2026 Home Price Predictions: The Correction Continues?

Home prices are about to “bend”...but will they break? The 2026 housing market could be another year of a correction, but how low could we go? Last week, we gave our mortgage rate predictions for 2026; this week, we’re focusing on home price forecasts. The housing market is stuck, and something needs to give. Americans can’t afford homes at these high prices, but with so many “locked-in” homeowners, where will the new supply come from? There are a few scenarios that could unfold, with different results that could greatly impact your buying, selling, and wealth-building. This year feels…different. And while Dave shares his “most likely” scenario for home prices, two other scenarios (“upside” and “downside”) aren’t worth ruling out just yet. One “X factor” could shoot home prices high, with Americans rushing back to buy. But a downside risk could drive our correction even deeper. Dave describes the rental properties he’s looking to buy during this year of opportunity, along with the rules you must follow so you don’t get burned. In This Episode We Cover 2026 home price predictions and whether the correction will continue into next year The one crucial factor driving home prices (and what happens when it changes) The “range” that home prices could be in this year, and what inflation-adjusted prices will look like The “X factor” that has a chance to reset the hot housing market and drive down mortgage rates What Dave is buying now and his exact buy box for “The Great Stall” market we’re entering And So Much More! Check out more resources from this show on ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠BiggerPockets.com⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ and ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠https://www.biggerpockets.com/blog/real-estate-1210 Interested in learning more about today’s sponsors or becoming a BiggerPockets partner yourself? Email ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠[email protected]⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠. Learn more about your ad choices. Visit megaphone.fm/adchoices

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Dave Meyer?

  Will home prices go up or down in 2026? We have seen a historic run of home price appreciation with values rising year after year, even as mortgage rates have remained high. But will that continue next year? Or will we see prices flatten or even decrease in the year to come? Today, I'm giving you my 2026 home price forecast.

• 0:27Dave Meyer?

  Hey, everyone. Welcome to the BiggerPockets Podcast. I'm Dave Meyer, excited to have you here for what is simultaneously both my favorite and least favorite show of the year, predictions about the next year. I genuinely enjoy and love the data analysis and research that goes into making these predictions. And since I started doing this back in 2022, I've been pretty accurately in calling the direction of the housing market. But at the same time, it's a little nerve wracking and difficult to put these predictions out in public, especially this year when there's less data available due to the recent government shutdown. But despite those limitations, I choose to make these predictions for you every year

• 1:09Dave Meyer?

  because having an idea of where the market is heading, even if it's not 100% accurate as no forecast is, this is still crucial as an investor because you invest differently in a rapidly appreciating market than you do in a flat or a correcting market. And don't get me wrong, you can invest in any kind of market, but you do need to plan accordingly. And that's what I'll help you do today. By the end of this episode, you'll know where the market is likely to go, what things to watch for in case things start to change, and how to build your portfolio accordingly in 2026. Let's do it. So making predictions about the housing market is difficult because the housing market

• 1:52Dave Meyer?

  is driven by so many different variables. On one side, you have all these things that impact demand. How many people want to buy homes? These are things like demographics, immigration, cultural shifts, domestic migration, investor activity, and so on. Then you have this whole other set of variables that impact the supply side, like the lock-in effect, construction trends, a longstanding shortage in homes in the United States, and so on. But to me, and I've been on this trend for a while now, affordability is the number one variable driving the market these days. Now, why this variable among all the other ones out there?

• 2:36Dave Meyer?

  Well, we have hit an absolute wall in terms of affordability. We are near 40-year lows. And by the way, if you haven't heard this term before, in context of the housing market, it just means how easily the average American can buy the average-priced home. And that's at 40-year lows. It hasn't been since the early 1980s that it has been this difficult for the average American to buy homes. Now, this is really crucial because what has not changed is that people do want to buy homes. There is still desire to buy homes. But when you look at demand, this economic term, demand, it's not just desire, it's desire and the ability to pay for it.

• 3:21Dave Meyer?

