling costs decline?

Chen:We’re already beginning to see it this yr. So we began the yr with dwelling costs rising about 5% yr over yr. We’re all the way down to about two, three-ish %, relying on precisely the way you need to measure it, what particular metrics you need to have a look at. So it’s come down loads, and it got here down loads as a result of the change of dwelling consumers to dwelling sellers has modified. So Redfin has this proprietary metric that we put out that we name lively consumers and sellers. So sellers is very easy. It’s simply quantity of stock available in the market. The variety of consumers is one thing that we impute from a few of our proprietary knowledge the place if we are able to see what number of properties are promoting and we all know how lengthy it takes folks to search out properties and the way lengthy it takes to promote properties, we are able to put all that collectively in a mannequin and say, “This suggests that there are this many consumers within the housing market actively trying proper now.” And what we noticed was that that hole received actually giant within the spring of this yr.There was about 37% extra dwelling sellers than dwelling consumers throughout the nation, and most housing markets had been tipping from being vendor’s markets to being consumers markets. In order that ratio of sellers to consumers has a really shut relationship to dwelling worth progress with a lead of about six months or so. So what we’re seeing is that that shift has led to dwelling worth depreciation actually slowing down. And it’s laborious to think about as we proceed to observe this metric and that hole continues to be traditionally giant, that it’s laborious to think about that dwelling worth progress will speed up once more. After which particularly if you happen to layer on prime of that, what we see occurring with demographics. So we all know that immigration into this nation has had been kind of halted. We additionally know that the underlying demographics of the nation implies that there’s going to be smaller populations going ahead, that it’s actually laborious to think about that dwelling costs will truly be appreciating that quickly within the close to or medium time period.However alternatively, it’s additionally tough to think about that dwelling costs will actually be falling dramatically as a result of as everyone knows, folks don’t should promote their properties. You may select to hire it out, you may select to proceed to dwell in it. And we truly put out a report, I imagine it was final week, taking a look at de- listings, and we noticed that the fraction of properties which might be being de- listed in 2025 was about 5.5%. That was up from about 4.8% final yr, which doesn’t sound like an enormous improve, however that fraction has been very fixed, like beneath 5% for the final eight to 10 years. In order that implies that that improve is definitely significant. It doesn’t sound like an enormous quantity, but it surely’s a fairly significant improve. And what we noticed was that the properties which might be being de- listed are individuals who purchased extra not too long ago.They don’t need to promote the place consumers are prepared to pay proper now. So consumers and sellers are simply kind of far aside. And so so long as dwelling sellers aren’t prepared to go the place consumers want them to go, it’s truly very laborious for costs to additionally fall.

Tony:Yeah. I truly, we did an entire present on that report about de- listings as a result of I feel it’s tremendous fascinating. And to me, it simply displays that sellers are responding appropriately to the market as a result of I feel loads of the crash narratives that you just hear about are there’s going to be panic promoting or there’s going to be this kind of downward spiral of accelerating stock, however what you’re seeing is a standard response. Individuals don’t need to promote at a loss, and so they don’t should. There’s no pressured promoting happening, in order that they’re simply selecting to not promote. I feel it’s personally, I’m curious to see if they arrive again on within the spring, as a result of I’ve loads of buddies who’re home flippers, loads of them are pulling them off and we’ll do it within the spring. However I feel that to me is an indication that you just’re appropriate that it’s going to be kind of a boring yr price-wise for the housing market.

Chen:Yeah. I imply, we’re going to proceed to publish this de- listings knowledge fairly commonly, and we will even be publishing who’s de- itemizing and are they relisting the house? So we should always see that within the spring if they’re coming again available on the market. It’s boring, I suppose in some sense to say, look, dwelling costs are going to possibly rising 1% or 2%, one thing very low. However it’s truly a significant change for consumers as a result of what meaning is that dwelling costs are rising slower than wages. And that’s what consumers really need. They want time for wages to catch as much as the place dwelling costs are. As a result of dwelling costs should not going to be falling, that is the one mechanism that we’ve to be able to get to this place the place we have to go the place properties are extra inexpensive for folks the place their incomes truly are.And that’s what we expect might be occurring subsequent yr.

Tony:So that’s your second prediction, proper, for subsequent yr?

