Housing Market Loses Steam, “National Buyer’s Market” Likely in 2026

Dave:We’re solely midway by means of October and it has already been a wild one for the housing market. We’ve received a authorities shutdown, we’ve received indicators of recession, we’ve received extra sellers leaping into the market, however are patrons biting? We’ll cowl this and extra on right now’s episode of On the Market. Hey everybody, welcome to On the Market. I’mDave Meyer. I’m simply getting my voice again after 4 wonderful days in Vegas at BP Con 2025. Hope a few of you have been there as a result of they’re all nice. Each BP Con has been enjoyable, however this one was particular. There was simply a tremendous power this 12 months. I believe in case you have been there you’ll know that and I used to be there after all, however so have been the remainder of our panelists. Henry did an superior workshop on deal discovering, however he additionally misplaced to me in golf simply barely, which was very enjoyable.Kathy participated in a pitch slam for offers and likewise single handedly began a 1500 particular person dance celebration on the closing celebration. Jane did an incredible session on flipping techniques and possibly closed 5 offers whereas on stage and I gave a keynote concerning the realities of investing in 2025 and received completely wrecked taking part in craps. It was all glorious. I had the time of my life and I can’t await subsequent 12 months, which occurs to be in Orlando. We introduced it the final day of the convention, so in case you didn’t make it this 12 months, positively take a look at subsequent 12 months’s convention. I promise you’ll have enjoyable. By the best way, earlier than we get into right now’s episode, I needed to say that we’re serious about doing extra kind of small and native occasions for BiggerPockets within the coming 12 months, so I’d like to know within the feedback if that’s one thing that you just’re concerned about and what format you’d need.See. Would you like meetups? Would you like shows, networking workshops? What would you worth most if available on the market got here and visited a city or metropolis close to you? Tell us so we will plan extra neighborhood occasions and get togethers in 2026. Alright, now let’s discuss all of these items that has been occurring since BP Con began. There’s rather a lot occurring after all, however right now we’re going to deal with a pair issues. We’ll have a look at new housing market knowledge after all, and the way actually the market is reacting to the marginally decrease mortgage charges that we’re seeing. We can even discuss how the federal government shutdown is definitely impacting the housing market possibly greater than individuals notice, and we’ll additionally discuss how there are indicators that the financial system on the whole is softening. Let’s soar in. First up, let’s discuss housing costs as a result of we simply received the case Schiller Nationwide Index for July and what it confirmed is that house costs nationally are up 1.7% 12 months over 12 months, so that they’re nonetheless up, however they’re displaying steady indicators of softening as a result of simply in June, the month earlier than we had them at 1.9%, and that is principally only a continuation of the development that we’ve seen.We’ve really seen month over month house costs fall 5 consecutive months and simply as a reminder, again in January, the 12 months over 12 months quantity, which is now 1.7% was at 4.2% and February is 3.9%, March 3.4, April 2.7, so it’s principally simply been trending downwards nearer and nearer to flat all year long. Now, I personally have been saying this for some time now, however simply as a reminder, I’ve been saying that I do assume that we’re in a correction as a result of the essential factor to recollect concerning the case Schiller index, which is the information we’re speaking about right now and there’s tons of various value knowledge, they’re all type of displaying the identical factor, however the factor that’s distinctive concerning the Case Schiller index is that it lags a few months. We’re in October, we’re speaking about July knowledge, and so in case you extrapolate out this development the place we have been beginning the 12 months at 4.2%, now we’re at 1.7%, we’re in all probability going to be very near flat by the tip of the 12 months, and that’s not simply inferring from the prevailing knowledge that we have already got.Like I stated, there are different knowledge sources you could have a look at which can be a bit bit extra present and people additionally present simply persevering with indicators of the housing market cooling. A brand new report final week got here out from Redfin and confirmed that new listings of US houses rose 2.3% 12 months over 12 months, so that is simply individuals who select to place their property available on the market. That’s up 12 months over 12 months and it’s not up loopy 2.3%, nevertheless it’s the most important enhance we’ve seen in over three months. Truly over the summer season we noticed fewer and fewer individuals selecting to record their house available on the market. I believe that’s in all probability as a result of charges have been nonetheless excessive and