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Housing in 2026: Home Prices and Rates Are in Flux. Time to Make Your Move?
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- [00:00]
Sean Pyles
The following is a paid sponsorship, not an endorsement by NerdWallet's editorial team. Today's episode is sponsored by Bilt. It's 2026 and if you are still paying rent without Bilt, it might be time for a change. BILT is the loyalty program for renters that rewards you for what is usually people's biggest monthly rent. With bilt, every rent payment earns you points that can be used towards flights, hotels, Lyft rides, Amazon.com purchases, and so much more. And here's something that I'm really excited about. Starting in February, BILT members can earn points on mortgage payments for the first time. Soon, you'll be able to get rewarded wherever you live and unlock exclusive benefits with more than 45,000 restaurants, fitness studios, pharmacies and other neighborhood partners. Personally, as a homeowner, I'm very excited about this news and I can't wait to use all of my points for a nice meal out with my partner. It's simple. With bilt, paying rent feels better because you can get more. And soon owning a home can feel better with BILT too. Earn rewards and get something back wherever you live. Join the loyalty program for renters at joinbuilt.com smartmoney that's J-O-I N B I L T.com smartmoney make sure to use our URL so they know we sent you.
- [01:10]
Podcast Host / Narrator
Why do growing businesses love working in Slack? Let's ask Christy at Ari Bikes.
- [01:15]
Abby Badek Doyle
Running things in Slack saves me so much time.
- [01:17]
Podcast Host / Narrator
AI summaries save 97 minutes per week. What say you, Rocks from Gosney?
- [01:22]
Ana Helhoski
Slack helps us build community.
- [01:24]
Abby Badek Doyle
It helps us build connection.
- [01:25]
Podcast Host / Narrator
Your partners, vendors and customers. Customers all in one place. Take us on home. Ashley from Caraway if we didn't have.
- [01:31]
Elizabeth Renter
Slack tomorrow, I would explode.
- [01:33]
Podcast Host / Narrator
Well, let's not let that happen. Visit slack.com podcast to get 50% off.
- [01:38]
Sean Pyles
Slack business plus, it's 2026. Do you think you'll be exploring any changes in your housing situation? If so, this episode is for you. Welcome to NerdWallet's Smart Money podcast, where you send us your money questions and we answer with the help of our genius nerds. I'm Sean Pyles. Later this episode, we'll be taking a look at some of the predictions for the housing market this year. But first, our weekly Money News Roundup, where we break down the latest in the world of finance to help you be smarter with your money. Our news colleague Ana Helhoski is here with us. Happy New Year, Ana.
- [02:16]
Ana Helhoski
Happy New Year, Sean. And I think it's pretty safe to say that we're all feeling reflective as the calendar turns over to 2026. So we're starting to think about what might be coming down the road in the now, not so distant future. And the future is often shaped by the past. I am hoping today that we can look briefly at some of the things that happened last year that may impact what we're going to see this year and get some context for all of it. And there's no better person to help us do that than Nerdwald's senior economist and friend of the show, Elizabeth Renter. Elizabeth, happy New Year to you and thanks for starting the year with us.
- [02:48]
Elizabeth Renter
Hey, thanks for having me, guys. And friend of the show, I really like that. I can't think of anywhere I'd rather be.
- [02:54]
Ana Helhoski
That's exactly what you are. So, first off, I'm hoping you can talk a little bit about what a standout moment in the economy last year was for you and what had the biggest economic ripple effects.
- [03:06]
Elizabeth Renter
So that's a really tough question because as we all know, 2025 was a crazy year when it came to impacts to the economy and potential impacts to the economy. But if I was to choose a single moment or event, it would sort of be the cluster that surrounded April and Liberation Day. So the announcement of the 10% universal tariffs, the reciprocal tariffs, and. And everything that happened relatedly to that after the fact. Right. Clawbacks of tariffs, changing policies. And the story is still unfolding both how it impacts inflation and what the ultimate policies are going to be. Some of them are in the Supreme Court as we speak. Those that were filed under the pretense of an economic emergency. So there's a lot going on with this topic, but it all started in April. What was the biggest one for you, Ana?
