New Zillow Forecast: 10 Predictions for the 2026 Housing Market - BiggerPockets Real Estate Podcast Recap

Podcast: BiggerPockets Real Estate Podcast

Published: 2026-01-09

Duration: 40 min

Summary

In this episode, Dave Meyer analyzes Zillow's 2026 housing market predictions, highlighting areas of agreement and disagreement, particularly around home prices and mortgage rates. He offers his own insights on market dynamics and affordability challenges.

What Happened

Zillow has released its predictions for the 2026 housing market, forecasting a modest 1% rise in home prices and a 4% increase in sales volume. Podcast host Dave Meyer, a trained data analyst, compares these forecasts to his own predictions made in December. He finds some common ground with Zillow, particularly on the notion that the housing market is stabilizing and moving towards a healthier balance between buyers and sellers, despite ongoing economic uncertainties.

Meyer notes that while Zillow's forecast predicts a slight increase in home values, he leans slightly towards a negative outlook, estimating home prices could fall between negative 4% and 2%. He emphasizes the fragile state of the economy, with concerns over inflation and labor market stability impacting affordability. As a result, he believes that while prices may remain close to flat, there is a possibility of slight declines, especially if economic pressures persist.

The discussion also touches on underwater mortgages, where Meyer disagrees with Zillow's assertion that fewer homeowners will face this issue in 2026. He explains that if home values drop as he predicts, more mortgages could go underwater, which is a situation where homeowners owe more on their loans than their properties are worth. He reassures listeners, however, that while underwater mortgages are concerning, they do not necessarily indicate a crisis unless combined with forced selling.

Lastly, when it comes to mortgage rates, Meyer agrees with Zillow’s forecast that rates are unlikely to fall below 6%. He acknowledges some potential for rates to dip into the fives in 2025 but maintains that overall, the market remains challenging for buyers, with longer days on market and softening prices in many areas. The episode provides a thorough examination of the housing market's future, encouraging listeners to stay informed and consider various perspectives as they navigate real estate decisions.

Key Insights

• Zillow predicts a 1% increase in home prices for 2026, while Meyer leans slightly negative.
• The housing market is stabilizing, moving toward a balanced environment between buyers and sellers.
• Meyer expresses concern over affordability challenges and the fragile economic climate impacting home prices.
• Both Zillow and Meyer agree that mortgage rates are unlikely to fall below 6% in 2026.

Key Questions Answered

What are Zillow's main predictions for the 2026 housing market?

Zillow predicts that U.S. home values will grow by 1.2% in 2026 after remaining flat in 2025. They also anticipate a 4% increase in sales volume, indicating a healthier market with improving affordability and steady buyer demand. While Meyer agrees with the general sentiment, he expresses skepticism regarding the extent of price increases.

How does Dave Meyer differ from Zillow's predictions?

Meyer is slightly more pessimistic than Zillow, forecasting home prices could range from negative 4% to 2%. He believes that economic fragility, particularly in the labor market and inflation, may hinder price growth, leading him to lean towards a negative outlook for the housing market.

What does it mean for a mortgage to be underwater?

An underwater mortgage occurs when a homeowner owes more on their loan than their property is worth. For instance, if someone bought a house for $300,000 and the market value drops to $265,000, they would have an underwater mortgage. Meyer notes that an increase in underwater mortgages is likely if home prices decline, which he anticipates could happen.

Why might mortgage rates remain above 6% according to the podcast?

Zillow asserts that mortgage rates are unlikely to fall below 6% in 2026, citing the complexity of predicting rates due to their dependence on inflation. Meyer concurs with this assessment, acknowledging that while there may be a chance for rates to dip into the fives in 2025, the overall expectation is for rates to remain elevated, impacting affordability for buyers.

What are the current trends in the housing market discussed in the episode?

The episode highlights that inventory growth has stalled, with new listings remaining flat and demand staying relatively strong despite economic uncertainty. While the market shifted from a strong seller's market during the pandemic to a more balanced buyer's market, it is now approaching a state of equilibrium, leading both Zillow and Meyer to predict that home prices will remain close to flat.