we’re coming into this correction and sellers have been simply considering, you understand what? I’m not going to promote into this hostile market. I’m simply going to attend it out. However now that we’re in the course of October, I’m recording this on October tenth and simply a few weeks in the past, the fed minimize charges charges are about 6.35% as of right now, however they did dip a bit bit nearer to six.1, 6.2, and so I believe what occurred is a whole lot of sellers listed their house in September hoping that these decrease charges would herald extra patrons that weren’t actually materializing over the summer season, however sadly that’s not what’s taking place.In reality, pending gross sales, the variety of contracts principally which have been formulated over the past couple of weeks really fell to 1.3% from a 12 months in the past, so not loopy, however once more, it’s the most important decline in 5 months. We additionally noticed that days on market, the common time it takes for a property that will get listed to promote is as much as 48 days, which is every week longer than it was final 12 months. It’s additionally longest it’s been since principally earlier than the pandemic since September of 2019. And so while you have a look at all these items collectively, in case you have a look at the case Schiller knowledge that I began off with and you progress onto this Redfin knowledge, what you see is a market that’s trending nationally in the direction of principally a flat impartial market and it might flip into extra of a purchaser’s market the place costs are taking place on a nationwide degree.I really assume at this level that’s in all probability fairly doubtless. I haven’t but made my predictions for 2026, however in case you bear in mind my predictions for 2025 is that we’d be fairly near flat and it’s wanting like that one’s going to be spot on. I do know that may be scary for individuals within the business like brokers, lenders or traders, however I simply need to remind everybody that that is okay. That is regular. That is a part of a standard housing cycle and really there are some advantages to this. If you’re a purchaser proper now, it signifies that there’s extra stock so that you can select from and you will have extra negotiating energy while you’re speaking to sellers as a result of they’re going to be competing for a restricted pool of patrons. The second factor is that issues are going to be on sale. You would possibly be capable of really get properties for cheaper than you may have over the past couple of years.And the third factor that’s I believe extraordinarily essential for the housing market is that affordability is definitely getting higher within the housing market. I do know it’s not rather a lot higher, however in case you see that costs are comparatively flat, they’ve been, wages are going up, they’ve been, and mortgage charges have come down even just a bit bit, that signifies that we’re seeing minor enhancements to affordability and we’ve got an extended technique to go, don’t get me mistaken, however we received to cease someplace. We received to see the tide flip and it has a bit bit, and I do know that’s not nice for on paper when everybody’s seeing the fairness worth of their houses, however if you wish to get again to a housing market that’s wholesome, which I definitely do, I believe that is really one thing that’s comparatively optimistic. Personally, I’m okay with comparatively flat costs if it signifies that we get extra affordability again into the housing market long run as a result of that’s going to get us again to extra predictable investing situations and residential shopping for situations, which is actually what I believe all of us want. In order that’s the replace on the housing market that we’ve had over the past couple of weeks. We received to take a fast break, however after we come again, I’m going to speak about how the federal government shutdown is definitely impacting the housing market in methods you may not notice. We’ll be proper again.Welcome again to On the Market, Dave Meyer right here speaking about latest updates out there simply gave you my housing market knowledge. Now shifting on to authorities shut down. I do know that these items occur and typically you’re unaffected by it and I believe in all probability for the common American who’s not trying to make a significant buy or doesn’t work within the business or is after all not a authorities worker who’s immediately impacted by the shutdowns and furloughs, you would possibly not likely really feel the influence of the shutdown, however there may be some knowledge that exhibits that the housing market is being impacted. First, I’ll simply share with you a survey that Redfin simply did with Ipsos, and it exhibits that 17% of Individuals are saying that they’re delaying a significant buy like buying a house or a automotive. 