2026 Housing Market Predictions: Seller Pain is Far From Over

Dave:We did it. We made it through the first half of 2026. Spite all the negative housing news, despite all the doom and gloom about the economy, the market is doing okay and we made it through. And today on On the Market, we’re doing our mid-year update. I’m here with Kathy Fettke and James Dainard. We’re going to recap the first half of 2026, then we’re going to make predictions about the second half and talk about what we’re looking forward to in the back half of the year. This is On the Market. Let’s get to it. Hey everyone. Welcome to On the Market. I’m Dave Meyer here with James Dainard and Kathy Fettke to recap the first half of 2026, which both simultaneously to me felt very eventful and also like nothing at all happened. There’s just so much news and here we are. It’s just kind of the same as it was six months ago, or at least that’s how I’m interpreting, but excited to talk to you both about this.Let’s just jump right into the conversation. Kathy, how would you summarize the first half of 2026?

Kathy:Kind of like somebody who’s learning how to drive stick, sort of like, then all of a sudden it stalls out. So I’m hoping the second half we’ll figure it out. We’ll be able to start driving.

Dave:Yeah. The clutch is burning up a little bit, but you’re getting there slowly. It’s okay. What about you, James? How would you describe it?

James:I felt like it was a marathon that we sprinted early too fast in the very beginning because the first part of the year I thought was great. And then once this conflict went down, everything kind of changed and moved quite a bit. And now you just got to finish the lap and get to the end because I don’t think the last six months are going to feel it… They’re going to feel worse than the first six months.

Dave:You think so?

James:I do.

Dave:Okay.

James:Well,

Dave:We’ll get to that in a minute. That’s interesting. Okay.

Kathy:Bloomy.

Dave:What are some positive things that happened to you in the first half of 26, James? Anything going well?

James:Yeah, inventory was really tight. As a flipper, inventory was really tight. And so we got some runway and we had a really strong December, January, February, March. Those were strong months to sell and we got some lift in our ARBs. And so I would think on average we were selling them for at least two to 3% more than we kind of thought we were on our underwriting, maybe up to five. And then once we hit the best month in the year –

Dave:April.

James:It just flatlined. April. April was just a wet blanket month. April sucked. Yeah, April was, and it’s not the month that usually sucks.

Dave:It was just the timing of the war and

James:Mortgage

Dave:Rates.

James:And it’s two in a row with the… Paris last year hit it and now we got this, but that’s just the reality of what it is. So I guess it depends if you’re a seller or a buyer. I think if you’re a buyer in the next six months, things are going to

Dave:Be great. Oh, good. That’s what I was hoping to hear. That makes me feel better about your predictions.

James:Oh, yeah. It’s both because I’m a buyer and a seller, so you take the stick on both ends.

Dave:What about for you, Kathy? Anything go well for you in 2026 working for you?

Kathy:Oh, yeah. I mean, we’ve got a business with businesses where on the one hand, we have one to four unit properties. We have 88,000 members at Real Wealth and I could really get an idea of where people are buying. I’m seeing investors buying in the Midwest, cashflow is good there, sort of buying in the Southeast, but investor activity overall down, but those who are buying are buying a lot. So I kind of could see from that perspective. But then also we’ve got our syndications where we have developments all over the place and they are completely having different experiences, different economies in these different markets. Our Tampa subdivision’s selling like crazy. And then our Oregon one just flat. No. Just nothing went on there. Yeah. They’re higher priced. I don’t know, but that’s been very frustrating. Pacific

Dave:Northwest is slow right now.

James:It’s very slow.

Dave:James could tell.

James:Very, very slow. It is dead.

Kathy:And then our multifamily fund, the biggest challenge there has been getting the deal. I keep talking about this is the time we started our fund. We’re just going to clean out as be able to buy at huge discounts. And we have had a lot of trouble finding a deal still that works. So I’m a little surprised with the multifamily fund that it’s been harder than I though. And then personally, finally got the tenant out of my California rental after a year of non-payment.

Dave:Wait, hold on, Kathy. The craziest part of this story I think is that Kathy’s friend wasn’t paying and then finished out the garage and was renting out the garage to someone else collecting rent herself and not paying Kathy. That is insane.

Kathy:It’s unbelievable.

Dave:I’ll say, you know what? I feel like it’s been a bright spot. I know it’s always boring, but at least in my investing, I’ve been really happy. I put a lot of my money in lending recently. There’s just no problems with lending. Well, I mean there can be problems, but man, it’s such a good way to make money right now. I’m very happy with it.

