Dave:
I’m seeing a huge buying opportunity in the housing market right now. Home sellers are cutting their prices at a higher seasonal rate than we’ve seen in years. In the most recent set of data, more than 20% of properties on the market had a price cut in just the last four weeks. So what does that mean? It means sellers are finally getting realistic. They’ve accepted that they can’t get 2020 prices anymore, and you can take advantage of that and start picking off premium properties at a discount. Buy below market price, collect the instant equity, and set up your portfolio for years to come. That’s what I’m doing, and I’ll explain all the data behind my thesis in this October BiggerPockets housing market update.
Hey everyone. Welcome to the BiggerPockets Podcast. I’m Dave Meyer, real estate investor, CIO at BiggerPockets, and a housing market analyst. And today on the show, we are doing our October 2026 housing market update. As you all know, a lot is changing in the housing market all the time. I know I say that every month, but it is true. In the world we live in, in 2026, things are changing in the housing market more than they normally do. And so in today’s episode, we’re going to do the three things we always do, which is first look at market update. We’re going to go through the data, what’s happening with prices, with inventory, with mortgage rates and all of that. Then I’m going to share an opportunity that I am seeing in the market that is supported by data and evidence that I think all of you should be paying attention to.
And then third, we’ll do what we always do, which is go through our risk report because you can’t turn on any media channel these days and not hear someone claiming that the housing market’s going to crash or some economic disaster is coming. And since those things are always possible, it is worth spending some time talking about if it’s coming. And we’re going to have an honest conversation about what risks exist in the housing market and for real estate investors. So we’ll talk about that at the end of the episode. So that’s the plan. Let’s get to it. We’re going to start with our market update. We’re going to go into prices first. It’s what everyone always wants to know is the big picture, what’s going on with home prices? And surprisingly, or you might be shocked if you go on any news site these days, home prices are still up nominally, not inflation adjusted.
The price you see on Realtor, Redfin or whatever, that is up two and a half percent year over year. That’s just about the historical average, just so you know, is about 2.5% appreciation per year. So from a price perspective, we are actually having, despite everything going on, we’re having quite a normal year in terms of pricing in the housing market. If you look at Case Schiller, which is a great data set, you look at Redfin, you look at Zillow, they’re all kind of in the same space. So no, we’re not in a market crash at all. It is important to know though that the data that I’m talking about is what is called nominal. It’s not inflation adjusted. And that’s what most people care about. That’s what you see on your contract when you go and buy a house or you sell a house. But I do want to call out the important caveat that if you do inflation adjust home prices right now, they are down.
It is not keeping up with the pace of inflation. And as investors, that’s normally what we want. We want our investments to keep up with the pace of inflation and that is not happening from a price perspective right now. But I think the real story in the housing market is looking at some of the forward-looking stuff, the stuff that helps us predict what is going to happen in the next couple of months. So let’s get into that. And for that, we really want to look at demand and we want to look at supply. What is happening with new listings and inventory? And the story with new listings are that for most of the data we have, it’s flat. If you look at the July data, the last couple months of really good data that we have, it’s actually flat. So the amount of people who are choosing to put their homes on the market, basically the same year over year.
This is again as of July. If you look at active listings, which is the number of homes for sale at any given point, that is also flat. And so if you look at the monthly data that we had in July, the last monthly data that we have, it looks pretty stable, right? Prices are up nominally. They’re a little less than inflation. Pending sales, they’re down a little. New listings are flat, inventory is flat, days on market is flat, the sale to list ratio is flat. So by and large, we have the same market today that we had a year ago, and that is happening even with higher mortgage rates. They are at 7.6 as of this recording. They were 6.3 a year ago. But again, I want to call out that they were a little lower. They were closer to about seven or 7.1% when all of this data came in.
So I think we need to ask the question as investors and people who care about the housing market, we need to ask the question, is it going to last? Is this stable market that we have that is very similar on paper to what we saw a year ago going to stay for the rest of the year? And what about into 2027? Of course, no one knows, but I will give you my opinion. No, it is probably not going to last. Now don’t freak out. We’re going to talk about the risk report later and what risks exist, but my base case, as it has been for years, is that the housing market is going to get weaker. And again, this is kind of nerdy, but we’re looking at monthly data. If you look at the weekly data, that’s the most recent stuff, you start to see the housing market moving in a weaker direction.