  We still have the desire aside. The issue is that most Americans just cannot afford it. And in my view, if that doesn't change, if affordability doesn't move, not much is going to change in the housing market. But if affordability improves, so will the market. So affordability, this key thing, is actually made up of three individual variables. We have home prices. How much do homes actually cost? That should make sense. We have mortgage rates because the majority of homes are purchased with a mortgage, and so this matters a lot. And we also have wages. How much are people earning? So those are the three things, and we're going to break each of them down one by one. So the first factor in affordability is mortgage rates. I did a whole episode about that.

• 4:05Dave Meyer?

  But the TLDR was that although I think they could come down a little on average, next year, I don't think they're going to move that much. So I think it could modestly help affordability, but it's probably not going to be the thing that really changes the housing market. The second one is wages. And real wage, Ruth, can improve affordability. Real wages, if you haven't heard this term, is basically just a question of are incomes rising faster? Than inflation. If the answer does, yes, you have positive real wage growth. The answer to that is no, you have negative real wage growth. But luckily, right now, one of the bright spots for the economy in recent years,

• 4:43Dave Meyer?

  since 2022 or so, is that we have had real wage growth. Wages in America, incomes are growing faster than inflation, which means your purchasing power is going up. I hope that will stay up, but I think it's going to slow in the next year. We've seen inflation up to about 3%. The job market is definitely weakening. That reduces leverage and salary negotiations, and I think wage growth will slow. But the thing about the housing market and how this relates to our strategy as investors is that even in the best times, wage growth takes time to really impact affordability. So although wage growth does really matter,

• 5:21Dave Meyer?

  it's probably not a big factor in 26. So if rates aren't going to change that much in my mind, in our base case, and real wages are not going to impact affordability that much, does that mean that the housing market is doomed to have another year like we had this year where things are pretty slow and stuck? Maybe, but we still have one more variable, which is housing prices, which is why my base case for next year is for home prices to be flat or maybe down just modestly. If you want some actual numbers, I like to predict a range and a direction, because I think as real estate investors, it actually hurts us to obsess about, is it up 1% or 2%?

• 6:01Dave Meyer?

  I think we actually should just say, hey, it's up modestly, it's down modestly, it's flat this year, it's going to go up a lot, there's going to be a crash. Those kinds of directional indicators, I think, are what's really important. And what I see is that home prices in 2026 are going to be between negative 4% and positive 2%. You could call this flat if you want. I am personally leaning more towards the negative side right now. Again, we don't have data from the last couple of months, but the way the trends are going, I think if I had to pick where we'll be a year from now, I'd say negative 1, negative 2% year-over-year growth. So you might be surprised hearing me say this because all previous years I've said we've been flat or up because I genuinely believe that and that was what actually came to be.

• 6:46Dave Meyer?

  But this year I see that changing. And I just want to say, having these kinds of declines, this isn't crazy. Seeing modest declines in prices isn't a crash. It's not even unusual. It is a normal correction and I should probably mention a buying opportunity. And that said, I am a little more pessimistic, I think, than other forecasters. I see Zillow at plus 1%. Some others are near flat, but most of them are modestly positive. But we're all still generally in the same range. Honestly, being plus 1%, minus 1%, it's kind of flat, right? So that's what most people are saying. And I think the takeaway here, whether you think it's plus 1% or minus 2% is the same. Appreciation is going to be slow at best.

• 7:30Dave Meyer?

  It might be negative. We can't know right now with the little data that we have, but we have to not count on appreciation. I think that's the main takeaway for us as real estate investors. Maybe we'll get 1%. That would be great. Maybe it'll be negative 1%. Honestly, whatever. If you're counting for flat or you're not counting on appreciation when you're underwriting your deals, you can still invest in this market. But that's the main takeaway I want you all to have right now is that you should not assume you're going to get appreciation in 2026. So that's my belief about what's going on in terms of nominal prices. It's going to get a little wonky, but stay with me. Nominal prices means not inflation adjusted.

• 8:14Dave Meyer?