Chen:Sure. Primarily that dwelling costs are going to be rising slower than wages. And that is the step that you just want for affordability. However importantly, this sort of progress may be very gradual. So it won’t even be very noticeable to loads of consumers after the primary yr. We don’t anticipate affordability to unexpectedly leap again to the place it was earlier than the pandemic. It’s going to be a gradual course of, possibly 5 to 6 years. It’d take some time for consumers to truly discover, “Hey, affordability has gotten higher.”

Tony:That is sensible. And only for everybody who’s listening, we’ve been speaking about this on the present not too long ago, however what Chen is speaking about additionally displays the distinction between nominal and actual dwelling costs as a result of Chen stated costs would possibly go up one to 2%. That’s the value you see on Redfin if you happen to had been going to go look. However while you truly examine that improve to inflation to wages, they’re truly detrimental. And I do know that sounds detrimental to some folks, however meaning affordability is bettering. That’s how we’re truly getting affordability. And proper now it’s child steps in direction of affordability, however we are able to get again in direction of significant enhancements in affordability over time. If actual dwelling costs keep type of flat and wages continue to grow, that’s a standard approach that we get affordability again into the housing market. All proper. So we’ve gone via our first two predictions from you, which was first about mortgage charges dipping into the low sixes, however staying there.Prediction two, dwelling shopping for affordability will enhance as wages develop sooner than costs. What’s the third one?

Chen:The third one is about gross sales. So we expect that gross sales will inch up simply barely subsequent yr. So we’re fascinated about current dwelling gross sales very particularly. It’s been about 4.1 million. It’s going to be 4.1 million once more this year-ish. Subsequent yr, we’re forecasting 4.2 million. It’s not loads. Traditionally, it’s very, very low truly. It’s solely up about 3% from the place we expect we’ll finish this yr. I feel that the elevated affordability means you simply get a bit of bit extra exercise available in the market, however by and huge, what we’re describing with consumers and sellers actually simply being on the stalemate implies that you’re not going to get this large pickup within the housing market subsequent yr.

Tony:I hope you’re incorrect about this, however I agree with you. I simply assume for this entire business, it will be nice if we had extra gross sales quantity. It simply feels prefer it’s been so sluggish and gradual. And for anybody who’s a lender, an agent, it’s been a troublesome slog. And hopefully although, at the very least this can be a register the correct course. It’s received to backside out in some unspecified time in the future. And possibly which means we’re shifting in direction of higher dwelling gross sales quantity, possibly not in 2026, a bit of bit higher, however possibly within the years after that, we’ll begin getting in direction of a extra regular degree of gross sales quantity. Chen, what’s the fourth prediction Redfin has this yr?

Chen:It’s about rents. In order everyone knows, rents have been actually flat to barely declining for quite a lot of years now. We expect that subsequent yr, rents will begin to tick up just a bit bit, in all probability in direction of the again half of the yr. We all know that multifamily building has actually slowed. There’s additionally elevated demand from folks not shopping for a house for renting. So the mix of these two issues implies that we in all probability simply get the smallest uptick in rents. It’d imply that you just had been speaking about this distinction between nominal and actual worth progress. Proper now, rents are falling on an actual foundation when you alter for inflation. By some metrics, they’re truly falling on a nominal foundation. We expect we would get to someplace the place it’s flat on an actual foundation. So rents are maintaining with inflation in different phrases.

Tony:And that’s based mostly on largely simply the provision glut that we’ve kind of been in from multifamily dissipating.

Chen:Precisely. I feel that’s the principle motivation right here, however we additionally assume that this continued affordability problem, that simply doesn’t take a very long time to work via on the acquisition facet means you simply get greater demand nonetheless. We additionally know that the economic system has gotten loads weaker. The labor market’s weaker. We’re kind of on the sting of a recession, in all probability received’t fall right into a recession, however that can preserve sufficient folks renting quite than shopping for.

Tony:That’s fascinating as a result of I observed the identical factor. I noticed some stat that the unemployment fee for folks beneath 25 is like 9% proper now. These sorts of numbers that I don’t know if we go right into a recession or not, but it surely made me marvel if it should weigh on family formation as a result of I feel you’re proper, we’ll have the next share of individuals renting, however for rental demand to maintain up, we want family progress, however I’m curious in case you have any ideas on that, if that’s going to decelerate or the place that can go.