- [03:51]
Ana Helhoski
Yeah, I mean, as you mentioned several times, tariffs, I think trade policy changes are most obvious, and their effect on consumers, their effect on companies. You know, we saw a huge jump in business and consumer spending in the spring ahead of the tariffs going into effect. And now we're at a point where a lot of that inventory that was bought up in the spring is starting to wane, and we could end up seeing prices rise soon for all kinds of consumer goods. I also don't want to forget the effects of the government shutdown on federal workers and SNAP participants. It's not that far behind in my mind, not to mention how it impacted economic data collection and reports, as we saw and didn't see. And we could end up being headed for another, at least partial shutdown at the end of this month. But was there one economic moment in 2025 where you can look back and say that's when things really changed?
- [04:40]
Elizabeth Renter
Well, if you frame it by something that really changed in the year, I mean, again, there were multiple things, but it really felt like economic policy whiplash throughout the year. The one thing that stood out, as far as change goes, is when the Fed resumed cuts in September. So they held rates steady throughout the first half of the year. They were looking at the new administration coming in, the new potential policies and the impacts of those policies, and they thought holding steady was the way to go until September. That change, when they decided to cut again, really told me that they saw the risks to the labor market as rising relative to the risks to inflation, and that was significant.
- [05:18]
Ana Helhoski
Yeah. Let's dig in a little bit more about what happened with the labor market last year. It's not looking quite as tight as it once was.
- [05:25]
Elizabeth Renter
Yeah, just a few years ago, things were totally different. It was very dynamic. And when I say dynamic, I mean it was really good for workers. Right. We called it the Great Reshuffling. People were quitting their jobs and moving to greener pastures. And that couldn't be further. From what we see right now, the labor market has definitely chilled. Hiring rates and quits rates are low. People are staying in their current roles because they know the environment out there isn't really friendly to them. And that's true whether you're unemployed and seeking a job, or whether you would otherwise be upgrading your job, looking for one with better pay and better benefits. So it's a tough job market. It makes things even more difficult for the Fed right now as well.
- [06:04]
Ana Helhoski
So with all that table setting, what do you think you're gonna be watching this year in the labor market? Do you feel like we're on track to hold steady, or do you think that we're gonna keep weakening?
- [06:12]
Elizabeth Renter
That's a good question. I think what I'm going to be looking at specifically in the coming year is sort of what is causing the cooling right now, or what is the big contributor to the cooling in the labor market, and specifically what is caused by supply issues versus demand issues. So when about supply in the labor market, what you're really talking about is not having enough workers in the industries that need them. And so this is really impacted by new immigration policies and enforcement actions that we're seeing. The way this would show up in the data is hiring would be slowing and the unemployment rate Remaining relatively low. Now, demand side issues are going to look like businesses truly pulling back on hiring because business is weak, it costs too much to expand and hire, or they're just generally uncertain about the direction of the economy. What this looks like in the data is a rise in layoffs and rising unemployment. So currently the signals are that both of these factors are at play in the cooling of the labor market. But I look forward in the months ahead to getting a little more clarity on which one is the driving force.
- [07:14]
Ana Helhoski
Now turning to prices, did inflation behave the way that you expected in 2025?
- [07:19]
Elizabeth Renter
Not really. There were a couple of surprises, but they weren't really dramatic. Just a few things that didn't go the way I anticipated the would. Number one, core inflation stayed stickier with housing and services inflation really holding overall inflation higher for longer. I didn't anticipate this. And that sort of precipitated the Fed pausing cuts. In addition to all the policy things they were thinking about from December to September of this year, the other thing that didn't go the way that I thought it would was I anticipated faster pass through of tariffs. I thought we were going to see more quicker impact to inflation from the tariffs that were implemented.
- [07:56]
Ana Helhoski
You're going to hear a lot about tariffs this episode, but spoiler, spoiler. But can you talk a little bit more about how they played into inflation?
- [08:04]
Elizabeth Renter
So far, tariffs have had the most direct impact to consumers on finished imported goods. So think about the things that you buy directly from overseas or you buy off the shelf at retailers here that came straight from another country. So we're thinking about toys and electronics, those. We can already see price increases happening in the inflation data. Intermediate goods or products that are used here to build things domestically have also been impacted. But it's the producers, the factories that are feeling the brunt of this. So we'll continue to see those intermediate goods trickle into consumer inflation. But it's gonna happen a little bit at a time. And you know, it's important to remember that unlike other factors, tariffs are pretty unlikely to cause persistent inflation. What you're looking for here is for these price increases to hit the inflation data once and then cool off a bit.
- [08:57]
Ana Helhoski
It does seem like we haven't necessarily felt the full effects of tariffs yet. And it's also possible that the tariffs could be rescinded. Can you talk a little bit more about that landscape as far as tariffs go?