  This is the price that you see on paper. This is the price that you see on Zillow. People are split on whether that's going to be up a little bit, down a little bit. But what almost every forecast that I believe in, that I think is reputable, all of them agree that real prices are going to be negative. And again, real in economic terms just means inflation adjusted. So every forecast I see believes that compared to inflation, home prices are going to go down. So even if prices on paper go up 1%, but inflation stays at 3%, then real home prices have declined 2%. Real prices are down. And even though I'm saying, I think the most likely scenario is that nominal prices are

• 8:59Dave Meyer?

  down next year, I feel much more confident that real prices will be down in 2026. That much seems pretty clear to me. So that's my base case. It's what I've called the great stall in recent months. If you've listened to the podcast and it's still what I think is the highest probability of happening next year because affordability is too low. Rates will come down a little bit, I think, but not that much. Wages aren't really going to help us one way or another. And prices, if they flatten or modestly decline, that's how we get into the stall period where affordability gradually gets restored to the housing market. That is the base case. But I should say that when I make these forecasts, I like to be honest about

• 9:39Dave Meyer?

  my confidence level. And I just want to say that this year it is lower than previous years. Last year, I felt really confident about what I said was going to happen. That was pretty accurate. This year, I think the great stall is probably a 50 ish, maybe 60% probability, which means that we have a 40 or 50% chance that something else could happen. And I'll give you some alternative forecasts and predictions right after this break. Running your real estate business doesn't have to feel like juggling five different tools. With ReSimpli, you can pull motivated seller lists, skip trace them instantly for free, and reach out with calls or texts, all from one streamlined platform. The real

• 10:22Dave Meyer?

  magic, AI agents that answer inbound calls, follow up with prospects, and even grade your conversations so you know where you stand. That means less time on busy work and more time closing deals. Start your free trial and lock in 50% off your first month at resimpli.com/biggerpockets. That's R E S I M P L I dot com slash biggerpockets. Most investors only think about insurance when something goes wrong. A tenant injury, storm damage, loss of rent. Then suddenly, the cheapest policy doesn't feel like the best one anymore. That's why a lot of BiggerPockets investors use steadily for landlord insurance designed specifically for rental properties. Whether you own one property or a growing

• 11:06Dave Meyer?

  portfolio, they make it simple to get covered properly. And BiggerPockets Pro members get an extra 5% off their landlord insurance premiums. Visit biggerpockets.com/landlordinsurance to get a quote today.

• 11:19Henry Washington?

  Here's a strategy that most W2 employees have never heard of. Normally, if you want to write off a rental property against your regular income, you need real estate professional status. That means tracking hundreds of hours a year. Rent to Retirement just launched a program that skips all of that. It's called the STR loophole tenant placement program. Here's how it works. You buy one of Rent to Retirement's Class A new construction investment properties. You set up an Airbnb listing and self-manage it for the remainder of the year. Rent to Retirement then rents the home as a short-term rental to establish it as an STR for the year, no furnishing required, making this the easy button to save five or six figures in taxes this year.

• 12:02Henry Washington?

  And because you're the sole manager, there's no hourly minimum to meet. That lets you use a cost segregation study to accelerate the depreciation and potentially write off over $100,000 against your income, even on your first rental. Add in cash back up to 13% of the home price, which exceeds $60,000 on some properties. With this massive cash back incentives, investors are seeing total returns up to 126%. New construction, A-class properties, and inventory is limited. Learn more at biggerpockets.com/retirement or text REI to 33777. Again, text REI to 33777.

• 12:44Dave Meyer?

  I just booked a backpacking trip through Olympic National Park. Two nights out on the trail, no cell service, nothing to do but eat trail mix and stare at mountains I'll never get tired of. That's the whole appeal. But while I'm off-grid, my place doesn't need to sit empty. I can list my space on Airbnb and make a little extra income while I'm away. And with Airbnb's co-host network, I could partner with a vetted local co-host to help take care of the details, from guest communications to onsite support, so I can fully unplug and enjoy my time out in the backcountry. If you've got upcoming travel plans, you can find a co-host at Airbnb.com/host.