7% are saying they’re straight up canceling plans to make a significant buy, after which really 16% stated that they could make a significant buy prior to anticipated.In order that’s a bit bit conflicting, however I simply need to name out that principally 24% of Individuals are saying that they’re going to cancel or they’ll delay making main purchases like shopping for a house, and that kind of is smart as a result of while you have a look at how the shutdown is taking part in out, pay has been suspended for about 2 million federal staff. There are three quarters of 1,000,700 and 50,000 who’ve been furloughed and the remainder are anticipated to work with out compensation. Usually, I believe throughout earlier shutdowns we’ve seen that these individuals will get again pay as soon as the federal government reopens, however the White Home has stated that they’re contemplating not paying furloughed federal staff for the time they didn’t work in the course of the shutdown. So all of these items have actually led to a whole lot of uncertainty for these federal staff, and I’m positive there are different individuals who aren’t federal staff who’re simply wanting on the chaos in Washington proper now and are saying they don’t need to make a significant buy.Given all this uncertainty, there’s additionally a ton of different Individuals who work for personal corporations, however they don’t receives a commission. They don’t go to work as a result of their work depends on authorities tasks. So all these items are combining to influence the housing market very immediately. That’s the very first thing. There’s a second factor although that I’m undecided everybody has seen, however when the federal government shut down on October 1st, the Nationwide Flood Insurance coverage Program lapsed which means that the federal government sponsored flood insurance coverage is not issuing new insurance policies, they aren’t doing renewals. You probably have an present coverage that’s ongoing that’s not being canceled, however no new insurance policies, no renewals, and that’s pushing individuals into the non-public marketplace for flood insurance coverage, which is far, far more costly. I used to be simply studying an article that confirmed a lady in Florida who had beforehand had a quote for $4,000 for annual flood insurance coverage for 2 bed room ranch already fairly costly.Now, the 2 quotes she received for personal carriers have been $9,000 and $12,000. So for one, the cheaper yet another than double for the dearer one, it was triple the federal government program. Due to this elevated value and uncertainty, NIR is estimating that that is going to forestall or delay 1400 closings a day throughout the nation. Now, on a nationwide degree, after all, 1400 closing a day might be not going to essentially present up within the knowledge, however what’s attention-grabbing and unlucky about that is that the areas of the nation which can be in these floodplains, and it’s really greater than you consider 8% of all properties within the US are in areas that require this sort of flood insurance coverage from most lenders, however most of these 8% of properties are in states which can be on the Gulf Coast, proper? You see Florida, Alabama, Louisiana, Texas, and these are areas of the nation which can be already getting hit by a housing correction, and so while you mix these items collectively, proper, while you have a look at the correction that’s already occurring, it’s fairly dangerous in Florida proper now in Louisiana, different locations are seeing extra modest corrections, nevertheless it’s positively going to chill the market additional, 1400 gross sales in Florida proper now is definitely fairly vital, and the sellers who’ve had their properties listed for months and are actually keen to shut and really promote their houses, these delays and these cancellations are going to be significantly painful.Hopefully, the federal government will attain an settlement quickly and the Nationwide Flood Insurance coverage Program will restart issuing insurance policies and renewals, however within the meantime, it might get a bit ugly there, particularly if you have to get non-public insurance coverage at the same time as a cease hole in the intervening time whereas the federal government is shut down. Now, I used to be studying that in some situations it’s potential for present owners to assign their flood insurance coverage to a purchaser. So in case you’re one in all these people who find themselves in a state of affairs the place the customer’s backing out or eager to delay as a result of they’ll’t get flood insurance coverage, I’d advocate wanting into this, name your supplier and see in case you can assign it over as a result of that could be a approach you could really get by means of this shutdown and really shut on a property. You may do that in case you’re a purchaser too. If you’re a purchaser and also you need to really shut on these properties, see if you may get the vendor to assign you their insurance coverage program.Once more, it doesn’t work in all situations, not all carriers are going to try this, nevertheless it’s price exploring in case you occur to be on this unlucky circumstance proper now. So we’ll have to simply see how this performs out, however as of now, these are the 2 most important methods the shutdown is impacting the housing market. We received to take yet another fast break, however after we come again, I need to discuss simply a few knowledge units I’ve been lately that present extra indicators of financial weak point even exterior of the labor knowledge that we’re