Chen:We do assume that the slower financial progress will weigh on family formation a bit of bit, however the economic system, there’s loads of headlines proper now in regards to the detrimental jobs knowledge that we’re seeing. The federal government shutdown implies that we simply haven’t gotten nice official jobs knowledge, so we nonetheless want to attend for that. And the truth of the labor market is that it has slowed down loads, but it surely’s nonetheless staying afloat and the economic system remains to be staying afloat. In order that makes me assume that we received’t get a big impact but on family formation, however housing prices stay excessive. So we do assume there are going to be some impacts on issues like family formation and likewise on issues like folks deciding to begin a household. So our fifth prediction is that affordability means folks have extra roommates, we are saying fewer infants, that means that possibly you need to get into an even bigger dwelling earlier than you begin to have children, however you’re discovering that to be actually difficult.So that you’re going to delay that for a short while. And as I used to be saying earlier than, we do assume housing affordability will enhance, but it surely’s going to take quite a lot of years. So that can weigh on a few of these elements for households.

Tony:Acquired it. Okay. I imply, that is sensible to me. I do assume individuals are stretched and it’s going to be laborious for folks to exit and kind a brand new family. Only for everybody is aware of, family formation, it’s a bit of bit totally different than inhabitants progress. It’s principally measuring the overall demand for housing items. So for instance, if two roommates reside collectively, then they every resolve to exit and get their very own residence. Doesn’t change the inhabitants of a metropolis or the nation, however that provides yet another family and that provides yet another unit of demand. That would occur when a teen strikes out of their dad and mom’ home or if two folks break up up and so they resolve to have two properties. In order that’s what we’re speaking about. And that’s simply an ongoing query I’ve, significantly because it pertains to rents. So we truly, we received a twofer on that one.We did prediction 4 and 5 on the identical time. So what’s prediction six?

Chen:Prediction six is about coverage. So housing affordability has change into the paramount situation in coverage. I feel for what we noticed within the final election cycle is that it’s the decisive situation truly, or will probably be in loads of elections. And I feel each events know this and candidates who’re operating for workplace additionally know this. So our prediction is that there might be loads of critical proposals introduced ahead. It’s, as is all the time the case in coverage, a few of them might be helpful and a few of them might not be that helpful on the finish of the day. We all know that to be able to actually handle housing affordability, it’s a must to construct extra provide, however that’s actually, actually laborious to do as a result of it’s managed by hundreds of native jurisdictions. An excellent portion of the inhabitants has a vested curiosity in not permitting there to be extra provide.So this can be a very difficult downside to unravel and it’s going to require actually progressive coverage options as a result of fairly frankly, nobody’s actually solved this downside. And it’s been an issue for a very long time. We all know that the nation is brief, many hundreds of thousands of housing items, however throughout the nation while you’re taking a look at election outcomes, you may see that this actually is the principle situation that’s on the minds of voters.

Tony:Nicely, I hope you’re proper. I do hope that we begin to see some wise insurance policies right here. I used to be getting interviewed the opposite day and I used to be saying, I really feel like the true laborious factor right here is that insurance policies that really assist should not rather well aligned with the election cycles in the US as a result of including provide takes years. We may begin now and it may take three years, it may take 5 years, it takes seven years. And politicians, each side of the aisle, they’re attempting to get reelected each two years or each 4 years. And so oftentimes I feel what frustrates me is the options that get probably the most traction are the short-term ones that may possibly make a dent within the brief run, however aren’t actually type of going after the provision situation. I’m curious in case you have any ideas on what’s some good insurance policies or any examples of insurance policies that would truly assist right here?As a result of I completely agree this can be a large downside for the nation and must be fastened.