James:It is the best, most consistent thing I do.

Dave:Yeah. And there’s really good ways to get into it now. There’s a bunch of companies where you could put 500 bucks, a thousand bucks, 10,000 bucks into lending and just get a 10%. Most of them, it’s somewhere between seven, 12% cash on cash return. It’s way better than rentals right now if you want cashflow. You don’t get the tax benefits, you don’t get the amortization. There are trade-offs, but as part of a portfolio plan where I’m kind of trying to simultaneously buy rentals for the long term, but they don’t throw off a lot of cash right now. So if you pair that with lending, that’s working right now. To me, that’s a strategy I’m pretty into

James:Right now. It is.

Dave:Well, overall, first half of the year, I feel fine about it. It didn’t get better. The market’s not significantly better than 2025, but I think I’ve been encouraged by the fact that despite rates going up, we’re seeing positive mortgage demand, we’re seeing positive pending sales, and the market’s not collapsing.Could we see less demand if layoffs get worse? Yeah, but labor market data’s been like okay. And so I think we’re in for more of the same, but I think that’s good given where we are this year. There’s so much negativity about the war, about rates, about AI stealing everyone’s jobs, about inflation. And there are real challenges. Don’t get me wrong, but the fact that the market’s holding up despite that, I think halfway through 2026, I think we take that as a win right now. It’s not glorious, but it’s better than it could have been.Things could have gone a different way I think over the last year, and I think that’s encouraging. So that’s the first half of the year. We’re going to take a quick break, but when we come back, we’re going to make our predictions about the second half of the year. I want to hear your doom and gloom prediction, James. And then we’re going to talk about deals that we’re looking to do and things we’re excited about in the second half of 2026. Stick with us, be right back.Welcome back to On the Market. James, Cathy, and I are here talking about 2026, what happened so far. Let’s talk about our predictions for the second half of the year. James, you hinted at something scary so terrifying. Yeah.

Kathy:What is it, sad clown?

James:It’s just the history repeats itself. I think people have really still haven’t gotten used to the seasonal slowdowns. They just have not. It’s like that’s always been the thing. You sell at the wrong time, things take a lot longer. And right now with the buyer, a lot of doom and gloom, a lot of unstability, and we’re in the summer months, which it’s typically slower in most markets. And last summer was terrible. Last June, July was not great to sell a house. And what happens is the debt kind of arose these deals out. And so you have to be prepared for the long haul. And I think that’s where people just, as long as you set your expectations right, I’m not expecting I have a massive amount of homes coming to market right now because we just finished up the season. I got to drop 10 and I already got some on, but I have to be prepared to wait and price well because even if you price well, you still have to wait today.There’s just less velocity in certain price points in the market. And so I think the name of the game is to be proactive. How can you cut your costs down? How can you cut your debts down? But you have to have the right expectation to either burn the deal out or be prepared to wait. And that’s where you’re going to feel the pain is because when you got high interest loans on short-term investments, it will beat you up. And I think that’s where we’re going to hear a lot of the pain right now. Because if you look at syndicators, flippers, what’s the problem? The problem’s the debt. And that’s what we’re seeing because the margin, they end up still selling for around what you think. You just misjudged your debt costs by 30 to 40% sometimes on these deals. And so I think that’s what we’re going to see is it’s going to be a long, slow summer in the upper echelon price points.It is not going to go well.

Dave:So paying for anyone who’s selling.

James:But buys are good. They are. The glass is half full.

Dave:Exactly.

James:And I mean, I will say the thing I’m most excited about for the six months, I’m not excited about what I got that I have to sell, but we got to get rid of it. But what I am excited about is, man, builders are locked up and they’re not buying.

Dave:Land?

James:Land. Yeah. The land pricing has fallen so much in at least our market. And actually look in Phoenix, same thing. Even in Newport Beach, I’m seeing lots selling for 15, 20% less. That creates a lot of opportunity when you take a segment out of the market. Builders are really locked up. I’m not seeing a lot of velocity in builder funding right now.

Dave:Well, especially for land, there’s just a limited pool of buyers in the first place.

James:Yeah. Or what it does though, it creates opportunities that as flippers I love when people are like, “Flippers don’t take all the inventory.” We don’t take all the inventory. A lot of inventory gets taken from us from builders. They’re aggressive, they’re moving. And because they’re on the sidelines now, it’s created so much more opportunities that I’m not used to buying the last 12 to 24 months. And land pricing has really came down. So that’s what I’m really excited about, getting dirt and keeping dirt, especially for bur opportunities, flipping. It can give you a really good product to sell and that’s what we want. What is sellable? And sellable is your property has all the amenities, no weirdness. And when you have a gap in the market and there’s less buyers, you can get better product and better opportunities to buy.