- [09:07]
Elizabeth Renter
We know the Supreme Court has a case on their desk right now. They're looking at the tariffs that were implemented under the International Emergency Economic Powers Act. And so I think we're expecting a decision on that fairly soon.
- [09:20]
Ana Helhoski
Yeah, the Supreme Court's taken that up, and that would affect every single reciprocal tariff that went into effect last year. So that's most of them. And the ruling should have a pretty big effect. It could result in businesses being owed an estimated $168 billion. It's really unclear what's going to happen next, but we should be getting a ruling as soon as this month. But I do want to point out that it's also possible that the Trump administration could use different avenues to enact new tariffs or try and reinstate the tariffs that they had already put out under two other trade acts that give the president some authority to take actions. And he's used some of those before, especially in his previous administration.
- [10:00]
Elizabeth Renter
So that's a big tbd. Right. We don't know what's going to happen. And the impacts of those tariffs remains to be seen. And then I'm also looking at, you know, the impact of current immigration policy, particularly on the labor market. Again, this speaks to the supply issues and labor supply. Certain industries are going to be noticeably suffering, and not just agriculture and manufacturing. We're talking about professional sectors where H1B delays are impacting the labor market overall as the months wear on. And we see how this impacts labor supply. This could mean really bad things for economic productivity and growth.
- [10:34]
Ana Helhoski
And you've mentioned before the Federal Reserve, do you think that the Fed's approach was effective in 2025 with the three rate cuts? And are we feeling those cuts yet?
- [10:42]
Elizabeth Renter
Well, the Fed was under considerable pressure last year. I mean, not only explicit political pressure, but the pressure to make decisions with a lack of clarity, a lack of clarity about where the were headed and how they could impact the economy, not to mention the data blackout that happened under the federal government shutdown. So are we feeling the impact of Fed rate cuts yet? Probably not. We know that it takes, quote, long and variable lags for monetary policy effects to hit the economy. So we'll likely be feeling the cuts not for potentially months down the road. And we may see another cut in 2026. Now, whether or not they will be effective, that's another big question mark. And that's going to remain a matter of discussion for years to come. I mean, there are still economic papers written about the response to the global financial crisis and the pandemic. So it remains to be seen.
- [11:31]
Ana Helhoski
And are there any global events shaping the U.S. economy this year that you want to point out?
- [11:36]
Elizabeth Renter
Well, yeah, I don't want to downplay the impact of tariffs and say we're just looking at inflation and prices. Right? We're talking about global trade policy and not just inflation and prices, but the second and third order effects of the tariffs. So this is reorganizing of the global trade system. Protectionist policies here and abroad will change old relationships and forge new relationships. Relationships and the impact to economic productivity around the world could be significant. And you know, this is another thing that's going to take months and years to see what the true impacts are. But this is something definitely worth watching develop because again, it speaks to more than just the prices we pay on imported goods.
- [12:14]
Ana Helhoski
And where do you see prices going in 2026?
- [12:17]
Elizabeth Renter
Inflation is likely to remain high throughout the year, though it's unlikely to get much higher. So we're thinking around 3%. We're going to see continued pass through from tariffs on items or in certain catego and services. Inflation is likely to remain sticky due to high shelter and healthcare costs. One big unknown is wage pressures and that can go back to the immigration policies. So a lack of labor supply could drive up wages for native born workers and wage pressures like that can drive further inflation.
- [12:48]
Ana Helhoski
We've talked a lot about different indicators, but is there any one that you'll be watching in 2026?
- [12:53]
Elizabeth Renter
Well, 2026 is a long year, so I'm going to have my eyes on all of the indicators.
- [12:59]
Ana Helhoski
I don't know if I have all.
- [13:00]
Elizabeth Renter
Of those ey I'm going to work on it. But I think in the shorter term, one of the things I'm specifically looking at is layoffs and how they show up in federal data. So during the federal data blackout that we saw in October and November and we're still catching up to in December and we will be for the next few months, we heard a lot from private data sources and private companies that were announcing layoffs or reporting big numbers of announced layoffs. So there's typically a pretty big difference between what is announced and what shows up in the federal data. The problem with that is announced layoffs rarely line up with the layoffs that actually show up in the data. So in the months ahead, I'll be looking to federal data to see what the layoffs actually look like at the end of 2025. And then another thing that I'm going to be keeping an eye on is household debt delinquency levels. So household debt levels have risen to and sometimes above what they were before the pandemic. Not only that, delinquency levels are rising, and this is a real indicator of household financial fragility. We're seeing it across auto loans and credit card loans. So I will keep an eye on how many people are, you know, becoming increasingly delinquent on those debt balances. And again, that speaks to their ability to weather economic storms should something come down the pike later in the year.