Chen:To me, I feel there are native jurisdictions which have made some progress by making it simpler, taking away purple tape, possibly introducing ADUs or manufactured housing, all these various kinds of innovation to attempt to add some provide. It’s not a silver bullet and it’s not sufficient provide, though we shouldn’t low cost that there’s some progress being made. I feel to ensure that there to be a consolidated federal push, the issue is that the federal authorities is concerned within the housing market totally on the financing facet. It’s not on the provision facet. However the federal authorities has loads of sticks and carrots that it could actually use when speaking to native jurisdictions as a result of native governments get loads of funding from the federal authorities. I feel if there was a approach to make use of these carrots and sticks and ties and funding to outcomes in native jurisdictions, that may very well be a very promising resolution.I don’t know that this has been tried very a lot in a kind of significant approach, however that may be one thing to discover. Many of the proposals that get put ahead are on the demand facet. And as everyone knows, that’s not truly what is useful. We simply have to deal with what is definitely occurring on the provision facet.

Tony:Yeah, that makes loads of sense as a result of simply for example, demand facet insurance policies, if you happen to subsidize consumers otherwise you decrease mortgage charges or to determine a way to assist folks purchase, that may be useful for a minute, however then it simply pushes the value of properties up and you continue to have the identical long-term structural affordability challenges, proper?

Chen:Precisely. It makes the issue truly worse in the long term. It’s very myopic and it’s actually actually the very last thing that we want. I usually do, after I’m fascinated about housing coverage and the affordability situation, we’ve to take our medication. You may’t have your cake and eat it on the identical time. Sooner or later, it’s a must to take your medication. And I feel that’s the actually laborious half as a result of nobody actually does as a result of most individuals who personal properties, nearly all of their wealth is of their dwelling.

Tony:So it’s laborious. Yeah, I get that. Individuals need extra affordability with out making their dwelling go down in worth. That could be a difficult factor to drag off. I’ve stated this on the present a number of instances. I like your saying, take your medication. We’re in an unhealthy place within the housing market, and to get again to well being, there’s going to be some ache someplace. You don’t get a magic redo. And so I personally assume the gradual, you guys are calling the nice reset or name the nice stall, I feel that’s type of steadiness personally. If we are able to add extra provide regularly, if wages can go up, this can be a tolerable approach for affordability to get restored with out the underside falling out of the market and householders shedding a ton of fairness and wealth. And so I’m inspired by among the market dynamics, however I do assume the coverage factor remains to be the lacking piece.There’s no coherent coverage from anybody. I’m not blaming one social gathering or the opposite. There isn’t any coherent coverage from anybody about how we’re going to do higher.

Chen:Yeah. And it’s an extremely difficult downside to unravel.

Tony:All proper, let’s transfer on to our seventh prediction. What do you bought?

Chen:So our sum of the prediction is that extra folks will refi and rework. So after we take into consideration refi, I feel we’re fascinated about it in two other ways. One is just that over the previous couple of years, truly lots of people have purchased properties at actually excessive mortgage charges. So proper now about 20% of people that have a mortgage have a fee above 6%. In order charges fall into that beneath sixes, you even have a wholesome quantity of people that might be within the cash for a refi. So we do anticipate that refi quantity will improve about 30% subsequent yr. Oh, wow. So it’s off a really small base, so we’ve to do not forget that. However that’s significant as a result of 6.3% mortgage charges sounds fairly excessive. However if you happen to do not forget that we had been at 6.8%, then 6.8%, then I feel this yr was 6.6% in all probability common for the yr.We’re coming down very, very slowly and it’s sufficient of a change that you’ll have people who find themselves going to be within the cash for a refi. The opposite is simply that, as everyone knows, lots of people have loads of fairness of their properties, however they’re additionally nonetheless caught. They will’t afford to maneuver on to an even bigger home. So loads of them in all probability will begin to, in the event that they haven’t already, faucet into that dwelling fairness. I feel renovation will proceed to be a scorching subject the place individuals are going to be attempting to make the house that they’ve work for them.

Tony:Let’s preserve shifting. Chen, what’s prediction quantity eight?