Pending sales, which is the number of people who literally go out, sign a contract to buy a property, that’s down 9% year over year. That’s a lot. Roughly 10% drop in contracts being signed is a lot when we’re already at a low level. So that signals lower demand. That means less people want to buy homes, right? The second thing is new listings are low and they’re probably going to stay low because fewer people want to sell their homes in this environment. If you think about the lock-in effect and what’s keeping people in their homes right now, these people are trapped with great mortgages. It’s a good problem to have, but it’s still a problem for the housing market. But all these people have three, 4% mortgages, when mortgage rates go up to six, 7.5% like they’re now, that’s going to get locked in even more.
That means that we’re going to see less new listings, but active listings are starting to climb. Now, if you remember back to what I said before, how does that happen? Well, maybe there’s less new homes coming onto the market, but the ones that are sitting there are sitting for longer. They’re not selling. Remember, there’s less pending sales. And so if you look at all these things together, what you’re seeing is a weaker market. And that means, in my opinion, the number of transactions can go down. They already are starting to. And I also think it means that prices are going to soften, especially as we head into winter. It’s already a time when prices go down. It’s actually why, personally, my favorite time to buy a home is in the winter. That’s where you get the best deals. There are not a lot of home buyers in December, Thanksgiving, Christmas, January.
Great time to make offers because those people are not getting a lot of offers, especially in this kind of market. So this caveat, but great time to make offers. Sort of my hypothesis going into next year is that prices are going to weaken. I already predicted I thought they will be down by the end of this year. I think they’re going to weaken more. And so this is sort of the information. The reason we do this housing market update every month and why it’s one of our most popular formats is because this is the stuff that really tells you how you should be planning your own investing. If you look at what’s going on here, you see a market with declining prices, which will scare some people, but as an investor, that shouldn’t scare you. That means discounts. That means better deals are coming, right?
And so you need to just think about how do you adjust your tactics for a declining market? And the answer is to buy it for cheaper. It’s kind of pretty simple. If prices are falling, if they’re going to fall 2% next year, 3% next year, then you need to buy that property for 10 or 15% less than what it’s worth today. Not what it’s listed for today, what it is worth today. You need to comp that out or use an investor-friendly agent. You can find one on biggerpockets.com to figure out what that property is truly worth today and don’t buy anything unless it’s 15 to 20% below that price. That’s how you get equity without market appreciation, right? We’ll talk about whether this could get worse, and I will tell you there are always risks that it can get worse, and we’re going to talk about it at the end of the show.
But the data that today that we are looking at suggests this is a classic correction. We are not seeing new listings flood the market like we did in 2008. We don’t have bad credit like we did in 2008. People have a massive equity cushion, and so this should be seen mostly as a buying opportunity. And I think the winter is a really good time to start making offers because people are going to be nervous. Sellers are going to be nervous. Their property has been sitting on the market for a while, now rates have gone up, buyers are drying up. Then you go into the winter, even more buyers dry up. People are going to be willing to negotiate. And that actually brings us to our second segment for today, which is this big opportunity that I’m seeing in the market right now. And I’m going to share it with you, but we have to take a quick break.
We’ll be right back.
Welcome back to the BiggerPockets Podcast. I’m Dave Meyer doing our October housing market update. Before the break, we talked about how we’re largely in the same market as we were last year, but things are starting to soften, which makes perfect sense to me given where we are in the economic cycle, where we are with mortgage rates, where we are with housing market affordability. It’s all pointing to a market that is going to soften. And I should have mentioned this before the break, but it’s true. Of course, this is all regional. What happens in your market is going to depend on local factors. I’m talking about broad national housing market trends, which do matter, by the way, because even if you’re in a market that’s up 7%, a softening market might mean that it’s up 4% next year. It doesn’t mean it’s going to crash, but I think the general trend is going to be softening across all markets just because of how low affordability is.
And we’re seeing that in a lot of regions, even some of the stronger Midwest and Northeast markets are starting to slow down as well. So that’s my expectation, but it’s also an opportunity. Lower prices, this is what people have been wanting for a long time, right? People are saying housing is too unaffordable. Well, prices are starting to come down. And this brings us to our opportunity this month that I want to call out, which is that right now we are seeing more than 20% of home sellers cut price. That’s just in a four-week period. They might cut price more than once. That’s just within four weeks. And it’s the highest share on record for Redfin who tracks this, that’s where the data’s coming from. So it only goes back a couple of years. It’s not super old data, but just the last couple years, rates have been high for a while, but we weren’t seeing sellers cutting price.