Kathy:Yeah, we literally just tied up some land in Truckee, California. Very, very hot market.

Dave:Oh, nice.

James:Truckee’s

Dave:Cool.

Kathy:It’s very difficult to get anything at a good price in an area like that, and we did. So I couldn’t agree more that builders are a little exhausted and it is a good time if you’ve got a good business plan. In this case, we’re not going to build, we’re just entitling and selling it to a builder who wants to take that risk.

Dave:Well, so James, you said you think it’s going to be… So your kind of prediction is it’s going to be tough for sellers. It’s going to be better for buyers. You’re looking at dirt. Is there anything you’re staying away from in the next couple of months, next six

James:Months?

Dave:Yeah.

James:I don’t want anything weird.

Dave:Like bad layouts or you want mass appeal when you sell.

James:Yeah. A deal recently and on paper you’re like, “Oh, it’s a no-brainer.” And then you look at it, you’re like, “Wait, this is a pie-shaped lot. I’m on a corner here with busyness. I got a lack of parking.” And even though it was a very thrifty price for a great neighborhood in Seattle, I was like, “There’s no way I’m buying this. ” Because not that it wasn’t a good price and not that it couldn’t be worth what the ARV that they’re proposing, it could take six months to sell this because you got to wait for one buyer that’s okay with all these weird things. And so I don’t want any of that because I don’t want to slow down the velocity. And so get in and out of deals and try not to take on stuff that if it’s missing amenities and there’s a lot of issues with the site, I just don’t want anything to do with it.You can’t get stuck with things that aren’t controllable in this kind of market.

Dave:All right. So that’s James’ outlook for the second half of the year. Kathy, let’s move on to you. Do you have any bold predictions about the second half of the year?

Kathy:Yeah, I think it’s going to be a real boom time.

Dave:Really? What’s booming?

Kathy:The American economy and what comes with that, people want it all, and unfortunately you can’t have it all. You can’t have low interest rates in a booming economy. You get low interest rates in a slowing economy. But what we’ve been seeing is job growth, which is kind of resulting in higher… Probably the Fed is going to keep rates high or raise rates, and that’s what happens in an inflationary sort of booming economy. But with a job growth, with more jobs tends to be wage growth and wage growth is totally what’s needed in this housing market because you’re not going to see home prices come down necessarily. You’re not going to see mortgage rates come down. So the thing that has to change is wage growth. And so if we’re seeing that, that’s going to help unlock the market a little bit. So I don’t know, I feel very positive and I think this has a lot to do with the AI boom and love them or hate him.Trump is definitely supporting that industry and wants America to be number one in AI. And I think that’s a part of what’s happening is the energy grab to be the leader in AI. So I don’t know. And then you’ve got AI that’s just making the world improve faster. I think we’re going to see massive change and advancements in everything. Healthcare, just how you construct properties. Investors are going to get smarter. I don’t know. I’m positive. I’m excited, but I’m also in California where a lot of this is happening.

Dave:Interesting. Well, all right. I like that take. I disagree and I will tell you, you’re much more optimistic than I am, but I like the optimism. I hope you’re right. Well, so if that’s your thesis then for the second half of the year, what kind of deals are you looking

Kathy:To do? We are looking, like James said, we love the land entitlement because you can negotiate on land right now. I’m looking at international real estate. I know we’ve talked about that before. And just also the population growth is still heading to the Southeast. So it’s on sale and people don’t follow the crowds. Don’t follow the crowds and be afraid. This is the time to follow the demographics, to follow the growth and realize that prices are down in the Southeast right now and it’s an opportunity and I think it’s going to rebound. I don’t know when it’ll rebound, but it

Dave:Will. I agree with you there. We talked about this in the show recently. Areas that are in a discount where population and job growth are, come on. Go