- [14:17]
Ana Helhoski
And what are some other concerns that you have heading into 2026? I'm a little nervous about that AI bubble bursting. AI investment was something that Fed Chair Jerome Powell had mentioned pretty frequently during his remarks after the Fed made its cut last month. We know AI has been a big economic driver. There's a big question mark as to whether a bubble and a potentially burst bubble can be avoided.
- [14:37]
Elizabeth Renter
So that is a concern. Is it a bubble? And if it is, what happens when it bursts? And, you know, it's definitely something we should be keeping our eye on, particularly because consumer spending has been credited with keeping the economy healthy over the past few years. But there's evidence that the bulk of that spending is coming from high earners and specifically people with assets, so people with real estate and people with stocks. So should the market tumble and these households suffer, what does that mean for the broader economy? So, again, it goes back to that household financial fragility and the ability for households to really withstand economic shocks.
- [15:10]
Ana Helhoski
And where do you see the biggest risk of an economic surprise? And I mean, upside or downside?
- [15:15]
Elizabeth Renter
So I think this is a trick question because I feel like the biggest economic shocks are the ones we don't see coming. I mean, true, there's a lot of hindsight. Like after an economic shock, people are like, well, we should have seen that red flag.
- [15:27]
Abby Badek Doyle
And this red flag.
- [15:28]
Podcast Co-host / Narrator
Right.
- [15:28]
Elizabeth Renter
But I mean, you think about the global financial crisis, there were a lot of risks bubbling beneath the surface, but they really weren't exposed at large until the Lehman Brothers investment bank collapsed and it spread across the world. The COVID pandemic, we definitely didn't see that one coming. So what comes next? I mean, we're all scanning the horizon, looking for the next big risk. And I don't have the answer because I think it might be something we're not anticipating.
- [15:54]
Ana Helhoski
Sure.
- [15:54]
Elizabeth Renter
Again, I'm looking at how well are households equipped to weather those storms. And I'm concerned right now that households are increasingly fragile, so any of those unforeseen shocks could be detrimental.
- [16:05]
Ana Helhoski
Anything else you're going to be keeping an eye on this year that might shape where the economy goes next?
- [16:10]
Elizabeth Renter
Yeah. So in the next year. I'm definitely keeping an eye on Fed independence. As we're recording, Trump is weighing a new chair. And by the time this airs, he may have named someone. The big question is, will the new Fed chair be someone that is a loyalist and perhaps perhaps more prone to political influence, or will they support a truly independent Fed? An independent central bank is the bedrock of a modern and healthy economy. And so I'll be keeping my eye on that. And then longer term, a couple things. This year and beyond, I'm going to be paying attention to policies that are put in place to reduce the cost of housing. The main thing driving high housing costs is low supply. So what are municipalities, what are city and state governments doing to make it easier to build more housing that will ultimately bring costs down in the long term? And finally, one more thing, and this is a long, long term thing, is the impact of reduced federal spending on science and research. We're seeing this now through reduced federal grants from the National Institutes of Health and the National Science Foundations. Reducing these federal grants has a real impact to potential innovation and economic growth. It can impact us all through our access to modern medicines, impacts to food production, prices, job creation and so on. And these things take decades to play out. You know, studies funded now are not going to lead to the research that can change 10 years from now. The problem with that is by the time we discover the impacts they're having, it's going to take decades to unwind them. So that's one thing I'm looking forward to in the long term future.
- [17:45]
Ana Helhoski
All right, Elizabeth Renter, thank you so much for joining us today with some great context for what we can expect in this new year.