getting and what this would possibly imply for the market. We’ll be proper again.Welcome again to On the Market. I’m Dave Meyer. Now let’s simply discuss a pair indicators of financial weak point. Now, I absolutely admit the financial system is completely polarized. There are indicators that the financial system is powerful. We’re seeing the inventory market close to all time highs. Gold is actually excessive, which you would argue shouldn’t be an indication of financial power, however asset costs are excessive. Bitcoin is close to all time excessive too. Some individuals assume that’s due to its hedge. Some individuals would possibly say that’s financial power, however once more, there are all kinds of blended indicators within the financial system proper now, however a pair issues got here out this week, the week of October sixth that simply present a pair issues that I believe are a bit regarding when it comes to the general financial system, and I simply need to discuss them and the way they could influence the housing market and financial system on the whole.The primary up is automotive loans. Now, I’ve stated on the present a number of occasions, and it’s nonetheless true, the common American house purchaser stays in good condition. We aren’t seeing huge upticks in foreclosures or delinquencies. They’re very minor for essentially the most half. They’re nicely beneath pre pandemic ranges. We do see some upticks in VA and FHA loans, however nothing at a regarding degree proper now. However while you’re wanting on the power of the financial system, you usually need to have a look at the standard of the debt that’s on the market as a result of what usually results in recessions is when individuals can not service their debt, they go bankrupt, they default. That causes these ripple results all through the financial system, so these are issues that you just all the time need to keep watch over. The automotive mortgage knowledge is getting just a bit bit worrisome. It’s not loopy or something like now, however what we’re seeing is that the portion of auto loans which can be 60 days or extra overdue which can be subprime hit a file of greater than 6%.That’s the highest they’ve been in any of the information that I’ve seen going again to 2000, and that features the monetary disaster once they peaked a bit bit beneath 5%. Now, it’s essential to notice that subprime auto loans should not an enormous portion of the market proper now, however prime loans, which is principally loans made to extra certified patrons are additionally going up. They’re under no circumstances time highs, however they’re kind of again close to pre pandemic ranges and so they’re on an upward trajectory, so each trending in that course. We additionally see that an estimated 1.75 million automobiles have been repossessed final 12 months. That’s the very best whole since 2009, and it appears to be like like automotive sellers are literally reducing their credit score requirements, which is one thing I all the time fear about having come into the financial system and the housing market in the course of the nice monetary disaster, I by no means like seeing lenders decrease their credit score high quality requirements, however we’re seeing proper now the proportion of recent automotive patrons with credit score scores beneath six 50, which is near subprime, was practically 14%.That’s one in seven individuals. It’s the very best it’s been in 9 years, and so it simply exhibits an general weakening of the American automotive proprietor, and I’m not tremendous involved about this proper now as a result of it’s nonetheless a comparatively small portion of the market, however these are tendencies that we must always be careful for after we’re evaluating the financial system. However there was one stat that I needed to share with you all. That is really insane. New automotive costs are simply, they’re wild proper now. The common month-to-month cost in america, the common for all individuals is greater than $750. That’s completely wild. That may be a loopy sum of money. That’s $9,000 in post-tax cash per 12 months going in the direction of the common automotive. No marvel persons are struggling to make these funds that’s so costly. Perhaps I’m simply previous and my expectations of what automotive funds must be is like $350, however man, that appears excessive and practically 20% of loans and leases, automotive funds are actually above a thousand {dollars} in month-to-month funds.That simply rubs me the mistaken approach. It simply makes me a bit bit involved. Once more, I’m not attempting to be alarmist, however that is one thing I’m positively going to maintain an eye fixed out, particularly amongst among the different knowledge that we’re seeing. Scholar mortgage delinquencies are up, we’re seeing bank card delinquencies up a bit bit, so that is simply including to the image that we’re seeing throughout the financial system proper now. For essentially the most half, American shoppers, their emotions concerning the financial system are down from a 12 months in the past, however they haven’t actually modified over the past couple of months. There’s this index of client sentiment. I talked about this rather a lot as a result of it may be an indicator