U.S. Housing Market Cancelled – Zillow Cuts Forecast

Zillow just downgraded their 2026 housing market forecast and now Zillow is forecasting values to drop in roughly half of the cities in the U.S. This marks a pretty big shift from where Zillow's forecast was only three months ago when they forecasted that prices were going to go up 1.9 percent in 2026. Now they think prices are only only going to go up 0.5 percent based on their most recent housing market forecast spreadsheet. Now why is Zillow downgrading their forecast? One of the big reasons is persistently low demand. Pending home sales to start 2026 are at their lowest level on record and ReVenture's housing demand index right now is only a 10 out of 100, also near the lowest level on record. Quite frankly, the demand to buy homes in the U.S. is at its lowest level that we've ever seen. Some of the markets where Zillow thinks prices will drop over the next 12 months include Dallas, Houston, Washington, D.C., San Francisco, Seattle, Denver, and San Antonio. However, what I'm seeing here on the ground, everyone, is that we have the potential of an even bigger downturn because every single day I find new listings with big price cuts. I find sellers taking losses and I'm going to show you some listings here in a second where these houses have been on the market for three or four or five months and the sellers are cutting prices and the buyers just aren't coming in. Here's one example, everyone. This is a three-by-two currently on the market for $434,000 here. This house has been on the market for 120 days. That's the true days on market and they've already done some price cuts. The owner of this house bought it in 2022 for around $430,000. So in four years, no appreciation on this house. They're basically breaking even maybe even losing some money on the realtor fees. The question is, what is a house like this actually worth and what is the price that this house would sell at? We're actually in a fairly desirable zip code south of Nashville in Nolensville. Our long-term growth score for the zip code on reVentures is 60 out of 100, high incomes, good demographic growth. However, we plugged that listing into our listing analyzer tool and we're coming up with a conservative offer on that house of $383,000. So our listing analyzer tool looks at how long the house has been on the market, how much they're trying to increase the price, how prices have changed in the zip code, what the market per square foot norms are. And we make a suggestion for buyers and we're suggesting $383,000 as a conservative offer, around $400,000 as a fair offer on this house, which is listed for $434,000. And one thing I think we're going to see in 2026 is more sellers coming to terms with reality. More and more sellers are taking on higher interest rates and higher mortgage payments as more and more people get the six to seven percent mortgage rate. And I think we're just going to see more of those sellers finally say, hey, I know I've been taking my house off the market, on the market for the last five or six years. I've been trying to rent it. Now's the time to actually sell and cut the price. And one trigger for this, everyone, could actually be the war in Iran right now. The war in Iran is something that's not, I think, directly impacting the housing market yet. However, we're seeing as a result of the war, the interest and mortgage rates go up. So the 30-year fixed mortgage rate is now up to 6.7 percent. Now, only a month or two ago, everyone, the mortgage rates actually dipped down to around 5.9. Now they're back up to 6.7 because the long-term bond yields are going up. People are concerned about inflation due to the rising gas prices. You actually see now we have the highest mortgage rates we've seen in nine months on the U.S. housing market. And I don't actually really think these mortgage rates are going to impact demand too much. Demand is already very low. But I think the mortgage rates might do is kick some sellers into gear in terms of cutting the price and getting out of this fantasy that many sellers still are in about the market needing to continue to go up, about thinking that their house is worth what it was three or four years ago. I'm actually going to show you guys some other houses here in a second that have been on the market for a little bit where sellers are doing big price cuts. We're going to try to project what these houses might actually sell for. First, I actually want to talk about ReVenture's forecast for the housing market in 2026 and 2027. How much do we think prices are going to go up or down in different parts of the U.S.? We established in the beginning that Zillow's forecast spreadsheet shows a 0.5% increase March 2026 to 2027 on a national basis. ReVenture actually is forecasting prices are going to go up 0.2% on a national basis the next 12 months. Our forecast takes into account inventory trends, days on market trends, price cuts, recent appreciation. You can see this forecast has just been ebbing down over the last couple years. We actually had the most accurate housing market forecast in 2025 of any major data provider compared to the other big real estate data providers. In fact, on a metro basis, ReVenture's forecast was six times more accurate than Zillow's in 2025. In 2026, it's around four times more accurate on a metro by metro basis. ReVenture is the top home price forecaster