• 13:26Speaker 02

  This episode is brought to you by Google Chrome. You think you know a browser, but Gemini and Chrome, that's new. It can help you with practically anything on the web, like restoring a vintage motorcycle from a 50-page restoration block, or finally break down that long article you've had open for weeks. Gemini and Chrome is here for it. Ready to make anything online make sense? There's no place like Chrome. Check responses set up required. Compatibility and availability varies, 18+.

• 13:55Dave Meyer?

  Welcome back to the BiggerPockets Podcast. I'm Dave Meyer, talking about home price predictions for 2026. Before the break, I shared with you my base case. It's what I think is the most likely scenario to happen next year, and that's having pretty flat, or maybe modestly declining nominal home prices next year. And I think pretty confident that real home prices are going to go down unless one of these other X factors happen, which is what we're about to talk about. So what else could happen in the housing market? To me, it still all comes down to affordability. As you'll remember, my base case is saying affordability not going to change that much. It's just going to gradually improve. But what happens if it goes up a ton?

• 14:39Dave Meyer?

  What if affordability gets way better? What if it goes down and actually gets worse? Are there scenarios where affordability really does move more than my base case? Yes, absolutely. That is possible. I don't think it's the most likely thing to happen, but I want you to understand all of the different scenarios that could play out next year. And to me, there is one really big X factor that I am going to be keeping a very close eye on next year, because it could cause what is known as a meltup, basically a huge surge in home pricing. So when I'm asking, could affordability get much better and send prices up? Yes, there are a few routes to that. But to me, the most compelling one,

• 15:21Dave Meyer?

  the thing I'm going to watch most closely, is something called quantitative easing. I went into this a lot in the episode predicting mortgage rates, so you can listen to that again. But if you missed it, it's basically the Fed using one of its emergency tools to get mortgage rates down into the mid or low 5s, maybe even lower. We don't know. Quantitative easing, it's basically they go out and frankly, print money to create demand for mortgage-backed securities and bonds. This pushes down yields, that pushes down mortgage rates, and that could increase the demand in the housing market a lot, which could potentially push up prices. Hopefully, that makes sense, right? Because I don't believe, regardless of what happens, the Fed cuts rates a bunch of

• 16:06Dave Meyer?

  times, I still don't think without quantitative easing, we are getting to the magic mortgage rate that we need in the United States to unlock the housing market. Research by Zillow, John Burns Real Estate, a couple of different economics firms have all gone into this, and they say that the magic number you need to get to, to get people off the sidelines, to free up inventory, to restore transaction volume to the market, is like somewhere between 5 and 5.5%. I just don't see that happening next year without quantitative easing. So the big question for 2026 in the housing market to me is will there be quantitative easing? And frankly, I think the chances of it happening are going up like every single week right now.

• 16:50Dave Meyer?

  The Trump administration has continued to prioritize affordability, particularly in the housing market. And as we've seen other parts of the economy start to falter and weaken, like the labor market, I think the chance that the Fed dips into its toolbox to stimulate the economy continues to go up. Now, I don't think this will happen right away in 2026. I think the earliest it will probably happen is in May, because President Trump, he actually the other day, said he already knows who he wants to name Fed Chair, but he can't do that until Jerome Powell's term is up in May of 2026. So that's when we would probably seriously start looking for this to happen.

• 17:32Dave Meyer?

  I don't know if it'll happen on day one, but you know, it might happen sometime after May. So if that does happen, and I call this the upside case, you know, you have your base case, which is, you know, what you think is most likely. Is there a more positive case? That's usually called an upside case. So my upside case for is we get quantitative easing, affordability improves, and then what? In that case, I think we see prices go up somewhere, maybe between 2% and 6%, maybe up to 7% if they really get rates down into the 5s. Maybe up to 7% if they get mortgage rates down to the 4s, but that seems unlikely. And that's what I see happening. Now, I know a lot of people are saying, if there's quantitative easing, if the Fed cuts rates,

• 18:15Dave Meyer?

  we're going to see an explosion in appreciation. They're going to go up 10% again, like during COVID. I don't buy that personally because we know that when rates went up, not only did it drive down demand, but it drove down supply as well, right? That's the lock-in effect. That's why prices haven't fallen because low affordability doesn't just impact demand, it impacts supply at the same time. Both of them are low right now. So, in my opinion, if rates come down, yeah, it's going to bring back demand, but it is also going to bring back supply, right? This will break the lock-in effect. So more people will be listing their properties for sale. More people will be looking to move.