- [17:51]
Sean Pyles
Thanks so much for having me and thank you, Ana. Alright, up next, Elizabeth and I get a preview of what's coming down the pike for the housing market. But first, a reminder listener to send us your money questions. Maybe you want some help getting your credit in shape to buy a house this year, or maybe you and your partner have a financial disagreement that you want Elizabeth and I to referee? Leave us a voicemail or text us on the NERD hotline at 901-730-6373. That's 901730, nerd. Nerd. Or email us at podcasterdwalla.com More in a moment. Stay with us. Today's episode is sponsored by Quint's Starting the year with a wardrobe refresh. Quince has you covered with luxe essentials that feel effortless and look polished. They're perfect for layering, mixing and building a wardrobe that lasts. Their versatile styles make it easy to reach for them day after day. Quint has all the staples covered from Mongolian cashmere sweaters that feel like designer pieces without the markup to 100% silk tops and skirts for easy dressing up to perfectly cut denim for everyday wear. Their wardrobe essentials are crafted to last season after season. The quality shows in every detail, the stitching, the fit, the fabrics. Every piece is thoughtfully designed to be your new wardrobe essential. And like everything from Quince, each piece is built with premium materials in ethical trusted factories then priced far below what other luxury brands charge. I recently picked up their cashmere zip up hoodie and I can tell you I'm going to be living in this thing all winter long. It's so cozy and seems really built to last. Refresh your wardrobe with Quince. Don't wait. Go to quince.com smartmoney for free shipping on your order and 365 day returns. Now available in Canada too. That's Q-U-I-N-E.com smartmoney to get free shipping and 365 day returns. Quints.com smartmoney the following is a paid sponsorship, not an endorsement by NerdWallet's editorial team. Today's episode is sponsored by Bilt. It's 2026 and if you are still paying rent without Bilt, it might be time for a change. BILT is the loyalty program for renters that rewards you for what is usually people's biggest monthly rent. With Bilt, every rent payment earns you points that can be used towards flights, hotels, Lyft rides, Amazon.com purchases and so much more. And here's something that I'm really excited about. Starting in February, BILT members can earn points on mortgage payments for the first time. Soon you'll be able to get rewarded wherever you live and unlock exclusive benefits with more than 45,000 restaurants, fitness studios, pharmacies and other neighborhood partners. Personally, as a homeowner, I'm very excited about this news and I can't wait to use all of my points for a nice meal out with my partner. It's simple. With Bilt, paying rent feels better because you can get more and soon owning a home can feel better with BILT too. Earn rewards and get something back wherever you live. Join the loyalty program for renters at joinbilt.com smartmoney that's J-O-I-N B I L T.com smartmoney make sure to use our URL so they know we sent you.
- [20:52]
Podcast Co-host / Narrator
We're back and continuing our series about your money in 2026. Now, last time we talked about investing, but today we're pivoting to mortgages and the housing market. We're taking a walk down memory lane, looking at how to get the best deal on a mortgage, sharing tips for house shopping, if that's something you're doing right now.
- [21:12]
Sean Pyles
To help us explore the not so distant past, present and future of the housing market, we're joined by mortgage nerd Abby Badek Doyle. Abby, welcome back to Smart Money.
- [21:20]
Abby Badek Doyle
Thanks. Good to be back.
- [21:21]
Sean Pyles
So let's start by talking about the housing market in 2025. Beginning in the winter, which tends to be a little bit slower, and then going into the peak home buying and selling season in the summer and then into the fall, what happens?
- [21:33]
Abby Badek Doyle
So at the start of 2025, the housing market was looking pretty sluggish. Prices were up, sales were down. And in January of last year, we were still seeing the 30 year mortgage rate hover around 7%. So all in all, kind of a rough start to 2025 from a buyer's perspective, beyond even those seasonal trends that we see. But things begin to thaw in the springtime. And that's when we started to see one of the most encouraging trends of 2025 for the housing market, which is real improvement in inventory and listed houses for sale. And by July, we saw inventory at its highest level since before COVID So more houses to choose from is a huge win for home buyers. And then as 2025 came to a close, we finally started to see some much needed relief on mortgage rates in the fall, as mortgage markets anticipated those rate cuts from the Federal Reserve. So while it's still tough out there in a few important ways, the housing market ended 2025 and a little bit better of a place than where it started.
- [22:36]
Podcast Co-host / Narrator
That's definitely a highlight and we love to see progress and honestly, a little progress is better than none at all. Now, Abby, there were so many housing market predictions for 2025 as there are every year. For instance, JP Morgan Research expected house prices to increase by 3% overall and also expected mortgage rates to stay higher for longer. So were market predictions mostly accurate?
