Will The Denver Housing Market Collapse in 2026? I Wouldn't Bet On It!

How we doing? This is Destination Denver, Colorado. And today, my 2026 housing market predictions. What's coming? When it's gonna hit? How you can win? And we're starting right now. All right, this is Destination Denver, Colorado. I'm your host, Drew Mavris. Listen, there's two things we do here. One, we talk all things eating, living, breathing, experiencing the Denver Metro and Colorado Front Range. And two, as a licensed mortgage broker covering the entire state of Colorado and teamed with some of the state's most talented realtors, we're helping people like you move here each and every day. So the number and email on your screen, just know that I'm always the person. Answer your phone calls, answer your texts, answer your emails there. When and if you need me. Now that we're done with that fun-filled stuff, let's get to 2026 and what is in store for the housing market. So odds are, if you're paying attention to the housing market, you're hearing two very loud voices. I don't know how much you're paying attention to either one, but you're hearing folks who say the market is going to collapse. Housing crash is inbound. We're going to see home prices drop 20, 30, 50% if you're Melody Wright and you pay attention to small neighborhoods in Texas. And then you've got folks that are pro-housing market and they're not just pro-housing market, they're pro-marketing housing market. And they're talking about everything is perfectly fine. Rates are going to come down a little. Home prices are going to start jumping up again. If you're a home buyer, you better buy now because we can't just tell people to prepare. We have to scare them into trying to do things faster on our timeline rather than theirs. But I digress. In reality, what you're going to get in this video is very simple. One, I don't think 2026 is going to look that much different than 2025. I think we're still going to have elevated interest rates. I think we're going to see most areas where appreciation is either not happening. We might even have small price decreases in areas where, especially the market was hot during the pandemic. You might have areas like Denver where appreciation has been very level for the most part. And then you will have, I mean, when we're talking nationwide, areas that were not hot during the pandemic that are now seeing appreciation. They're in a healthy spot because their home prices weren't increased dramatically from 2020 to 2022. Now, the focal point of this video is talking about some of the elements. What's going to happen in 2026 that will impact our market? And so to do that, we got to unbox some of the bigger ticket items. And the first is the fact that we're going to get a new Federal Reserve chairman in May. Now, we don't have to wait until May to really have this start to impact the market because odds are the announcement of who is going to take that role is going to take place in January. We've heard as early as the first week of January, but at some point in January, maybe early February, we're going to find out who the new chairman of the Federal Reserve is going to be. And to make sure you understand this, as the White House announces who is going to be the Fed chair of the market, the Treasury bonds, the mortgage-backed security market that controls mortgage rates, Wall Street, they all move in anticipation of what they expect to happen. So the odds on favorite for these positions is Kevin Hassett or Kevin Warsh. Now, granted, there are other candidates. There's a possibility it goes either way, but both Kevins, if you will, are pretty high on the list. Odds are they are the favorite. So here's the key here. Wall Street doesn't wait for this chairman to be sworn in. They don't wait for this move. They're going to act off of speculation and political positioning. Odds are, based on this administration, whoever gets chosen is going to be pretty dovish. They're going to want to see lower interest rates. Now, will they get their way? Will the administration get their way of lower interest rates? Will the Fed chairman get their way of lower interest rates? It's not that simple. It's not as though this chairman who gets selected suddenly has all the power. No different than Jerome Powell now. Very large voice, very powerful voice, but not necessarily the end all be all. For example, Jerome Powell, when he leaves his position in May, is still going to be part of the Federal Reserve Board. He's still going to be a voting member. His opinion is still going to carry weight. Second of this is the perception, again, as I mentioned earlier, of a dovish, meaning lower interest rate, chairman. Someone who is dovish versus hawkish. Again, I'm pretty sure you can figure that one out. If you're hawkish, you are for either keeping rates the same or higher interest rates. You're very concerned about inflation. You don't want certain things to get out of hand in that regard. So right now, odds are this administration is going to choose someone who is all about lower interest rates, and