• 18:58Dave Meyer?

  And so in this quantitative easing scenario that we're talking about, I think the real winner is going to be transaction volume. We are going to see more homes bought and sold. That will help and there will likely be upward pressure on prices, but not like COVID. That is unusual. Seeing 10% appreciation might be a once-in-a-lifetime thing that we don't see again for generations. Of course, if they drop rates down to 2% or 3%, maybe that will happen, but I think that is not the case, even if there's quantitative easing. So I would expect positive appreciation in this scenario. Good appreciation, really good for investors, but nothing crazy like COVID. The other thing I should mention is that if this happens,

• 19:42Dave Meyer?

  it will probably happen amongst a backdrop of a slower economy. So people may not want to make huge economic decisions like buying a house when they're fearful about their jobs. So we have to temper our expectations for what might happen if there is quantitative easing. Now, I told you my base case, I think that's about a 50, 60% chance of happening. When we talk about the upside cases, quantitative easing, I think it's getting more likely. I actually think it's about a 30% chance that this happens. And we'll talk about how to account for that in your own investing in just a minute. But I also want to talk about downside because yes, there is a chance that affordability gets better. There is also a chance that affordability gets worse, right? How does that happen?

• 20:26Dave Meyer?

  Well, it probably happens if inflation stays high, right? If inflation goes up, it's been going up four months in a row. It is nowhere near where we were in 2021, 2022. So people overuse the word hyperinflation a lot in this country. 3% is not hyperinflation. Four months in a row of growth is not hyperinflation. We are nowhere near that. But if inflation continues to creep up and mortgage rates go back up, I think there is more downside. I'm not saying that's going to be a full on crash, but I think there's more downside below 1 to 2%, right? Could a crash happen and it really get bad? Sure. But on top of rates staying high, what we need to see is forced selling, right? We've talked about this on the show, but the thing that takes a correction to a crash

• 21:11Dave Meyer?

  is when homeowners are no longer able to afford their mortgages and they are forced to put their homes on the market to avoid foreclosure or as part of a foreclosure. Now, right now, delinquencies, they're up a little bit, but they're still very low by historic standards. They are below pre pandemic levels. But what I am saying is that there is no evidence that a crash is likely at this point. If people's predictions about AI just destroying the labor market come true and we see unemployment go up to 10%, yeah, there is a chance that there is a real estate crash, but that still remains unlikely. I think even in this scenario, maybe prices drop 5 to 10%.

• 21:53Dave Meyer?

  I have a really hard time, even in a downside case, imagining more than a 10% drop in 2026. It seems just extremely unlikely to me. But the chance that we see, you know, 5% declines, 7% declines, low, but I'd say it's maybe a 10% chance because we just don't know. There could be some black swan event that we don't see coming that negatively impacts the housing market. We always have to remember, even though we can't predict them, we have to remember that these things exist. That is part of being an investor and we can't just ignore them and pretend that they don't happen. They are out there. So the question then is, what do you do? How do you use this information where I've just said, yeah, I have a base case,

• 22:36Dave Meyer?

  but it's maybe 50, 60% likelihood. There's a 40% chance that something totally different happens. How do you invest in that kind of market? I'll tell you how, right after this break. For my wife's birthday, I wanted to make her a new website for her landscape design business. So I researched a lot of different options. I tried out a couple, but honestly, it was really overwhelming. It was pretty time consuming and still the site wasn't coming out the way I wanted it to. Then I tried Hostinger and everything was super simple. I asked Hostinger's AI to build a clean site for her business and it had a working version up in minutes. No coding or designer needed.

• 23:16Dave Meyer?