They were being very stubborn. And I mean, if they could get their price, why not? That’s in their best interest. Even in 2023, for example, when rates went up and affordability was at one of the lowest it’s been, we only saw about 18% of sellers cut price. Now we’re at 21% home sellers cutting prices. So I know this isn’t a lot. It’s not some record thing where we’re seeing 30 or 50% of sellers cutting price. But to me, this is a sign that the stubbornness is fading and that sellers are getting realistic about pricing because you have to remember with price cuts, two things are happening here. Price cuts on their own, I don’t think are as useful as a lot of people say. People are always like, “Oh, there’s so many price cuts. That’s sign that the market’s crashing.” Not really. The price cut is actually a reflection of how well that home is priced.
So in a lot of markets, what we’re seeing for many years is that yeah, there are price cuts because people are pricing it like 2022. Whereas in markets where sellers are being more realistic, prices might actually be down in those markets, but there aren’t price cuts because they’re going into it with a realistic price given where the market is today. So I think this is a good sign because it tells us two things are happening. One, the fact that it’s not exploding does not mean that prices aren’t falling. I think that a lot of markets are probably just going in at lower asking prices. You actually see this. You can see this in the data. The average home price is up 2.5%, but the average list price is not up. It’s about flat for the year. So you can see that in the data as well.
And then the fact that it’s going up, I know it’s not a huge going from 18% to 21%, but this has been a very, very stubborn metric, and I think people are finally accepting that prices are not what they were. And this is the opportunity for investors. Like I said before, we’re entering a slow season. Anyone who’s selling their home right now knows what’s going on with mortgage rates, at least I hope so. If they have an even mildly competent real estate agent, they should know that mortgage rates are going up and that’s going to pull demand out of the market. It’s going to make their home less affordable and they’re going to have to list it at a price that is lower in order to attract a buyer. And I think a lot of sellers have just been waiting for years under the assumption, like a lot of buyers are doing, that interest rates were going to come down.
And now that we’ve been on this seesaw for so long and there is no end in sight to higher mortgage rates, and that is a hill I’m going to die on this year. I have said many times, I don’t think mortgage rates are coming down and I stick by that. Maybe it’ll come down to like six and a half percent next year. I don’t know, but they’re unlikely to come down meaningfully. And I think sellers for them finally get it. If they’re going to sell their house, it doesn’t benefit them anymore to wait six months. I think sellers are saying, “What if it gets worse? What if mortgage rates don’t get below 7% for the next year or two? What if inflation stays high? I got to sell my house now while the stock market’s still good.” I’ll be honest, I was talking about this on the market, my other podcast the other day.
I’m thinking about selling my house, not out of panic, but I’m thinking about moving anyway. And now is maybe a time to do it because mortgage rates probably not going to get better. And I think while the stock market is still high, it’s probably a relatively good time to sell a house. If the stock market tanks, sure, mortgage rates could come down a little bit, but that is not going to be a good environment to sell your home. So I think a lot of sellers like me are having this realization, and that means they are more open to negotiation. And I know this winter right now feels like an incredibly uncertain time in the economy and in the housing market, and it is. I’m not going to sugarcoat it and pretend that we know what’s going to happen. But remember that if you are a buyer, sellers are having that same emotion.
And I’m not saying this to take advantage of it, but it might mean that they’re going to be reasonable or they might be willing to say, “Hey, I know I’m not getting top dollar, but I want to get out of this home. I’m ready to move or I need liquidity for other parts of my life or I’m concerned about my job.” A lot of those things are happening. And so if you want to be a homeowner, if you want to be a rental property investor, there are going to be opportunities right now. And it’s going to take you putting yourself out there and making offers. The things I’ve been doing recently is I am glued to on-market deals that have been sitting on the market for 60 days or more. Those people are probably likely to cut a deal. If you go in Redfin, you can actually filter for how long they’ve been on the market.
So like 60 days, you can do 90 days, you can do 180 days, whatever, how long they’ve been on the market and people have dropped price in the last couple of weeks. Those are going to be motivated sellers. And when I look in the markets I invest in, they’re not crappy homes. They’re good homes in these categories. A lot of times what happens is these people listed and price too high in the first place and then it sits and then the home just becomes kind of tainted for whatever reason. It’s not really logical. The value is what it is. If it’s been sitting for 90 days and they’ve dropped the price by 10%, that might be worth paying for, but a lot of home sellers aren’t going to look at it again because they already went and looked at it or they saw the listing and they’re not going to do it again.