- [22:59]
Abby Badek Doyle
There's always going to be some variation, Elizabeth, but I'd say the 2025 market pretty much did what everyone thought that it would like. We didn't see any wild swings in either direction. More inventory gradually came on the market, which is what most folks expected, and prices still went up. But we saw the rate of price growth kind of slow down compared to previous years. One nice surprise, though, was lower mortgage rates. And for a while there, some forecasters didn't think that we would get to the low 6% range until 2026. But when we started to see those low 6% rates toward the end of 2025, October, anticipating that first rate cut from the Fed, mortgage rates briefly started flirting in the range of 5.9%. And you know, that threshold between 5 and 6 is an important threshold for buyers psychologically, like. Like, it's not that much different mathematically, but 6% feels heavy. But once rates dip into the fives, like even barely, buyers feel that sense of relief and they feel that sense of momentum, like the market is moving back in their favor.
- [24:06]
Sean Pyles
And given how expensive homes have gotten over the past five or so years, any relief in mortgage rates will help home buying affordability.
- [24:13]
Abby Badek Doyle
Absolutely.
- [24:14]
Sean Pyles
Speaking of mortgage rates, some factors that typically impact those rates and the broader housing market include things like inflation, job growth, interest rates, public policy, location, and also also broader economic performance. So, Abby, can you talk about the factors that impacted the housing market most.
- [24:29]
Abby Badek Doyle
In 2025, even with the relief that buyers saw with those lower mortgage rates? You know, when you zoom out, you can't ignore the effect of stubbornly high inflation. And that plus overall uncertainty with the job market is still clipping the wings of some would be buyers. It's hard to get excited about mortgage rates in that low 6% range if you're still feeling the squeeze from higher grocery bills or if you were furloughed by the government shutdown and it drained your emergency savings, or if you're just plain worried about losing your job. Like, for a lot of regular folks, I think there's some larger economic forces at play that are making it still tough to jump in the game at all. So for the housing market to be truly buyer friendly, we need a combination of significantly lower mortgage rates and even more inventory. And we're headed in that direction, but we're not there quite yet.
- [25:20]
Podcast Co-host / Narrator
And I know last year we saw some Fed rate cuts. I want to know how it impacted the market.
- [25:25]
Abby Badek Doyle
Quick explainer first, since I know I mentioned this earlier, the Fed doesn't set mortgage rates directly, but the rate that it does set, the federal fund rate, influences mortgage rates. So if you're shopping for a mortgage, you know it's wise to pay attention to what the Fed is doing. And the Fed meets every six weeks, roughly. So in that week or two before they meet is when you start to hear Most of that talk about rates. Right. So in general, when you hear that buzz that the Fed is talking about cutting rates or might cut rates in the future, that's when you tend to see mortgage rates go down, not after the Fed rate cut itself. So with the cuts that we saw in 2025, mortgage markets tended to price in those cuts before they happened. And of course, it's not always predictable, but that's the pattern that we see more often than not.
- [26:14]
Sean Pyles
We talk a lot about the housing market, but I think it's more accurate to say housing markets because it can vary from one city or state or even county to the next. Last year, some of the smaller metro areas saw stronger growth than larger areas. So can you talk about how different markets have been seeing different changes in what's been going on in terms of prices, inventory, all of that?
- [26:34]
Abby Badek Doyle
I love this question, Sean, because it's convenient to look at a national average, but there's really no, like, national housing market. I'm using heavy air quotes for our audio listeners. Right. So I'm in Pittsburgh where the median list price is around 2.70k. And I know that sounds cheap.
- [26:51]
Sean Pyles
It does.
- [26:52]
Abby Badek Doyle
Average age of our housing inventory is among the oldest in the country, so maybe the prices are lower. But with an older home, you need to budget for significant repairs or upgrades either now or in the future. Like that big ticket stuff like, like electrical, plumbing, heating, roof, like all that expensive stuff.
- [27:11]
Sean Pyles
Yeah. You're a homeowner. Have you had to deal with any of that at your house?
- [27:14]
Abby Badek Doyle
We had our roof recently replaced before we bought our home. But I'm looking at some appliances and some plumbing that I know is. Is going to be an expensive project in the next few years.
- [27:26]
Sean Pyles
Well, I'm sure you're saving up for it.
- [27:28]
Abby Badek Doyle
Yes, yes. So, you know, by comparison, my best friend, she lives in California in the East Bay, and the median price there is closer to 700. And another difference that you see regionally, too, is the price of homeowners insurance. So out west, my bestie has to deal with, like, wildfire risk. And here up north, we have the polar vortex freezing your pipes and all of that. So it's not just about what markets are doing in terms of prices and inventory, but it's also the ongoing cost of homeownership that makes every market look different. So my best advice is, if you are looking for a house, that's why it's important to team up with a buyer's agent, an experienced buyer's agent who knows the local market in your area and can give you advice specific to.