you would expect Wall Street to really like that. You would think stock prices will go up. What will happen with treasury bonds is a little different, because if you put someone in who wants lower interest rates and there is a large risk that that then starts inflation, or excuse me, increases the rate of inflation drastically, that is terrible for bonds, treasury bonds that fund our debt as a country, and that is equally bad for mortgage rates. So while we want to see lower interest rates, the market is going to pay very close attention. Remember always, inflation, really bad for bonds. If there's a threat of that, rates are going to go up. And the last thing I would say here is, again, just because you have a new chairman, keep in mind that the vast majority of the current board of the Federal Reserve is in place until 2031. There'll be new leadership, but you have most of the core people. It's like having your favorite football teams core together for five more years. The next very interesting thing as we get into 2026 is because we are still catching up from the government shutdown that occurred earlier this year. There's a lot of reports that have not been released or a lot of data that has been backed up. We saw certain reports, like CPI came out recently, we got a jobs report, but in January, we will get jobs data. We will get CPI. We will get producer price index. We will get labor turnover surveys. And these are all landing. All of these reports are going to land in the first couple weeks of 2026. And a lot of these are catch up. We don't know, let's be real, we never know exactly how accurate some of these reports are, but we really don't know how accurate this first round of reports were in December because of the government shutdown and because of how much guessing they acknowledge they do. Now, understand on any of these reports, if I'm doing an inflation report for you, I'm collecting data. I'm getting data from grocery stores, different surveys. If I don't have enough data, I have to make some guesses. Sometimes I have to substitute items out. Maybe instead of Prime Ribbon, instead of this item, I'm using this item. Instead of this brand of toilet paper, I'm using a cheaper brand of toilet paper. Long story short, the information on inflation, on job growth, on unemployment, it's shaky right now. We just don't know how accurate it is based on how much guessing they had to do. So in January, you're gonna get all of these reports. If the reports are strong, let's say we show strong job growth and let's say inflation still looks like it's really low, good for the economy, bad for mortgage rates. That means mortgage rates stay steady. Now, if these reports come out, inflation is going higher, that would be bad for mortgage rates. Now, if we get these reports in and they still show that inflation is moving lower, that's good for rates. If we get a little more accuracy and it still says inflation is going lower, which I do not expect to be the case, that's good for interest rates. If we see that job growth is holding steady, not blowing up, but it's holding steady, still pretty good for rates. That should hold rates steady. The only way that rates really move lower is if you have inflation showing really low. I'd say in the mid twos, 2.5, 2.6, and you have job growth being non-existent because bad things for the economy equal good things for mortgage rates. And it will be interesting throughout the year to watch these reports as they come out. We already saw last year, and I'll let all of you political commentaries jump on me for this, but we saw a really bad jobs report come out towards the later half of last year. And because of that jobs report, the person in charge of the Bureau of Labor and Statistics, the people who organized this report, that person was fired by the president. Now, when the reports come out and they're positive for the economy or they make certain people look good, we tend to support those reports. We tend to say that they're accurate. So we will see how these reports come out this year. We will see how tricky this situation is. Because again, as I mentioned, good things for the economy means bad things for rates. You have, which I'm leading to next, midterm elections later in 2026. So if we want interest rates to be lower, we need bad economic data, but that's not good for getting reelected. So it's going to be a bit of a balancing beam here and very interesting to see how that plays out. Which leads us to, again, that third key factor, and that is midterm elections in November of 2026 and all the buildup leading into it. Will the Republicans maintain power in Congress? Will they still control both houses? What will be the talking points? So you're going to have primaries earlier in the year. You're going to have a ton of economic rhetoric. You're going to have jobs and inflation and affordability. And what party is doing more for their people? And which direction is the country going? You're going to have lawmakers talking about tax and housing policies, and talking about points of state and