  Plus, its AI agent helps with SEO, website copy and email marketing after launch. You get domain, website, email, all in one account. And right now you can get Black Friday and Cyber Monday pricing through December 14th. So snag Hostinger's services at their lowest prices before the sale ends. Create your website today for just $1.99. Go to hostinger.com/realestate and use code REALESTATE for an additional 10% off Black Friday and Cyber Monday pricing. I just booked a ski trip to Park City and I've already got the whole thing planned out. Five days, first tracks every morning before the crowd show up.

• 23:57Dave Meyer?

  My knees reminding me I'm not 25 anymore by the second run and an embarrassing number of overpriced burritos at the lodge. I don't even care. This is the trip I look forward to all year. But here's the part I actually appreciate. The practical side of my brain kicking in is that my place doesn't have to just sit there empty the whole time I'm away. I can list my space on Airbnb and bring in a little extra income while I'm out getting humbled on a mountain. And with the co-host network, I'm not the one handling all of it. You can partner with a vetted local co-host who can create your listing, manage reservations, message guests and even handle the styling. So I get to fully focus on my trip and my place is still working for me the whole time.

• 24:42Dave Meyer?

  Find a co-host at airbnb.com/host.

• 24:47Speaker 02

  This episode is brought to you by Google Chrome. You think you know a browser, but Gemini and Chrome, that's new. It can help you with practically anything on the web, like restoring a vintage motorcycle from a 50-page restoration block, or finally break down that long article you've had open for weeks. Gemini and Chrome is here for it. Ready to make anything online make sense? There's no place like Chrome. Check responses set up required. Compatibility and availability varies 18 plus.

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• 25:42Speaker 04

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• 26:15Dave Meyer?

  Welcome back to the Big Pockets Podcast. I'm Dave Meyer, sharing with you my predictions and forecasts for 2026. So far, I've told you about my base case, which is the Great Stall, the potential for quantitative easing to bring us into an upside case, and a scenario where the labor market really breaks and inflation stays high, where maybe we have more downside. These are obviously three pretty different scenarios. So the question is, how do you invest in an era of uncertainty and low confidence? How do we invest when there are multiple likely outcomes? There's no right answer to this, but I will tell you how I am doing it. I am first and foremost preparing for the Great Stall.

• 26:56Dave Meyer?

  I think that is the most likely scenario and the whole idea of making forecasts is to not get paralyzed by all the different outcomes, but to have a plan, but to remain somewhat flexible. So I'm going to plan for the great stall because I know this might seem counterintuitive, but I actually think it could be a great time to buy, right? If we are in a scenario where prices are flat or going down on average, that means you can get great assets at a discount. Now, of course, in these kinds of scenarios, there's also the risk that you might buy a property and the value of that property goes down more once you buy it. But in the great stall, the downside risk of that is not so great. And if you use tactics

• 27:39Dave Meyer?

  like buying deep or value add investing, you can mitigate that risk. Now, seeing this opportunity, wanting to pursue that, at the same time, I'm protecting myself against those possible declines in values. Like I said, I am going to underwrite super conservatively. I am being very, very picky right now. I am being patient. I will only buy sure things, only buy excellent assets, things I would want to own even if prices went down for a year or two after I bought them. Those things absolutely exist 100% and they will become easier to find and buy during the great stall. That is one of the benefits of this market is that more opportunity will exist. And by doing this,

• 28:24Dave Meyer?

  by pursuing great assets that I can get at a discount, but while simultaneously protecting myself against downside risk, I am also positioning myself to take advantage if that meltup happens, right? This is the way that you are actually planning for all three scenarios, right? You plan for flat, you protect against downside, but at the same time, you need to make sure that you are in the market in case the upside case happens to take advantage of the growth that could come from that. This, to me, covers all the bases and it's entirely possible. So let's talk a little bit more just specifics about what this looks like.

• 29:06Dave Meyer?