- [28:14]
Podcast Co-host / Narrator
Where you live Now, Abby, towards the end of the year we saw the market turn and it started favoring buyers due to decreasing demand and also increasing supply, which is a shift that many people I personally know have been wanting. Considering it was a seller's market for so long now, I don't think I will ever forget the craze that ensued during the pandemic when buyers were purchasing homes without inspections because competition was so steep. It was insane and I'm glad those days are behind us. While the market did begin turning, costs were elevated for both mortgage rates and homes towards the end of the year. Now, Abby, how likely is it that people can achieve their home buying dreams in 2026? According to NerdWallet's 2026 Consumer Outlook Survey, 17% of respondents plan to buy a new home. Is this a realistic goal to have?
- [29:03]
Abby Badek Doyle
I know it's tough out there, Elizabeth, but I'm. I'm still an optimist at heart and I really believe that if homeownership is your dream, you can make it happen. Just focus on the factors that you can control. This is one of those things like doom scrolling does not help you. Making a budget does, right? So a good place to start is to know what price range is even realistic for you. And NerdWallet has a great calculator to help you get started. There are how much house can you afford Calculator and that's a really great first step to plug in your income, your monthly debt payments, about how much you expect to pay for a down payment. And that calculator can help you see real price ranges that are affordable, that are a little bit of a stretch or might be out of your budget entirely. And it also factors in today's interest rates in real time. Next, if you're planning on buying a house this year, make a list of your must haves and then know where you're willing to compromise. Because. Because if you're willing to compromise on some things like that's where you can save money and home buying gets more affordable if you have wiggle room on things like location or the size of a house, or maybe you're willing to look at townhomes or condos, all of these things are variables that can help bring down the price tag and get your foot in the door.
- [30:19]
Sean Pyles
We still know that home buying is really challenging for many people to afford. Do you have any tips for those who are on a tight budget or just don't think it's feasible for them to buy a house.
- [30:27]
Abby Badek Doyle
Definitely look into down payment and closing cost assistance programs. Most of those programs are geared toward low or middle income folks and some of them do have location restrictions. But some programs surprisingly accept higher incomes too and have fewer restrictions. And there really is free money out there if you know where to look.
- [30:47]
Sean Pyles
Well, I love all of your optimism, Abby, but that said, we know that for some people, home buying is not going to be in the cards in 2026, but maybe 2027 will be a better year for them. So in that case, they could use the next 12 months to really set themselves up for success to be able to buy a house. So what do you think people can do now to avoid getting in a situation next year where maybe they are in over their head financially or buying a house they can't afford? We want people to make sure that home buying is something that fits into their budget in a reasonable way.
- [31:14]
Abby Badek Doyle
Totally. And first of all, I want to stress that you don't need to buy a house to be an adult. Right. Like in some areas, especially higher cost of living areas, renting really might make more sense as a longer term choice. So shout out to another nerdwallet calculator. Our rent vs buy calculator can really kind of help you suss out the financials there. But if you know that you do want to be a homeowner and have that lifestyle and you have a year to prepare, I'd focus on two things. Your credit and your savings.
- [31:46]
Sean Pyles
Well, let's start with some tips around credit. What do you have?
- [31:48]
Abby Badek Doyle
So it's always good to know where you stand with your credit score. Right? And as far as mortgages are concerned, the lowest mortgage rates go to buyers with scores of 7, 40 and above. And even getting your score up into the 7 hundreds can really help you get a better rate. So if you're below that and time is on your side and you have a year to prepare, you can work on reducing any balances, keep making those on time payments, maybe ask for a credit limit increase. All of those small steps can really help over time. And next, boosting your savings. So when you buy a house, you'll need cash on hand for not just a down payment, but also closing costs, moving costs, and of course, like fun stuff like furniture and area rugs and gosh, window treatments and blinds. And the list, the list of things.
- [32:35]
Sean Pyles
Which gets very expensive but is maybe more fun to buy.
