BiggerPockets Real Estate Podcast

Episode: 2026 Home Price Predictions: The Correction Continues?
Host: Dave Meyer
Date: December 8, 2025

Episode Overview

In this annual predictions episode, Dave Meyer analyzes where U.S. home prices and the broader real estate market are likely headed in 2026. Drawing on recent trends, economic data, and forecasting models, Dave discusses whether the recent "great stall" in home prices will persist, worsen, or pivot into a new phase—outlining the probabilities and key variables that will shape next year's market. Investors are guided through both actionable strategies and a mindset for navigating uncertainty.

Key Discussion Points & Insights

1. The Challenge of Real Estate Forecasting (00:27–03:15)

• Dave highlights the complexity behind predicting the housing market, citing countless variables like demographics, immigration, cultural shifts, and the much-discussed "lock-in effect."
• Main Variable: Affordability is flagged as the foundational driver for 2026, determined by:
  • Home Prices
  • Mortgage Rates
  • Wages

Quote:
"Affordability is the number one variable driving the market these days." — Dave Meyer (02:08)

2. Breaking Down Affordability (03:16–06:33)

• Mortgage Rates:
  • May decrease slightly next year but won’t drop enough to fundamentally alter affordability or spark a major surge in demand.
  • Quote:
    "Although I think [rates] could come down a little on average next year, I don't think they're going to move that much." — Dave Meyer (04:01)
• Wages:
  • Positive real wage growth since 2022 but likely to slow in 2026 as the job market weakens; wage growth affects affordability, but only over longer timelines.
• Home Prices:
  • The lever most likely to move in 2026, as rates and wage growth provide limited relief.

3. The Base Case: The Great Stall (06:34–13:38)

• Home Prices Forecast:
  • Nominal home prices likely flat or modestly down: between –4% and +2% for 2026, with Dave leaning toward a –1% to –2% outcome.
  • Main consensus among professional forecasters (e.g., Zillow): Slightly positive or flat—so no meaningful appreciation.
  • Even if nominal prices rise, real (inflation-adjusted) prices will likely fall.

Quote:
"What almost every forecast that I believe in...all of them agree that real prices are going to be negative." — Dave Meyer (10:10)

Key Takeaway:
Investors should not count on appreciation in 2026—underwrite deals assuming flat or negative price movement.

4. Alternative Scenarios: X-Factors for 2026 (13:39–21:39)

a. The Upside Case: Quantitative Easing and a "Melt Up" (13:39–18:41)

• Game-Changer: Federal Reserve (Fed) initiates quantitative easing (QE) to aggressively lower mortgage rates (potentially to the low/mid-5% range or even lower).
• Trigger: Most likely window starts in May 2026, when a new Fed chair (potentially Trump-appointed) could take office.
• Effects of QE:
  • Could increase both demand and supply, as the "lock-in effect" dissipates.
  • Upward pressure on prices, but not a boom like 2020–2021.
  • Transaction volume, not price, would be the biggest winner.
• Probability: 30%

Quote:
"The big question for 2026...is will there be quantitative easing? And frankly, I think the chances of it happening are going up like every single week right now." — Dave Meyer (16:20)

b. The Downside Case: Stubborn Inflation and High Rates (18:42–21:39)

• Risk Factors: Stubborn or rising inflation, mortgage rates moving up, shock events, or a spike in unemployment.
• Crash Probability: A true crash (>10% price decline) very unlikely; moderate declines (–5% to –10%) possible in a "black swan" scenario (estimated 10% likelihood).

Quote:
"What takes a correction to a crash is when homeowners can no longer afford their mortgages and they are forced to put their homes on the market to avoid foreclosure...There is no evidence that a crash is likely at this point." — Dave Meyer (20:36)

5. Strategies for Investors in 2026 (25:20–31:30)

• Plan for the Base Case, Stay Flexible:
  Focus on scenario planning rather than paralysis by uncertainty.
• Buy Great Assets Conservatively:
  • Only purchase properties you’d want to hold for 5–10 years.
  • Buy at a discount, with value-add potential, and under conservative assumptions.
  • Ensure cash flow positive within the first year (after stabilization).
• Adjust Mindset on Returns:
  • Do not assume appreciation or significant rent growth.
  • Returns should primarily come from cash flow, tax benefits, and amortization.
• Why Not Wait?
  • Waiting risks missing out if the upside scenario materializes.
  • Long-term market participation is more valuable than perfectly timing an entry.

Quote:
"If you use tactics like buying deep or value-add investing, you can mitigate risk... By being patient, by being picky, by having conservative estimates...you can still find great deals." — Dave Meyer (27:15, 30:36)

Key Principle:
"The value of real estate is being in the market for a long time." — Dave Meyer (30:49)

Notable Quotes & Memorable Moments

• "Affordability is the number one variable driving the market these days."
  — Dave Meyer (02:08)
• "Home prices in 2026 are going to be between –4% and +2%. You could call this flat if you want. I am personally leaning more towards the negative side right now."
  — Dave Meyer (06:50)
• "You should not assume you are going to get appreciation in 2026."
  — Dave Meyer (08:31)
• "What almost every forecast...all of them agree that real prices are going to be negative."
  — Dave Meyer (10:10)
• "The big question for 2026...is will there be quantitative easing? And frankly, I think the chances...are going up like every single week right now."
  — Dave Meyer (16:20)
• "If you can't get to positive cash flow after stabilization, do not buy it. I know some people say appreciation is more important. I don't think so in this market."
  — Dave Meyer (27:41)
• "The value of real estate is being in the market for a long time."
  — Dave Meyer (30:49)

Timestamps for Key Segments

• 00:27: Dave introduces the annual predictions episode and outlines the importance of affordability.
• 03:16: Breakdown of the three main affordability factors.
• 06:34: Base case forecast: "The Great Stall."
• 13:39: Analysis of upside (quantitative easing) and downside (inflation, crash risk) scenarios.
• 25:20: Actionable strategies for investors facing an uncertain 2026.
• 30:49: Closings thoughts on long-term investing philosophy.

Conclusion

Dave Meyer forecasts a stagnant or slightly declining housing market for 2026, stressing affordability as the central driver. Investors are advised to plan for stagnation, buy conservatively, and focus on cash flow—while staying alert to a potential "melt up" should monetary policy unexpectedly shift. Above all, a long-term perspective and adaptability will be critical for success in the uncertain year ahead.