Chen:So prediction quantity eight is about totally different areas of the nation. So we expect that the markets which might be going to be scorching in 2026 are actually loads of these suburbs round New York Metropolis that proper now are a few of our strongest markets. Additionally, among the metros within the Midwest, that are among the many extra inexpensive locations. On the flip facet, we expect that the locations that we’re actually seeing which might be amongst our weaker markets within the Sunbelt in Florida and Texas, these are going to proceed to be the weaker markets in 2026. So there may be this again to workplace return to workplace development that’s simply persevering with to occur. It’s, I feel, going to be extra of a development in a weaker housing market as a result of employers simply have extra of the higher hand. Proper now, people who find themselves searching for jobs are having a very tough time discovering jobs.So after they say three days is now 4 days, 4 days is now 5 days, otherwise you simply should … I feel there’s going to be extra of that taking place, however nonetheless some folks will stay hybrid. So not everybody’s going to be trying to transfer to Manhattan, however lots of people are going to be trying to transfer to Lengthy Island and New Jersey or Westchester. And so these are the markets which might be sellers markets, although a lot of the nation is made up of purchaser’s markets at this level.

Tony:And the way do you see the unfold right here? Over the past couple years, we’ve seen dramatic variations. Should you checked out 24, 25, there are markets like Milwaukee had been up seven, 8%, there’s Austin down 78%. That was a fairly large unfold between the highest and backside performing markets. Do you see that consolidating a bit of bit?

Chen:Sure. I imply, there are locations, particularly in Florida and Texas, these are your weakest markets proper now. While you examine them to what’s occurring on Lengthy Island, they’re worlds aside proper now. However what we’re persevering with to see in locations like Florida and Texas is that loads of these metros have 100, 150, typically 200% extra sellers than there are consumers.

Tony:Oh my

Chen:God. And as I used to be saying, that metric tends to be forward-looking by about six months. In order that implies that in all probability over the subsequent six months to a yr, if we proceed to see this unfold between consumers and sellers being so large, these markets are going to proceed to be fairly weak.

Tony:And what in regards to the hotter markets? Is that this modest progress, two, 3%, or one thing greater than

Chen:That? It appears like these markets, if something, are literally heating up a bit of bit. Not a ton. Demand is type of gradual on the whole.That’s an overarching factor in all places, but it surely’s nonetheless, comparatively talking, they appear to be heating up. And loads of these markets like Boston or Lengthy Island round New York Metropolis, these are locations the place you’re nonetheless sustaining a wholesome distance the place there’s extra consumers than sellers. And in order that feels prefer it’s one thing to maintain the value progress that we’re seeing.

Tony:Nicely, this might be an fascinating one to observe as a result of the market is … We speak on the present on a regular basis in regards to the nationwide market, however clearly as Chen simply identified, we’ve very totally different markets. And as an investor or house owner, it’s good to be taking a look at what’s happening in your particular person market to formulate your technique. All proper, let’s go to our ninth prediction. We’re flying via these. Which one’s that, Jen?

Chen:It’s about local weather migration. So we expect that that is going to be extra of an area story than a cross-metro story in 2026. So we all know that with local weather change, that this has change into extra on the minds of consumers. So individuals are being attentive to local weather knowledge after they see it on actual property portals. We all know that insurance coverage has change into an actual situation relating to affordability within the housing market. However when consumers are fascinated about the place to dwell, they’ve so many various points that they should cope with. They consider the place’s your loved ones? The place are the roles? So as a substitute of claiming folks aren’t going to be dwelling in Florida, possibly they must be in Florida for another motive. They is perhaps fascinated about, I have to dwell on this a part of the town quite than this different a part of the town, which is perhaps extra vulnerable to catastrophe danger.So I feel that feels, I feel, extra lifelike for dwelling consumers who should cope with quite a lot of various factors after they’re fascinated about the place to purchase a home.

Tony:How do you measure that? How are you aware individuals are … Should you see somebody transfer inside a metropolis, how are you aware it’s due to local weather danger?

Chen:I feel one actually great way to do that, and it’s laborious to have all the information in place to be able to actually do that evaluation properly, is to take a look at insurance coverage prices as a result of actually when speaking about local weather danger, it’s manifested via insurance coverage prices. So I feel if you happen to had been ready to take a look at insurance coverage prices after which tie that to housing market exercise, and we’ve a fairly good measure of demand within the housing market proper now via our consumers and sellers metric, that would enable you to to see this relationship clearly even inside a broader metro space, I feel.

Tony:And I’m curious, you stated you see this occurring simply in 2026. Do you assume there may be potential for cross-metro migration sooner or later or do you not have that info?