- [32:39]
Abby Badek Doyle
Yes, yes. So I've said this before. I saved for about 10 years before ultimately buying our home. And it wasn't for lack of drying. Like, we had some offers along the way that weren't accepted. But by the time that I did buy a house, I was so grateful that I had been diligently saving and I had that little stash of money. So if saving feels a little overwhelming to you, a good way to boost your savings is to stash those little windfalls that you aren't expecting. So for me, like, if I got a bonus or a raise at work that went into the house fund, birthday check from grandma went into the house fund. And my biggest regret about saving for a house is not knowing about High Yield Savings Accounts sooner. Like, especially if time is on your side and we're talking about folks who are taking a year to prepare, having that High Yield Savings account and putting your money to work for you can really make a difference.
- [33:30]
Podcast Co-host / Narrator
High Yield Savings Accounts can definitely help your money grow quicker. And, Abby, I just want to say I'm impressed by you saving for 10 years. I think to date, the longest financial goal I've saved towards is retirement, and I'm still saving. So I'm sure some people may want to refinance also, but are holding out because they're waiting for better mortgage rates. Any tips for them in 2026?
- [33:52]
Abby Badek Doyle
I know we've all been waiting for the year of refinancing, Right. And for some folks, it might be a good time to refinance now, even in an elevated rates environment, it just depends on what your current rate is and what mortgage rates are doing now. So, in general, our rule of thumb is that you want your new mortgage rate to be a half a percentage point to, ideally, like, at least three quarters of a percentage point lower than your existing mortgage rate. And that's when the benefits start to outweigh those upfront fees and costs of refinancing. So if you're thinking about refinancing this year, and I know we've all been waiting for the year of refinancing, I'd start by running the numbers through a mortgage refinance calculator to see if it would be worth it for you.
- [34:37]
Sean Pyles
And it seems like NerdWallet has a calculator for about every step of the home buying process.
- [34:42]
Abby Badek Doyle
We do calcs for days.
- [34:44]
Elizabeth Renter
Yeah.
- [34:45]
Podcast Co-host / Narrator
The one time that I was shopping for a house, it was so interesting to see. Yeah. The price differences when I shopped around. So that's definitely an important tip. Abby, you've given us a wealth of information. Now, some people may be thinking, okay, I'm ready to Start looking for a house. People usually think of spring as the best time to buy a home, but what's it like out there right now in the wintertime?
- [35:06]
Abby Badek Doyle
You know, buying a house in January can actually be a smart move. Sellers tend to be pretty motivated in the off season because, you know, they're not listing their house because they want to. Generally, it's because they have to. They're pretty motivated to sell, right? So there's less competition over the winter months, too. So buyers might be able to have a little more leverage to score a better price or better terms. Inventory tends to dip seasonally in the winter, so in January you might have fewer homes to choose from, but that also means that you can take your time. Like, you're less likely to run into bidding wars or rush deadlines for offers, things like that. Another benefit to house hunting in January is that movers and contractors tend to be available and they tend to be cheaper. So you can save some money there, too. And, you know, at the end of the day, like, winter can really work in your favor if you know how to work it.
- [35:59]
Podcast Co-host / Narrator
I can attest that moving in the summertime is very, very expensive. Do not recommend what about home sellers, Abby?
- [36:06]
Abby Badek Doyle
You know, on the flip side, as a seller, like, if you can wait to list till spring, it might be worth it to wait until that traditional home buying season. If you're listing your home in the spring, there's more demand. You're probably going to see a little bit more action. But you know, if you want to sell your home this year, winter is a great time to meet with a listing agent to tackle some of those cleaning projects, some of those repairs, and get your home ready to sell.
- [36:30]
Sean Pyles
Great. Well, Abby, thank you so much for coming on and sharing all this with us today.
- [36:33]
Abby Badek Doyle
Thanks. Good to be back.
- [36:34]
Podcast Co-host / Narrator
And that's all we have for this episode. Join us next time as we continue our series about your money in 2026. We'll talk through what you need to know about credit cards this year. Follow Smart Money on your favorite podcast app that includes Spotify, Apple Podcasts and iHeartRadio. To automatically download new episodes, here's our brief disclaimer.
- [36:56]
Sean Pyles
We are not your financial or investment advisors. This nerdy info is provided for general educational and entertainment purposes and may not apply to your specific circumstances.
- [37:04]
Podcast Co-host / Narrator
This episode is produced by Tess Viguin and Ana Johan Hosky. Hillary Georgie helps with editing. Nick Karismi mixed our audio. Thank you, thank you. And thank you to NerdWallet's editors for all their help.
- [37:15]
Sean Pyles
With that said, until next time, turn to the nerds.