Kathy:Get

Dave:It. Opportunity. Yeah, exactly. Be brave. Makes so much sense. Yep. Awesome. Well, that makes a lot of sense to me. And even regardless of the economic outlook, I think what you’re talking about, the kind of deals just make sense regardless of what happens. SoI like that a lot. All right. Well, we’re going to take one more quick break, but we’ll come back and I’ll share with you some of my predictions about the second half of the year and what I’m looking to do with my portfolio. We’ll be right back. Welcome back to On the Market. I’m here with Kathy and James today. We’re talking about what’s happened in 2026 and where we’re going. We’ve heard conflicting views so far. James, doom and gloom for sellers. Great opportunities for buyers. Kathy sees a big economic boo and is looking at international and Southeast real estate. Kathy, honestly, I don’t disagree with you because I have some super insight. I wish I could be as optimistic as you are. I’m just not. I see these just two different economies going on and there’s this AI economy which is totally separate from everything else.And all this GDP growth is going to AI data centers that frankly, no one knows if they’re going to work. No one knows how long they’re going to last. Even if they work, they might need to replace them every five years and throw a trillion dollars. It’s super uncertain. At the same time, it’s hard for me to ignore the red flashing signals around American consumers. Maybe I’m wrong, but it’s just like you look at credit card debt, you look at student loan default, you look at the savings rate declining, you look at negative real wage growth. I’m not saying things will necessarily get that much worse. I just have a hard time imagining them getting better. I just really can’t imagine I’m struggling to figure out what takes us from where we are today to Americans, the average American consumer being in better position to go out and buy and stimulate the economy and get in the housing market.And I just don’t see it. So I don’t know. I’m gloomy to be honest about the economy in general.

Kathy:So much of that inflation was, I hate to use the word, but I will, transitory. Is

Dave:That what we say? Transitory. You can’t say that word. That is a risk. It’s

Kathy:A dirty

Dave:Word. It’s a

James:Terrible word.

Kathy:It’s a dirty word. But it is true. We need oil for everything. Oil transports everything. And when prices of oil go up, then costs go up because it costs more for everything to be transported. That was predicted. If oil prices come down and they have, we’re going to see that reflected, I believe, in prices. So yeah, I actually think inflation will come down, but it will not come down to 2%. It’s because of the economy. So expect inflation, just not runaway inflation. And inflation is… Guess what inflation’s good for guys? Real estate. Real estate is the winner with inflation. So go get it. Go get your real estate.

Dave:You are, again, more optimistic than me. I think inflation will come down, but it’s going to take a little while. I think we’ll have warm inflation. I think it will peak. I actually did an episode on this the other day. I think it’ll peak in Q3. I think in the near term, but it’ll take a long time to come down. Not years, but I don’t know if it’s getting below three in 2026, which isn’t terrible. But electricity in the US is up 6% year over year just because of AI data centers. Food costs are going up. Some of it’s related to the Strait of Hermes, some of it’s not. So I just think there’s going to be frustrating inflation. Again, nothing close to where we were a few years ago.It might go up one more month and then start to come down in my opinion. So I’m with you on that. I guess I don’t know if people care. At the end of the day, does an American consumer, the fact that it goes from four to 3%, is that fundamentally going to change their spending behavior? I don’t think so. I think people are stretched. I think they’re stretched. And that’s what I’m trying to understand is how does that get better? And I just don’t know. That said, I don’t think that’s a disaster for the housing market. I’ve talked about in several shows recently, I think we’ve kind of seen what behavior in the market’s going to be even when people are stretched. Now, if AI really does take everyone’s job and unemployment goes to 7%, then we’re in for a rough time. But I think a lot of the AI fear is a little overblown.I think people are starting to se their bills from Anthropic and ChatGPT and they’re like, “I could just hire someone for cheaper than that. ” Yeah.

Kathy:No, think if you were being raised with AI, imagine the skills you’d have. Imagine the mistakes you wouldn’t have made. Imagine the business ideas that you could suddenly create overnight. I’m scared of these youngsters because they are going to grow up with this that’s going to be just a second brain. It’s going to be like having 20 assistants all at once. It’s like being a business owner overnight. For sure. So there is going to be such a boom. So I think it’s going to be amazing.

James:Is this going to turn into this junk drawer of just ideas everywhere though? Just garbage you got to dig through to get to what you want to find.

Dave:It’s the dead internet theory. It might come true.

James:Yeah, I think it is coming true because it’s already a struggle.

Dave:I’m not a hater on AI. I think it will get there. I just think it’s going to go through this learning phase where there’s just trash everywhere and no one’s making money. Everyone’s talking like I slop coded this thing. It’s like, all right, did you make any money? But they

Kathy:Learned some skills. Are you doing anything? Think about your first deals. They were sloppy, but you did it and you learned and then your next one was better. And if you are not sloppy right now in AI, everyone is running this race. So if you’re not in it, you’re going to be left behind.