Chen:I feel if you happen to’re considering additional out while you’re fascinated about catastrophe danger or insurance coverage prices, that is, I feel, one lingering large danger for the housing market. It’s a bit of bit laborious to know precisely the place it goes many, a few years from now although. I feel it actually is determined by what we truly see occurring in insurance coverage markets, what mortgage firms resolve to do by way of fascinated about the dangers and who’s proudly owning the danger for the properties which might be mortgaged and have this catastrophe danger. So it’s a bit of bit more durable to see, however actually I feel it wouldn’t be out of the query for there to be a cross-metro migration.

Tony:Thanks. All proper, we’ve two extra predictions to go. What’s quantity 10?

Chen:So quantity 10 is actually in regards to the business. We expect that with so many MLSs on the market, the Nationwide Affiliation of Realtors goes to only take a bit of little bit of a step again, let the MLSs set extra of their very own guidelines. That is one thing that’s actually already beginning to occur. So it’s extra of a continuation prediction than a change. And NAR is actually going to, for its half, truly spend extra time on advocacy as a substitute.

Tony:Oh, okay. Attention-grabbing. Do you assume it’s simply given loads of challenges NAR has confronted within the final couple years, they type of have to select and select the place they’re going to spend their vitality?

Chen:Sure, I feel so. I feel it is sensible as a continuation of the turmoil within the business that we’ve seen over these previous few years.

Tony:I feel that is sensible, simply being an informal observer of how a lot … Yeah, such as you stated, there’s been loads of turmoil within the business. In order that brings us to our final prediction, quantity 11. What do you bought?

Chen:Nicely, quantity 11 is about everybody’s favourite subject, AI. Can’t

Tony:Escape AI, proper? Sure, received to speak. I can’t undergo a podcast with out speaking about AI.

Chen:After all. Yeah. So 11 to prediction is that AI will change into an actual property matchmaker. We’re already beginning to see this. AI is infiltrating principally each side of our lives. We expect that AI is actually more and more going to assist folks resolve the place to dwell, which properties to purchase. It’s simply going to begin to play an even bigger function. Redfin has conversational search now on our web site. We’ve seen that loads of the customers who’re utilizing it are actually proud of the outcomes as a result of it implies that as a substitute of going via the search filters, you may have a dialog and describe what you need in your house search. And that’s very interesting to lots of people. Persons are additionally going to make use of AI to only do analysis and look into which cities or which cities have the traits that our household is searching for. So that is nonetheless know-how that’s very a lot in its early levels, although it looks as if it’s dominating the information on a regular basis.However over the subsequent few years, it’s laborious to think about that AI wouldn’t play a a lot larger function in actual property search.

Tony:I feel so too. I feel the search half actually makes loads of sense. That appears proper up AI, Zali. I’ve seen some predictions that individuals are saying they’re going to assist negotiations or coordinate transactions. What do you concentrate on that facet of issues?

Chen:That appears like if that occurs, it must be additional down the street. As a result of while you deliver AI into a task like that, I feel there’s additionally a little bit of a belief situation the place folks … While you’re fascinated about what’s the distinction between AI and a human, most people will in all probability say, “Nicely, I belief one other human greater than I belief AI.” Like I used to be saying, the know-how remains to be in its early days. There’s a lot for us to study it proper now. So the search part appears like the plain place the place it could actually actually make a constructive change proper now, however a number of years down the street, who is aware of?

Tony:I agree with you. Lengthy-term, in all probability going to disrupt all the pieces. However proper now, I feel lots of people are kind of saying AI can do issues that may’t but, at the very least not in a dependable approach. However I feel search, analysis, gathering knowledge, these sorts of issues it’s already fairly good at. And so this makes loads of sense to me. All proper. Nicely, thanks a lot, Chen, for being right here. It is a lot of enjoyable. It’s all the time enjoyable speaking via these predictions and seeing how they play out via the remainder of the yr. Thanks for being right here and for all of the wonderful analysis you and your workforce at Redfin put out. We’re all the time speaking about your work right here on On the Market.

Chen:Nicely, thanks a lot. It’s all the time enjoyable approaching right here, so thanks for having us.

Tony:Completely. And thanks all a lot for listening to this episode of On The Market. We’ll see you subsequent time. I