Zillow Forecast: Best and Worst Housing Markets of 2026 - BiggerPockets Real Estate Podcast Recap

Podcast: BiggerPockets Real Estate Podcast

Published: 2025-12-26

Duration: 35 min

Summary

In this episode, Dave Meyer analyzes Zillow's forecasts for the housing markets in 2026, highlighting regional trends and investment opportunities while cautioning about potential risks, particularly in areas like Florida and Arizona.

What Happened

Dave Meyer kicks off the episode by discussing the slowing growth trends in the U.S. housing market, emphasizing that while prices are still positive year-over-year, the rate of growth has significantly diminished. He notes that normal appreciation in the housing market is around 3.5%, and many once-hot markets, such as Milwaukee and Detroit, are now showing growth rates that hover around normal or below. This shift indicates a broader trend of deceleration across major metro areas, which could impact investment strategies moving forward.

Meyer delves deeper into specific markets, particularly highlighting the challenges facing Florida. He mentions alarming declines in areas like Punta Gorda and Cape Coral, which have seen drops of 13% and 10% respectively. While he refrains from declaring a full-blown crash, he warns that Florida is on a “statewide crash watch” due to issues like oversupply and rising insurance costs. In contrast, he points out that some markets, particularly in the Midwest, are thriving due to their affordability, indicating a significant correlation between market performance and the ability of locals to afford homes.

Towards the end of the episode, Meyer shares insights from a recent Realtor.com report, which identifies the hottest markets in the U.S. Many of these are located in Wisconsin and the Northeast, demonstrating that affordability remains a key factor driving market success. Dave concludes with his overarching thesis on the housing market, stressing the importance of understanding local dynamics over national trends as investors look for viable opportunities amidst these changes.

Key Insights

Key Questions Answered

What is the current growth rate of housing markets?

Dave notes that while housing prices are still up year over year in nominal terms, the growth rate is slowing down across the board. He emphasizes the difference between nominal growth and real growth adjusted for inflation, stating that many markets are hovering around normal appreciation rates, with some even falling below the inflation rate of 3%. This indicates that the overall pace of growth in the housing market is not what it used to be.

What are the challenges facing Florida's housing market?

Meyer highlights several issues plaguing Florida's housing market, including oversupply and rising insurance costs. He points out that specific areas, like Punta Gorda and Cape Coral, have witnessed significant price declines of 13% and 10%, respectively. He expresses concern that the state is on a crash watch, suggesting that double-digit losses may occur statewide from peak prices as conditions continue to deteriorate.

Which regions are currently performing well in the housing market?

In the episode, Meyer discusses the success of various markets, particularly noting that many in the Midwest, such as Wisconsin, are thriving due to their relative affordability. He mentions that the hottest markets identified in a recent Realtor.com report include cities like Springfield, Hartford, and several in Wisconsin, indicating that affordability is a key driver for these regions' sustained growth.

How does inflation affect housing prices?

Dave explains that inflation plays a significant role in assessing real estate investment viability. He clarifies that if housing prices increase less than the inflation rate, those markets are effectively declining in real terms. This highlights the importance for investors to consider the rate of inflation when evaluating market performance, as many areas are now showing nominal growth rates that are insufficient to keep up with inflation.

What is the significance of local market trends in real estate investing?

Meyer reiterates that there is no singular 'real estate market' and emphasizes the importance of understanding local trends. While national data can provide a broad overview, the actual profitability and performance of investments depend heavily on what is happening in individual markets. He encourages investors to focus on local dynamics, which can reveal emerging opportunities and potential risks that might not be apparent in national statistics.