of the place the financial system goes and what it’s displaying proper now could be that client sentiment was principally unchanged month over month. It really simply went down barely from September, 2025 to October, 2025, however actually huge decline 12 months over 12 months.So in October of 2024, the index was at 70. Now it’s at 55. That’s a 22% lower 12 months over 12 months, which is down rather a lot. We see the index of client expectations of the financial system dropping 31% 12 months over 12 months, so clearly Individuals in comparison with a 12 months in the past feeling worse concerning the financial system. Now, this examine is definitely put out by the College of Michigan, and so they put out this actually attention-grabbing chart that I assumed was type of fascinating and needed to share. It exhibits that sentiment and expectations for individuals who haven’t any inventory holdings are simply plummeting. In the meantime, individuals who have giant inventory holdings are literally beginning to really feel higher and higher concerning the financial system, so it simply continues to point out that in america proper now we’ve got kind of two totally different economies occurring. Folks on the very high of the earnings bracket are typically doing nicely.We’ve seen knowledge that exhibits that fifty% of spending within the financial system proper now are coming from the highest 20% of the market, and their expectations are fantastic. They’re feeling good concerning the financial system. In the meantime, different shoppers kind of within the decrease finish of this socioeconomic bracket, they’re not feeling good concerning the financial system, and that may very well be an indication that they’re going to pull again on spending much more within the coming months. So that is one other factor that we have to be careful for. Lastly, that is simply fast, however I really noticed this attention-grabbing knowledge on realtor.com that confirmed that 22 states, so practically half of all states are both in a recession or in the next threat of a recession. These are states, they’re actually simply unfold out all through the nation. You see some within the northeast, like in New England, you see some in the course of the nation, Wyoming, Montana, South Dakota, Illinois, a pair within the south in Mississippi and Georgia up within the Pacific Northwest in Washington and Oregon.They’re fairly unfold all through the nation besides the southwest of the nation. That appears to nonetheless be a vivid spot. Not all of them are rising. We see California, Nevada, Colorado, New Mexico. They’re kind of treading water. Similar factor with another states like Missouri, Tennessee, Ohio, New York, after which there are a whole lot of states which can be persevering with to develop. Texas, Florida, the Carolinas, Pennsylvania, North Dakota, Idaho, Utah, Arizona. All nonetheless persevering with to develop, nevertheless it does once more present that a whole lot of the nation, while you see all this complicated financial knowledge, it’s as a result of it’s all actually segmented. It depends upon what state you’re residing in. It depends upon the place on the earnings bracket you’re in. It depends upon how a lot inventory and gold and Bitcoin you personal, so if you’re feeling actually disconnected from the headlines that you just’re seeing, it is smart as a result of the headlines are broad generalizations and it’s actually arduous to make broad generalizations concerning the financial system proper now.It’s completely totally different relying on who you’re, the place you reside, what your job is, what sort of stuff you spend money on, and so simply do not forget that you bought to go a degree deeper within the knowledge. However I’m bringing this all up as a result of a few of this recession threat may very well be mirrored in mortgage charges going ahead. Once more, as you could know, when there may be threat of recession, that typically pushes down mortgage charges, which might deliver again some extra affordability to the housing market, but when that occurs, and the way a lot that occurs will largely rely on inflation knowledge, as a result of if inflation knowledge goes up, it should in all probability counteract this recession threat. Mortgage charges will keep the identical, but when inflation begins to degree out and we see extra of this recession threat, clearly nobody desires a recession, however the one silver lining of that could be barely decrease mortgage charges within the weeks or months to come back.That’s why I needed to deliver this up, and it’s one thing we’ll maintain an eye fixed out for right here available on the market. That’s my replace for right now, October 14th. Thanks all a lot for listening to this episode of On The Market. Don’t overlook, if you wish to see extra available on the market occasions in your native space, be certain to go away us a remark both on YouTube or Spotify. We’d love to listen to what you wish to see out of available on the market occasions. We’d like to see you in your native market. I believe it’d be a whole lot of enjoyable, however we simply need to determine what precisely that ought to seem like. Thanks once more for listening. I’m Dave Meyer. See you subsequent time.