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The housing market is weakening. And that sounds scary, doesn't it? But a weakening housing market can actually mean better buying opportunities than we've seen in years. But to find the best deals in this kind of market, you need to understand why price growth is slowing and whether that's likely to continue or if you're buying at the bottom right now. So today I'm going to share my analysis to help you answer that question for yourself. This is the biggerpockets October 2025 housing market foreign I'm Dave Meyer, head of real estate investing at BiggerPockets. Welcome to our October 2025 housing market update. In today's episode, we're going to do a deep dive on home prices because there's more happening than you'd think from just looking at those top line national price trends. Then we're going to look at inventory and we'll analyze some rent trends and see where those are pointing as we head towards 2026. And of course, like every month, I'll end this market update with my own opinions on where the market is heading next and the actionable steps investors can take right now to align their own strategies with the best opportunities available. Let's get into it. First up, we're going to do this deep dive on housing prices and we're going to go a little bit deeper than we normally go on housing prices because there is more than meets the eye right now. People, when they're talking about home prices, they tend to look at something called nominal home prices. When you hear the word nominal, that just means not adjusted for inflation. And this is useful. There's nothing wrong with looking at prices this way. It's the price that you probably hear. It's the price that you actually write a check for when you buy something. It's the price you see on Zillow or redfin or realtor.com but it is not the only way that you can look at housing prices. There is another way to look at it that's called quote, unquote, real price prices. And real prices are adjusted for inflation. And although it's maybe not the most intuitive thing or the thing that you hear about most, it's something you absolutely should be paying attention to right now because it really gives us insight into what's happening in the housing market, where growth is right now and where it might go in the future. And as investors, those are critically important data points that we need to make informed decisions about our portfolios. So we're going to talk about this and I just Want everyone to remember nominal means not inflation adjusted. That's the price you see on paper. Real means inflation adjusted prices, which I'll explain a little bit more in just a minute. When you look at nominal prices, those are actually still up right now, depending on who you ask. If you look at the case Shiller, they're up about 1.2%. I think Redfin has it at 2%, Zillow has it about flat. So when you look at those nominal prices, like it's still doing okay. Now if you want to get really nerdy about it and seasonally adjust that data, you would see that nominal home prices are down about 1% off their all time highs, which was back in February of 2025. So given everything that's going on, housing market still doing okay. Like that's not exciting, exceptional growth. But we are three and a half years into a very aggressive rate tightening cycle. Affordability is pretty low right now. And so given all of that, to see nominal home prices be somewhat flat year over year, that's actually pretty good. But when you look at housing in that other way, when you look at it in inflation adjusted real terms, the story is different. It's more different than you actually might imagine. Rather than just being a little bit off their peak right now, prices in real terms are about 3% below their peak, which actually happened back in 2022, 38 months ago to be exact. So if you think about it in that way, that it's been 38 months and prices have come down a little bit, I mean, 3% correction, given how fast things grew during the pandemic is not crazy. But when you look at it in this real terms, you actually see that the housing market has already been somewhat flat for the last three years. And that's happened even as you've seen the prices on paper go up year after year after year, even though that growth rate has been slowing down. And I think this distinction is really important for a couple of reasons. First and foremost, as an investor, I really care about whether my home price growth is at least beating inflation. Ideally it is beating inflation. You don't want to make an investment in an asset that is going to appreciate lower than the pace of inflation. Because when you calculate then your quote unquote real return, it's actually negative, right? If you were to buy a property that went up 1% nominally, and then you subtract the 3% inflation we're at, you actually lost 2% on your return. Now that's for an all cash purchase leverage kind of changes that situation. But I'm just trying to explain why this is really important. Because you as an investor want your property, your asset values to at least go up as quickly as inflation. And that's not happening right now with housing. The second reason this is really important is because I think real home prices help us understand where the housing market might go next and where we are in sort of a historical context. Because when you look at real home prices, it actually tells a very, very different story than nominal home prices. If I were to ask you to guess how much real home prices are up in terms of the pre crash level, you know, 2006, how much more would you say would be prices have exploded since then? Right. So in real inflation adjusted terms, how much is it up? Is it 50% higher? Is it double? Is it triple? It is actually 10%. Housing prices are only up when you adjust for inflation, 10% from the bubble period. If you compare to the low, you know, during the crash 2012, they're up a good amount, 60%, but still nothing close to what you see on paper. People point to home prices and say, oh my God, they have doubled, they've tripled in the last couple of decades. And that is true when you look at them nominally. But a lot of that price increase is actually just inflation. Other assets, other goods, other services have also risen at really rapid rates. And when you look at the last 19 years in inflation adjusted terms, how much have home prices grown? 