  I am going to focus only on assets that I want to hold for a long time. I want to take a long-term mindset. When I look at a property right now, I'm thinking, do I want to own this five years from now? Do I want to own it 10 years from now? And if the answer to that is no, I'm not really interested in it. Even if I think it's going to go up in the next couple of years, maybe there's something great happening in the neighborhood, or you're buying it below comps. For me, I only want to buy things that I'm going to hold on to for a long time. That's like the number one thing. Number two, I want cash flow within a year to make sure I can hold on to it for five or 10 years. Now, we've done a bunch of episodes about this recently. I really recommend you listen to them, but you need cash flow positive within the first year.

• 29:51Dave Meyer?

  One year is really not some magical number, but I basically mean at stabilization. A lot of times now, when you go out and buy a property with current rents, the current condition of the property, it's not going to cash flow. Well, if you're going to do value add, if you're going to upgrade them, if you're going to bring rents up to market rate, that's when you need positive cash flow. If you can't get to positive cash flow after stabilization, do not buy it. I know some people say appreciation's more important. I don't think so in this market. I just told you, I don't think appreciation's coming next year. So make sure you get cash flow so you can hold on to that property, so that when appreciation does come, because it will come back, when it comes back, that you're in the market, you're already making cash flow, you're getting those tax benefits, you're getting that amortization,

• 30:36Dave Meyer?

  you're in the market and you're comfortably holding on to them. That's what cash flow does for you. Next, I am adjusting my mindset to care less about short-term returns. Some people might disagree with this, that's fine. But I am saying, I still need cash flow, I still need the tax benefits, I still need amortization. So I'm not saying I'm getting no short-term returns. Those three things alone should probably beat the average of the S and P 500 by themselves without appreciation. So you can still get 7, 10, 12% without appreciation, not to mention value add. You should still be able to do that. But by expectation for appreciation, market appreciation, where macroeconomic forces push up the price of housing. I have very low expectations for that for the next few years.

• 31:21Dave Meyer?

  I have low expectations for rent growth over the next few years. I could be wrong about that, but I don't want to account on that. I don't want to assume that because no one knows. It's super uncertain. I'm sorry, I know some people are going to say it's going to go up. It's coming back next year. We don't know and that's okay. If you buy according to the way I'm telling you by being patient, by being picky, by having conservative estimates when you underwrite your deals, you can still find great deals, but you have to follow an approach similar to this. I'm not saying you have to do everything exactly the same as me, but having this kind of mindset will help you in this era of investing. This is the approach that I am going to pursue.

• 32:04Dave Meyer?

  Now, I understand that some people are thinking now, why not wait? If there is this flat period that we're going to be in, why not wait? I mean, you could, but what if that upside case happens and you miss out on it? That wouldn't be good, right? The value of real estate is being in the market for a long time. So if there are good deals that produce cash flow that are going to produce a seven, eight, 10, 12% return, as good as the average in the stock market in a bad year. If you're going to get that in a bad year and you can buy properties that you want to own for 10 plus years, why would you not buy it now? You'll still get cash flow. You'll get amortization and tax benefits.

• 32:46Dave Meyer?

  You'll be able to do value add and all of that, even if appreciation is slow. You'll also start paying down your mortgage, which means that your benefits of amortization get better year after year after year and you'll be learning and growing. So to me, this approach gives you a little bit of everything. That's how personally I am going to approach a year where there is frankly, a lot of uncertainty. As I've shared with you, I think the most probable outcome is the great stall. That's what I'm planning for. But I just want to be honest with you. I don't want to pretend I know everything. I want to be honest that there's probably a 40% chance that something else happens, that there is a meltup or 30% chance is my rough estimate of that or a more significant client.

• 33:29Dave Meyer?

  I think that's really only about a 10% chance, but it is still absolutely there. Even with all of that uncertainty, there are very proven ways to invest in real estate and to continue moving yourself along the path towards financial freedom if you are willing to set your expectations appropriately, to be patient, to be conservative in your investing that will benefit you over the long run and even in the next year. So that's my approach, and hopefully this helps you as you start formulating your own strategy and tactics heading into 2026. That's what we got for you guys today. I would love to hear your forecast. What do you think is most likely to happen in 2026? Please let me know in the comments. Thank you all so much for listening.

• 34:14Dave Meyer?

  We'll see you next time.

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