federal races. And this is going to be a big deal. Housing and affordability in general is going to be a massive ordeal. How much progress have Republicans made in power over the last couple of years? Now, granted, we've only had about a year of this administration so far. So if things are moving in a good direction, you know, they may carry midterms, you know, if the economy moves well. But if the economy starts to show weakness, and there's a chance that Democrats take over, that adds another layer of intrigue and another layer of confusion. Sometimes, you know, if people are thinking about buying a house, the one thing they don't want is confusion over what's going to happen with the economy, what's going to happen politically. They don't want that uncertainty. Primaries can definitely impact that. And that's huge. I mean, you'll have buyers who will hesitate because of political fog. You got sellers who hold out because they want policy clarity. Who's going to be in charge of making policy as far as capital gains and how it might impact the sale of your home. Investors pull back because they're not sure what's going to happen with these assets. How quickly is the asset I buy going to go up in value? And so my prediction for quarter four of 2026, I wouldn't necessarily call it bold, is that you're going to see a slowdown in transactions. Again, that's not me looking into a crystal ball there. I think a lot of people will make that prediction. It's pretty common that as we get closer to elections, people kind of just freeze in place. They wait to see what's going to happen. And you'll see it, the people who like the outcome of the election tend to have more belief in what's going to happen in the future. So they start to move again. And the people who do not like what happened in an election, they tend to hold steady because they're either not certain or they flat out believe that things are going to fall apart. Saw that in 2024, 22, 20, you name it. It happens every time there's election. There's always a freeze for everybody. And then basically half of us start to move a little faster than the others. Probably my boldest prediction that I'll give you, because it's a strategy that I'm considering following myself, is purchases in 2026 in quarter four, like December, late November, December, 2026, there are going to be some smoking deals. Because I just don't think there's going to be nearly as many buyers out in the market. Because as I just previously mentioned, half of these buyers are going to be uncertain about whether they want to do anything. So the people that are moving, you're going to have even less competition than you already do during a time of the year where things aren't moving that much anyway. So let's quickly talk through kind of some quarter by quarter predictions, if you will, or what might happen. So again, quarter one, we're talking January through March. You're going to get some data shock. You're going to get some initial volatility because we're going to get all these backlog, BLS data reports. We're going to get markets repricing their long-term yields. Because again, inflation, employment, all of these things. Who is going to be investing in our country, in our country's debt based on this? So rate volatility will become a phrase you hear all the time on CNBC. So you can expect headlines like jobs beat, CPI missed, what this means for your mortgage. All this scare tactic stuff might come out. As far as mortgage rates themselves, I don't see a lot of movement. I see maybe an eighth of a point, a quarter of a point in extreme. Right now we're kind of low sixes as of the beginning of this video, low sixes for a 30-year conventional. And somewhere in the high fives, mid fives for any VA or FHA. You could expect much of the same, certainly through the first half of 2026. Refinancing discourse, I mean, again, that continues to push from when will it happen to does it really matter? Are we going to make this move in the first place? And then early optimism for 2026, I just think it's going to start to fade a little sooner. As far as it being this bigger year than 2025 or 2024, I think really quickly we're going to realize, nope, we're in for a very similar year. Let's buckle up, let's get through it. Quarter two, we're talking April through June. As I mentioned earlier, that's when you get the Fed chair decision and really you get rate reality. This is when things really start to happen, not just anticipation. So the nominee for the next Fed chair is official. You get markets start to front run the narrative and they start really moving that as we get into our May and June Fed meetings, first meetings run by this new chairman, especially getting into June. Commentary shifts from our rate cuts ahead to will we get maybe one more cut? Will there be one more movement this year? So a lot more guessing because we won't have a history. We've seen Jerome Powell for multiple years. We have a pretty good idea of what he does and how he thinks. We don't know how this new Fed chairman is going to act yet. So recent