10%. And this is actually normal. I know a lot of people make a lot about appreciation in the housing market and say, oh, you should invest for appreciation. But actually, if you look back decades, back to the 1970s, which is what I have good data for, if you look at that, what you actually see is the average appreciation rate in the United states is about three and a half percent, 3.4, 3.5%. The average inflation rate is about two and a half percent. And so when you look at appreciation in real estate, it's not actually all that much appreciation. You get about a one, one and a half percent quote, unquote, real return. The rest of it is just inflation. Now, I'm not knocking on appreciation because one of the best values, one of the most important reasons to invest in real estate is because it's a very valuable inflation hedge. And that is very important right now, in my opinion. So don't get me wrong. I'm just saying that if you want to look at home prices and how they grow compared to inflation, it's really not all that much. Historically Speaking, which is why I always advocate on the show for investing not just for appreciation, but, but for cash flow, for value add, opportunities for amortization, for tax benefits. Because appreciation might look good on paper, but when it comes to actual spending power and how much it actually improves your quality of life and contributes to financial freedom, it's not as much as people think it is. So that's why these things are important. But I also want to just explain why I'm telling you this. It's because in the next few years, I think it is very likely that we see real home prices coming, continue to stall out. And that is true, in my opinion, even if nominal prices increase, and this is something I want the BiggerPockets community to be aware of and to think about, is that even if you see prices up 1%, if inflation's at 3%, that is a negative real return. That means prices in reality are actually pretty stagnant right now. So there's a couple ways logistically this could happen. You could see nominal home prices go up a little bit like they are now, and inflation run a little hot, and that means real prices will be down. Or you might actually see both. You might see nominal home prices go down. That, that is personally, what I think is going to happen probably at least in the next six months, maybe in the next year or so, is that we'll see modest nominal price declines and we'll have inflation at 2 to 3%. And so real returns are probably going to be negative 4 to 6%. I'm just estimating right now. These are not official predictions, but you know, something like that, in the next year, we're, we might actually see that. And this is not a reason to panic. This stuff happens in the housing market. But it is pretty important to know, right, if your real return is negative. Right now, you should be thinking, okay, I need to change my real estate investing strategy based on that reality. And that's something we're going to get to later in this episode, is how do you adjust to this kind of market? Because you absolutely can and some would argue should invest in this kind of market because you get great assets at good prices. That. But you got to adjust how you do it, right? That should be evident to everyone, is that you invest differently in a correcting market like this than you do in one that's growing rapidly. Again, I just think that investing for appreciation, market appreciation, not forced appreciation, is a bad idea in my opinion. In today's market, the best comp that we have is the 1970s and what it shows is that during that period when you shot real home prices and accelerate a lot, it started to come down like we've seen here. And it took nearly seven years, it took six and a half years for real home prices to recover. Now we don't know if that's going to happen again, but six and a half years is not an unreasonable timeline. If you look at other Data during the 90s it took about 11 years for previous peak. So this can take a while, especially when we have really low affordability. And this is what I want everyone to remember is that even if nominal home prices grow a little bit, what you really want to look at if you're going to understand when the real big returns are going to come, when you get those outsized gains that real estate can offer you, it comes not when nominal home prices are going up, it comes when real home prices are going up. And in my opinion, that's probably not going to happen for at least this year and probably for a few years after that. That does not mean you cannot invest right now. I think there's very good arguments that you should invest right now because you're going to get assets at a discount. But but it does impact your strategy. You need to think differently about a market where real home prices are not growing. Then you need to think about a market where real home prices are growing. We're going to talk about that more later in this episode. But first let's talk about why this is happening in the first place. Because if you understand why it's happening, that's going to inform the things that you should do in your portfolio to mitigate any risk and take advantage of the opportunities that are going to come. But we got to take a quick break. We'll be right back. This week's bigger news is brought to you by the Fundrise Flagship Fund. 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