As 2025 winds down, we want to share our perspective on what we feel is ahead for our local real estate market. We anticipate 2026 will mirror the patterns we've seen in 2024 and 2025 - and that's not a bad thing. Interest rates are likely to hover around 6%, though we'll be watching closely as a new Federal Reserve chair is appointed shortly and takes the helm next year.
While many hope for interest rate cuts, we encourage a balanced perspective. A significant rate decrease could trigger a rapid rise in home prices, potentially offsetting any affordability gains. The good news is we expect to see some natural easing of affordability, as incomes rise and housing prices stabilize.
Our region remains well-positioned. The Midwest and Northeast markets are projected to maintain current conditions or even see improvements, while coastal markets - particularly Florida, Texas, and California - face more challenges. Florida, especially, is experiencing difficulties due to rising insurance costs and demographic shifts. If you are looking to scoop up a Florida home now is a time to consider that! Same w/ Arizona. Let us know if you need a referral for a great Agent as we are well connected in both markets.
We're watching several key trends that will shape our local market:
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Baby boomers are increasingly looking to sell larger properties as maintenance becomes challenging due simply to age
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Market pricing has definitely softened since the strong start of the year
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Today's pricing, not last month's, is what matters most
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2026 will likely see more repeat buyers and fewer first-time buyers
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We're noting more instances of younger boomers and older Generation X parents helping their children with down payments or home gifts
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Property taxes have increased significantly (up to 30%), affecting those on fixed incomes/Watch for this to be a catalyst for necessitating a move. Sad but happening.
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New construction remains expensive, keeping inventory limited as many elect to renovate
Despite these shifts, it's important to remember that it's always somebody's market. Our role is to help you navigate these changes and understand how they affect your specific situation. The fundamentals remain solid: Inventory is limited, and demand for quality homes continues. Real Estate does not stop because life events are in constant motion.
As we look to 2026, we're mindful of the significant impact of AI on various industries and how this might affect retirement plans and the broader economy. How much of a factor this is on the labor numbers which strongly affects the interest rate remains to be seen. Yet we remain optimistic about the resilience of our local market! The Midwest has been robust and thriving due to affordability, safety and natural resource factors.
In closing, we feel very blessed to do what we do: Helping people find homes where they'll create lasting memories. That's what truly matters. Here's to a healthy and memorable 2026!
Merry Christmas from our homes to yours!