commentary shows the Fed has signaled that they'll likely pause. Maybe they make one more cut in 2026, but I think they want to wait. They want to hold off. They still want to see how the economy is going to go, how tariffs, a lot of things at play. So people realize, I think here's the biggest thing, that 6% rates aren't this winter fluke. They're not a temporary thing. They're persistent, they're structural. And I think right there in quarter two of 2026 is when that becomes as stable as stable gets. That's when people really realize, okay, we've hoped, we've prayed, we've wondered if rates are going to come down. They're not. We just have to be here. This is where we are. What does that mean? It means lenders pivot. Hopefully some of you learn, as I have, that you pivot from let's wait until five and a half or I think you can get to five and a half to be prepared for six. Let's be prepared for six and find success with 6% interest rates. Buyers who are on the fence, they start negotiating harder. Sellers realize that this idea that you're going to sell for top dollar of this imaginary, it's not real. That you can't price your home based on what somebody else sold for a few months ago. You have to price for what other homes in your area are listed for today. And you have to be listed competitively because if you don't, your house is going to sit on the market for months and months. And I do think that in large part, because of this reality, because of this just accepting that we've hoped that it's going to change for a couple of years, it hasn't. You're going to get, again, more of that lock-in effect. Certain people just saying, you know what? We hoped it would change. We hoped we would be able to buy a house. We hoped we would be able to sell a house. It's not happening yet. We're just going to stay put. I think you're going to see more of that lock-in effect to 2026. Quarter three, again, very quickly, July through September. The summer slowdown kind of meets reality check again. We start to get into more politics, more talking. We're going to have a much clearer idea of where the economy is going, things that have occurred. You know, buyers, again, they're already pricing in, aren't 6% interest rates the way it is. Sellers are taking advantage as best they can of the hotter season. And we get through, you know, usually the springtime brings the most buyers out. After Mother's Day, things start to slow down. We should anticipate that. Activity dries up, but it's not panic. I don't think people at this moment are going to be panicked about it. It's just going to be the reality of affordability and holding off. More than half the homes will sell with concessions during this, you know, July through September period. Just expect it, especially in markets and especially neighborhoods that are not hot. If you've got your average typical house, with all respect to it, I live in the average typical house, expect that you're going to have to help your buyers. You're going to have to give the buyers of your home some concessions that help them lower the interest rate, cover their closing costs, do something. I would predict at least half of the homes will get concessions or lower sales price. You're just going to see that. This is the logic that Denver faces right now. This is part of us, again, going through that correction. And then Q4 happens October through December, which is typically a slowdown anyway. This becomes even more so because you have election watch, you have decision freeze. You know, election years always create behavioral stall in markets. People delay decisions, you know, really until they know what is going to happen politically. So what this looks like. One, you have volume dips. You've got price negotiations that get really sharper. Buyers tend to tighten their criteria. They get more picky because if they're going to do this, they really want to do it. And then sellers hesitate to list. They're just not sure. Like, should I do this now? There's a lot happening. Again, this is not a crash. It is a slowdown. It's a stall driven by psychological considerations, things happening that are out of our control. And the last couple of things to consider, we'll shoot through quickly, are just some outliers of what could impact. One, you're going to have pushback on data models. This is the year where, you know, a BLS report comes out. There's delays, there's revisions, which have always happened. The methodologies of collecting this data. There's just a lot of people that are not going to trust these reports. People that are going to say they're not good enough. People who are going to say they're not bad enough. So this is like writing a whole new rule book of how we really navigate these markets and how we, you know, decipher this information. Two, the Supreme Court is likely going to make a decision. They're going to get involved in how much independence the Federal Reserve has. Now, I think the Federal Reserve is going to maintain its independence, but there's a lot of cases. There's a case related to a Fed governor's