Those are the kind of things that you should be looking for. There’s absolutely going to be stuff that’s out there on the market. The other opportunity I’ve been seeing, this is not true in every market, but a lot of flippers I know are looking to get rid of inventory. And so if you can create something that’s mutually beneficial, those are another group to target if you want to buy rentals. I live in Seattle. A flipped home still doesn’t work as a rental here, but in a lot of less expensive parts of the country, flipped homes that are done in a good way are going to be really nice. They’re going to command a lot of demand from renters. They’re going to command a higher rent from renters and could be a way for you to get a recently renovated home for a good price and to help a flipper out of a tough situation.
So those are the two things outside of direct to seller marketing that I would look for as we enter the winter because everyone’s feeling the lack of buyers. And if you are a buyer, you have a lot of leverage and remember that and use that in your investing strategy. All right, so that’s the opportunity. Now to end the show, let’s talk about the big risks because they’re out there. There are always risks in the housing market and we are in a very uncertain economy. So let’s talk about the specific risks that exist and how you can mitigate them. But first we got to take a quick break. We’ll be right back.
Welcome back to the BiggerPockets Podcast. I’m Dave Meyer and on today’s October housing market update, we’ve talked about market trends. We’ve talked about opportunities heading into the winter, and now let’s go into our risk report. This is something we do every single month because as I shared with you earlier, the market is somewhat stable right now, but I think people want to know what risks exist out there for a crash. It is very hard to go on any media platform right now and not hear someone calling for a crash. And maybe that’s just my algorithm. I don’t know about you guys, but I get a lot of that. And so I want to address what risks exist. And upfront, is the market going to crash? Can it crash? The answer to can it crash is yes, it always can. There is always a chance that the market is going to crash.
Real estate, just like any asset class, is not without risk. And I think personally it has less risk than things like the stock market right now or crypto right now. These things ebb and flow, risks change, but to me, the valuations in crypto and the stock market are crazy. I think in residential, we’ll probably see a correction, but I think the relative risk of a crash is low. And I’ll explain to you why. I think a lot of the people who go out there and call for a crash are basing that on emotion or they’re maybe just trying to sell you something, I don’t know, but they’re just saying, prices are too high, there has to be a crash. That’s not really how it works. Prices can stay high for a very long time. We’ve had unaffordable periods in the housing market. The 1980s were less affordable than they were today, early 1980s.
Market didn’t crash, right? That is not a good way to evaluate whether the market’s going to crash. The best way to look at it, in my opinion, is to look at distress and demand. You need to look at how many people want to buy homes and how much supply is there. And we’ve already talked that the market is relatively stable in that regard, but the one thing that can cause the market to go from a correction, like the one we’re in, into a crash where prices really drop 10, 20, 30%, maybe in a year, something like that, it takes something called forced selling. If the selling conditions are bad, not many people are going to choose to sell their home. And that’s kind of the situation we’re in and have been in for three years. That’s the lock and effect. But if people stop being able to pay their mortgage, that whole formula changes, right?
Because then if you stop paying your mortgage and you go into delinquency or you go into pre-foreclosure, if you go into foreclosure, then you can become forced to sell. That’s a really bad situation we don’t hope on anyone, but it is a situation that can happen and was a large factor in the 2007, 2008 crash of the real estate market is that people were not able to pay their mortgages largely because the mortgages that were given out were predatory and people were given mortgages that they could not afford. They had adjustable rate mortgages, and when they adjusted, people could not afford them. And so all of a sudden, all of this inventory flooded the market that created an excess of supply during a time when there was already low demand that caused the market to crash. Generally speaking, when we look at delinquencies and foreclosures, I just call that distress.
How much distress is there in the market? And the answer to that for today, how much distress in the market is not a lot. It’s not tiny, but it is pretty close to the long-term average. And if you look at the top of the funnel, delinquencies right now, they’re really not bad. They’re actually 0.35% or 35 basis points below where they were this time of year in 2019. And I say this on every show, but just as a reminder, in 2019, no one was worried about a foreclosure crisis and we are below that level. So keep that in mind. That is the big picture here is that delinquencies are relatively low. Have they gone up from COVID? Yes, they have. But it’s up from this artificial low, right? It’s up from COVID period when there were forbearance programs in place and basically no one was getting foreclosed on.
