Zillow Forecast: Best and Worst Housing Markets of 2026 - BiggerPockets Real Estate Recap

Podcast: BiggerPockets Real Estate

Published: 2025-12-26

Duration: 35 minutes

Summary

Dave Meyer analyzes Zillow's 2026 forecast, highlighting regional variations in housing market performance. He explores where markets are cooling, where they remain hot, and what this means for investors.

What Happened

Dave Meyer dives into Zillow's 2026 Metro-level price forecast, highlighting the ongoing correction in the real estate market. He notes that many hot markets have cooled to normal appreciation rates of around 3.5%, with inflation currently at 3%, indicating that some markets may effectively be declining. Florida is particularly impacted, with significant declines in cities like Punta Gorda and Cape Coral, each dropping by double digits over the past year.

Meyer discusses the contrasting performance of markets across different regions. While Florida faces challenges, the Northeast and Midwest show robust activity, driven by affordability factors. Cities like Atlantic City, New Jersey, are expected to lead in growth, whereas Louisiana markets are forecasted to underperform.

Rents present another dynamic layer, diverging sharply from home prices in some regions. For instance, San Francisco sees a 5% rent increase despite falling home prices, while Austin experiences a notable drop in rent growth. This divergence suggests changing demand patterns and investment opportunities.

Affordability continues to drive market divergence, with investors encouraged to consider this factor in their strategies. Meyer emphasizes the potential for discounted property purchases in markets like Austin, California, and Florida, as well as the opportunity for institutional investors to capitalize on lower prices.

Despite some markets cooling, others remain competitive, with sellers outnumbering buyers by a significant margin, as seen in Austin, Texas. This imbalance highlights areas where buyers might gain leverage in negotiations.

Looking ahead, Meyer expects a return to more normal growth rates, with Midwest markets offering steady cash flow opportunities. However, markets such as Austin, Denver, Las Vegas, and Phoenix might offer higher returns but come with increased risks.

Key Insights

• Florida's housing market is experiencing significant declines, with cities like Punta Gorda and Cape Coral seeing double-digit price drops over the past year, contrasting with more stable growth in the Northeast and Midwest.
• Despite declining home prices, San Francisco's rental market is seeing a 5% increase, indicating a shift in demand patterns that may present new investment opportunities.
• Markets like Austin, Texas, are seeing sellers outnumber buyers significantly, suggesting potential leverage for buyers in negotiations.
• Midwest markets are expected to offer steady cash flow opportunities by 2026, while cities such as Austin, Denver, Las Vegas, and Phoenix may provide higher returns but come with increased risks.