Dave:I agree with that. I just think the time to we really see economic gain from AI adoption is a few years away. That’s my theory. I am not denying the power of AI or the importance of it. I just think we’re going to go… Everyone’s just fumbling around in the dark right now. Maybe some people are super good at it, but even these websites, you hear these things. I read the stat that CFOs of big companies that track this stuff have attributed zero productivity or revenue growth because of AI adoption. It’s the wild west right now and it will settle down and will make sense. But that’s why I just think we’re talking about the second half of 2026. I don’t see the boom coming right now.Maybe 27, 28, 29. I don’t know.

James:But that’s a benefit of buying at the tail end, right?

Dave:Exactly.

James:Yeah. And so that’s the thing to remember. That’s why I am not so doom and gloomy. I’m not excited to sell these houses over the next six months, but I’m definitely excited to buy some houses. And that’s what people have to remember, especially as flippers or developers, you catch the wrong side. It sucks. It really does. But if you can catch the right side, that’s where people make a lot of money. And so you just have to keep buying. You have to stay in the… Do not get out of the game. Oh,

Dave:I agree with

James:That. If you put the game with a loss, then you just lost. And so just keep moving forward. But yeah, I don’t think it’s going to be great till the end of the year. I just don’t. I think we’re going to see a little pop in the market around September because we always do. But again, it’s back to those seasons, but I don’t see it skyrocketing.

Kathy:I was talking about earlier when you asked me a question, how was my first half of the year? I’m like, which part? Which business? My personal, which of my businesses? They’re all across the country. They’re all different. So James, when you’re talking, that totally makes sense. I don’t think it’s going to be easier to sell over the next six months. I think that is true. If you’re talking from that lens, is it going to be easier to buy? Yeah.

James:Unless you’re in San Francisco, that thing is on fire.

Kathy:Yeah, exactly. So just again, what lens? And maybe we need to clarify that because it’s so broad what we all do.

Dave:I like buying right now because you can get good deals. And I do believe there will be a boom. And I just don’t know when. I’m guessing right now, I don’t think it’s going to be this year, but I want to be in the market when it does boom. And that might be next year, it might be the year after that. I don’t know. But man, we all owned a lot of real estate in 2020. I never guessed that was going to be the boom, but I’m sure glad I had real estate when I did. That’s just how you have to view it. You don’t know. You have to have a dose of humility and say, “I don’t know, but I know it’s going to happen. And if I can buy good deals now, might as well hold onto them and be positioned to take…” Not even take advantage.You don’t do anything. Just be in position that when the tide comes in your favor, when you get those tailwinds, then you win.

Kathy:You got there first. Yeah. And there’s clues. There’s plenty of clues. Again, coming back to AI, where are these cities? You’ve got Indianapolis, that’s biotech. You got Cleveland that’s healthcare. Look at what’s AI going to rapidly increase in development and buy in those areas. I believe in Indianapolis and Cleveland for those reasons.

Dave:I’m so with you on AI and healthcare. It’s going to completely change. That I feel so confident. That’s so cool.

Kathy:So buy your stuff in healthcare cities.

Dave:Well, there you go. Just go buy in Cleveland and Indianapolis. Done. That’s the plan for second half of the year.

James:I’m just hoping that Seattle, San Francisco’s little brother just falls throuh.

Dave:Yeah, send us some of that good love.

James:You know what? We typically are nine months behind.

Dave:All right. But we’re getting all these layoffs here. We actually have a lot of layoffs here.

James:Yeah, we do. And we got a lot of bad –

Kathy:Politics.

James:Yes, financial consequences.

Dave:Business climate is not positive right now.

James:No, it’s not. They’re leaving. People are leaving. So wherever those

Kathy:Business are, that’s a clue though, right That’s a clue. So where those businesses are going is where you want to be buying real estate.

James:Austin. Yeah, Austin. That’s wh I’m starting to get fixated on

Kathy:Austin. Austin. Let’s go, man. Let’s go. I want to do a deal with you.

James:All right. All right. But we got to go through a house that has beg bugs because I still, for some reason –

Kathy:We love those big bugs.

James:We got to leave with a rash caffeine. We know it’s a good deal.

Dave:All right. Well, those are our predictions, our thoughts on 2026. We’d love to hear yours. Let us know in the comments below, what are you doing the second half of the year? What are you excited about? What are you fearful about? We’d love to hear from the on the market community what you’re up to. Thanks so much for watching this episode of On the Market. I’m Dave Meyer. That’s Kathy Fettke and James Dainard. We’ll see y’a next time.