attempted removal that will be, you know, that will be kind of a key factor in 2026. And it will really have this implication of what control anyone can have over the Fed. Right now, the Fed is supposed to be an independent operation. It does whatever it wants, good or bad. The Federal, the, excuse me, the Supreme Court could impact that. And then treasury supply and deficits. I mean, listen, the national debt, we could talk all day about this. It's continuing to get worse. We're continuing to print more money. That causes more inflation. Continued deficits, long-term yields, likely to stay higher. This is irrespective of what the Fed cuts do. The Federal Reserve could cut rates that could still cause 10-year treasury bonds in particular to increase. The 10-year treasury tends to be what impacts mortgage-backed securities and mortgage rates. So Fed cutting doesn't fix everything. So our bold predictions for 2026. One, mortgage rates will average, you know, I'd say 6.1 to 6.4%. Maybe we dip into the high fives, but don't expect a refi boom. You can cancel that. Expect only one Fed rate cut next year. I mean, I don't see more than that. If they do, it's because we got some really bad economic data, which again, certain people do not want to see. I don't think that'll be the case. Quarter one, 2026 volatility will be driven by this data backlog. Not really by economic shifts, but by us finally getting all this information about it. Summer of 2026, you can expect that to be concession season for buyers. If you're thinking about buying a home, that's when you're going to get a lot of money from sellers to drive down your interest rate and cover closing costs. It's going to happen. Again, Q4, fourth quarter into the year will be all about elections. It'll be the freeze. It'll be confusing. And then as far as Denver and similar markets, just expect it to underperform the national average. Denver is just an expensive place. So because of that, it's not a crash. It's more stagnation. It's more price correction, which long-term, I'll keep beating this drum, long-term is what we need. So to wrap it up, how do you act? How do you win? Again, buyers, I'll keep saying it. If you run mortgages, you talk to someone and you run mortgages based off of roughly a 6% interest rate, I think you're setting yourself up for success. Because if you can stomach that payment, if rates get a little better, a little better, you win, but you're not set up for failure by pricing things at a 5.5% interest rate that odds are you're not going to see. Sellers, hiring the right agent now, and I'm not a real estate agent, at the end of the day, who you hire is who you hire, but make sure you are interviewing agents that know what they're doing. We use that term so loosely. But the agents that know how to price a home right now and how to price it strategically, they're winning, and their clients are winning. Their clients are getting good offers on their home, and they're not getting beat up. Far too often, I see sellers who put their house on the market and they throw out a number. I want to get this for my house. And in this market, their house isn't worth this. And the problem that becomes is because it's listed here, it keeps dropping and dropping and dropping. And it's like an animal bleeding in the woods. Bleed a little bit and predators start coming. So that house starts to sit, you start to cut price, and next thing you know, you're not just walking away with what you thought you might get, you're walking away with far less than your house was actually worth because you didn't price it correctly. And if you're an investor, I mean, at the end of the day, you know your numbers. You know if you're using a DSCR, you know if you're looking short-term, long-term. A lot of great markets to be had. Tough to make numbers work in Denver. That's why I work in a lot of different states to make those. But at the end of the day, continue to look for opportunities because as in any market, they continue to be there if you look hard enough. So 2026 is not chaos, it's not crash. If I could just impress upon you, beg you, don't listen to the doomsdayers. Doomsdayers who say the market is going to crash are relying on so much desperation from people that are just desperate. You know, there are people that want to sell their homes. There are people that, a few that are desperate to sell their homes, but the vast majority of people, they would just prefer to. And that is not desperation. That's not what leads to a housing crash. 2026 will be steady. It'll continue to correct housing prices that have needed to be corrected for, let's say roughly 15 years. It'll be all right. Then in 2027, we'll see if the same thing happens again. In the meantime, this is Destination Denver, Colorado. I am your host, Jim Harris. If I could ever be of any service, just know the number and email. I'm always the person to answer your phone calls, answer your texts, answer your emails. That was my 2026 housing market predictions. What's coming, when it's gonna hit, how you can win. Till I see you next time.