And so if you’re asking, does it come up from there? Yes, of course it comes up from there. But even though it’s up, foreclosures are still below the 2019 level. And can this change? Yes. And I’ll talk about that in a second, but the thing to know is that right now, despite the scary headlines, delinquencies are below where they were in 2019. Distress is below where it was in 2019. And that means that the housing market, in my opinion, is still at a lower risk of crash. There are definitely pockets that aren’t looking great. And actually I flagged earlier this year FHA loans. These are designed for low income folks, so it always has a higher degree of distress than a conventional mortgage. But just want to call out, I flagged that three, four, five months ago. I was like, I’m going to keep an eye on this because it’s starting to go up.
Great news. It is going down. The delinquency rate on FHA loans has declined over the past three months. That is really positive news. Happy to see that. On the other end of the spectrum though, VA loans, veteran affairs loans, this is for active duty and veterans, that is where defaults are actually concerning to me. I think that is one of the areas that is worth keeping an eye on. We are seeing, unfortunately, again, not rooting for any of these things, I’m just reporting what I see. VA delinquencies have risen about 25% year over year. That’s a lot. And so hopefully that turns around. FHA, we saw it spike last year and then it flattened up. I think that was likely what we will see with VA loans as well, but it is something I do want to call out because this is a risk report.
That is a risk that we should look at. Now again, similar to what we talked about in the pricing part where we’re talking about things as they stand today, but what we really want to know is what’s going to happen into the future. And the question is, is distress going to get worse in the market? As of today, there is no evidence that it is going to. If you look at the unemployment rate, if you look at the jobs numbers, they’re up and down, but they’re really pretty historically low. That said, I think there are some reasons to think that there could be a rise in unemployment. Everyone and their mom is talking about how AI is taking everyone’s jobs, right? Inflation is eating away at people’s spending power. And so I do think there’s a decent chance that distress goes up in the next couple of months and maybe approaches that 2019 level, maybe it goes a little bit higher.
But I am sticking with my call as of now that I don’t think, let’s call it the next year that a crash is likely because I think it will go up modestly. Unless there is some massive financial crisis, which is possible, I’ve done a lot of shows on the market. I’m very worried about an AI bubble popping, right? That’s an example of something that I can see. I think the valuations in the stock market are very speculative. I think AI is an incredible technology, but I think that the betting on it and speculation on it is running rampant. And if that bubble pops, could unemployment go up? Could there be more distress in the housing market? Yeah, I think that is possible, but not to the effect of 2006, 2007 levels, at least in the housing market. In your most sober moments, you need to say what evidence is out there and the evidence does not support a crash.
I feel very strongly about that. And that’s why we do this every month is because these things can change, and that’s why I update you every month is because I want you to know what’s happening. But another month, I don’t think this has changed. I do not see any evidence of a crash. And that’s why I think the opportunities we talked about earlier in this episode remain true. Yes, you need to protect yourself against falling prices. You don’t want to “catch a falling knife.” You don’t want to buy a property only to see it lose value. So you need to buy below market price. You need to do value adds. You need to find ways to build equity in your properties that don’t rely on the broader economy and on macroeconomic conditions to help you out. That’s also just called real estate investing, right? That has been what we’ve always done for years.
Outside of the years from 2013 to 2022, that was just normal real estate investing. That’s what you always did. You did not bank on appreciation. You’re grateful for when you have it, but you don’t count on it. You have to be skilled at it, and that’s the environment we’re in today. So hopefully this is helpful to you because I know a lot of people are going to be scared and are going to see this data and see rising mortgages and think this is a terrible time to invest in real estate. If you’re trying to make money by next year, it is a terrible time. But if you’re at a long-term buy and hold investor, you see this as a buying opportunity. Prices are coming down, better assets are going to be for sale, adjust your strategy, protect yourself, but keep your eyes out for the opportunities that absolutely will be there.
That’s our housing market update for October 2026. Thank you all so much for listening to this episode. If you enjoyed it, or if you’re arguing with your friend or uncle over Thanksgiving about the housing market, send them this episode. Let them know what the data actually suggests and turn them on to the BiggerPockets Podcast. We would really appreciate it. Thanks again. We’ll see you next time.