The Great Housing Market Reset IS Here

Whether people like to admit it or not, the great housing market reset is here. 2026 is going to be quite a different year from what we've been seeing over the last few years in the housing market. A lot of things are going to be resetting, but the issue is it's not really going to be good for anybody, which is kind of crazy, guys. For example, throughout 2025, we have seen the median home price increase by 2%, which means it's still going up, not down. But that is just the median price across the entire United States, which is largely driven by the luxury home sales. And it is now predicted for the median home price growth in 2026 to be at 1% only. And if you're familiar with the inflation figures, the CPI is sitting right around 3% right now, which means when accounted for inflation, even homes that are going up in value are actually losing value in terms of real purchasing power. And on the surface, that sounds like a good thing for home buyers, but it's still too expensive. However, things are starting to turn in your favor as a home buyer, which is part of this reset. Because if wage growth goes up by 4% in 2026, which is predicted to, and home prices only go up by 1%, then now wages are outpacing home price growth for the first time in a long time. However, when you account for inflation and taxes and everything else that you have to pay for, it doesn't really matter because it's still completely unaffordable. And later in this we'll get into more of the predictions that Redfin and Zillow have for 2026. But for now, let's look at the current state of the market. One very common trend we're seeing right now, which is part of this great housing market reset, is more adult children living with their parents. More homeowners are actually retrofitting their homes to have it be a multi-generational household. Whether that means adding an ADU in the backyard, turning the basement into a finished basement, a whole separate apartment that some other family member can live in, whatever. More and more people are doing this right now as housing is more unaffordable than ever. And the fact of the matter is, is that Gen Z and millennial purchasers have been completely priced out of the housing market. And there is going to be no signs of that improving in the next couple of years. We have 6% of all Americans who are struggling to afford housing on their own right now, moving back in with their parents, while another 6% have moved in with roommates. So clearly, most people are done trying to find a place to live because they just can't afford it. And while it is a good thing that home prices are going down when accounting for inflation and wages are outpacing that, it's just not enough. And it's not going to be enough until prices continue to And the reason why is because the costs to own a home are still going to continue going up, even if the prices were to come down. For example, you have your utility bills, your property tax bills, your homeowner's insurance bills, all the maintenance costs on the home are not going to be getting any cheaper anytime soon. And that's the real problem with homeownership combined with prices. And it's one of the best cases of why home prices are going to continue going down for the foreseeable future. A lot more buyers are waking up to the fact that it's not just the price of the home, but it's the price combined with your interest rate for the mortgage, as well as your annual carrying costs for the house, which all add up to being a lot more than what people realize. And that's why they're not buying. And at the same time, part of this great housing market shift, it's more and more sellers having to come to terms with reality. Sellers have seen a much bigger shift in the housing market dynamics over the past couple of years than buyers have, because sellers went from getting multiple offers on a lot of their listings to sitting on the market well past the normal amount of time within just a two or three year timeframe. And sellers are so delusional in many different markets that a lot of them are suffering from imputed equity. And if you've never heard of this term, what it means is that even if a home sells for less today, they still believe that its true value is actually higher. The owners of these properties are convinced that the market is wrong and that the prices will eventually revert back to what they're supposed to be. There are still a lot of sellers out there that are convinced the home is worth what they say it's worth, not what a buyer is willing to pay, which is completely wrong on so many different levels. In fact, one of the places where delusion is at its highest right now is in New York City and the co-op boards, because a lot of co-op boards there have been denying purchases of these co-op units because the purchase prices are too low. Imagine you're somebody who owns one of these properties and you want to sell your co-op in New York City, but it has to be run by the board of directors first. And they say, no, you're not selling your place because the sale price isn't high enough. They're telling you and the buyer that your sale price isn't good enough, even though both parties agreed to this sale price. How ludicrous is that? I mean, that's how out of control the delusion is getting right now, guys. This is a real story. But the problem is this has no basis in economic theory and it distorts the entire real estate market. Because when it comes to selling real estate in particular, value is only established when actual transactions between buyers and sellers take place. Meaning once a buyer and a seller can agree on sale terms, especially the sale price, that's a real transaction that will dictate what the true value of that home is right now. And without a real time sale, without comparable sales, everything else is just speculation. So sellers today that believe that the price is worth what it was two or three years ago, just because they want to, and it's not really based in any sort of reality, they can believe and think whatever they want. I can believe that I'm going to see Santa Claus on Christmas Eve. I can believe that if I want to, but is it going to happen? Probably not. Now, if I was the owner of one of these co-ops, depending on what the rules and regulations say and the bylaws, I would be suing these people that are denying these purchases. I don't know if they have the right to do that. That's why you have to be thorough researching that before waging a lawsuit. But I don't see how they could have the authority to tell you what you're allowed to sell your place for. And this is a huge problem because it traps sellers in their properties, regardless of whether they want to be there or not. Obviously they don't if they want to sell. And it also is bad for the local market there and puts a stigma on that building. If the local real estate agents start to know that, hey, they're not willing to sell here below a certain price point, regardless of what you and the seller agree on, well, people are going to look elsewhere and that hurts property values at those places even further. Just like these condos here in Florida, guys. If you're a buyer and you want to buy a condo here, what are you more likely to buy? Are you more likely to buy in a building that has healthy financial reserves, doesn't have any special assessments, and has been keeping up with the maintenance on the property, but the price is, I don't know, 20% higher than a building that's not doing any of those things? Which one are you more likely to make a purchase in? Of course, everyone's going to go for the place that is actually being maintained and is doing the right thing because yeah, you might get a little bit of a discount on the other one, but it's going to come at a huge cost later. And a lot of what these boards are doing too, in order to try and keep the price floor of these Manhattan co-ops higher artificially, is they are suggesting that the seller has some sort of credit at closing and keep the selling price high, and that way the values in these buildings look artificially higher than they really are. So you literally have people in these properties manipulating the real-time sale prices of these properties, guys. This is a known fact at this point, and I'm sure this has been going on for a long time, but this is the first time I've ever read a story about it. And this is bad for the buyer, because even though you're going to get some of that money back at closing, don't forget, the more you pay for your property, then the higher your property taxes are going to be. So paying an artificially inflated price for the property makes it so that you're going to pay higher property taxes than you should be, and that's for life, as long as you own the property, which you can see why that would be a problem. But also, when it's your turn to sell, if you want to get rid of the property, then you're going to be facing the same song and dance, and trying to convince buyers that it's good for them to pay $200,000 or a half a million dollars more than what they should be, and give them this credit at closing, and try to play these financial shenanigans. But what all these people are doing is they're actually just delaying the inevitable. They're in complete denial of the current state of the market, and the longer they deny the real sale prices to come through, the harder it's going to get hit in the end, especially once more people find out this is what's going on. And the reality is, if people are offering 10% or 15% below what places were selling for last year, that's the new reality. That's the new price that people are willing to pay. I've always told you guys this on the channel, and this is part of the new housing market reality that everybody has to face, both buyers and sellers, is your property is only worth what the next guy is willing to pay for it. Whether that's more or less than what you paid is irrelevant. So this imputed equity that these sellers are hanging onto is nothing but a psychological coping mechanism. It's not a market principle. And it's not just the co-op board members in NYC that are doing this. A lot of home sellers across the country are still hanging onto unrealistic prices from two or three years ago. I see it all the time here in Miami, and I saw it over the summer in California.