in the U.S. right now, and we're seeing flat prices nationally, which might be disappointing to some of you guys out there who are wanting the crash to happen faster. However, if prices are forecast to be flat nationally, that means in a lot of areas you could see declines as big as 10% in average value, and in certain listings could be going down 30% to 40%. I think we're going to need to see some listings go down 30% to 40% before the buyers come back. I actually polled you guys, and I asked you the question, how are you feeling about buying a house in 2026? What's your attitude towards buying? The results were really interesting. A lot of realtors and mortgage brokers out there and a lot of investors and mainstream news analysts, they think the demand is coming back. They think a rebound is around the corner. When you take a look at the results of this poll, it's very clear that's not the case. 4,000 of you voted in this poll, and only 8% of you are definitely buying a house in 2026. 9% of you would buy a house if prices dropped 10% to 20%. 42% of you would buy a house if prices dropped 20% to 40%, and around 42% of you are definitely not buying this year. Now, my YouTube channel represents probably the biggest collection of people interested in real estate in the U.S. I have almost 700,000 subscribers. These polls get thousands of votes, 4,000, 5,000 votes. That's well above the sample of a traditional poll that you see in the news. What I think this proves is that buyers have a lot of inertia right now on the housing market. Only 8% of you are definitely buying this year. Only 9% of you are buying if prices drop 10% to 20%. That shows you that we're going to have persistently low demand until there's some real improvements on price and affordability. And that's just the reality of the market, and I want everyone to understand it, because I fear that there's a lot of people in maybe politics, in real estate, working for realtor organizations and prop tech companies. I think a lot of them don't truly get the type of environment we're in, and that the reason the demand is so low purely has to do with prices. It's the home prices that are in a record bubble. You can see on this graph, inflation-adjusted home prices are in the biggest bubble ever going back 130 years, even bigger than the 2006 bubble, while the mortgage rates around 6% to 6.5% are pretty normal. And so, if you are a seller out there who wants to sell your house in 2026, you need to price below market. You need to be in front of this downturn. You need to use ReVenture's forecasts for your neighborhood to help you understand where the market's heading, so you don't end up being one of these sellers, like I'm showing you in this video, who has been on the market for four or five months and is having a miserable time selling their house and having to cut the price by more, simply because they weren't aware of the market. A big mistake a lot of sellers make is they talk to the listing agent, and the listing agent might try to guide them a bit lower on price, but they have an idea of what they think their house is worth. They might try to find a comp from three years ago and say, oh, that's what my price is. Folks, this is a different market in 2026. Zillow's downgrading their forecast. Zillow's saying prices are going to drop in half the cities in the US. I mean, Zillow's normally kind of optimistic about the market from what I've seen. It's just my opinion. So, if they're even forecasting half the cities to go down, and you're in one of those cities, and you're selling, get with reality. Be careful. Now, this is a... the site I'm walking around in right now was a new build site back in 2019, and definitely looks a bit nicer than a lot of the other home building sites I've walked around. You know, you can see there's actually trees here. You actually have these silos here, very Tennessee style. I don't know if these are grain or grain silos or water silos, but actually has a bit of a neighborhood feel, a bit of a character to it. Me, personally, I would rather live in some of the... a neighborhood like this than some of the other home building neighborhoods I've walked through. You guys can let me know what you think. Would you ever live in an HOA? I know a lot of people right now are not liking the HOAs, even though the HOA fees on these are about $100 a month, not that expensive. Some people just even hate the idea of being in an HOA in 2026. It's funny, HOAs used to be viewed very positively. You know, 10, 20 years ago, it was viewed as like, oh yeah, I want to be in an HOA, because that's going to protect the value of my house. Now people view being in HOA as a big negative. They view it as taking away their freedom. They take it as infringing on their rights. They don't want to be fined for doing X, Y, Z. I think it's interesting to see that shift. Pretty much every builder community is in an HOA. Could be one of the reasons why builders are starting to struggle on sales maybe and are cutting prices. So folks, this is another house that's for sale in Nolensville, Tennessee. I'm curious what you guys think this is going to sell for. The owner bought it in 2019 as a new build for $503,000. Then they listed it for $875,000 two months ago. They've since cut it to $799,000. And I think this house is a really interesting test case in what's going on in the U.S. housing market and potentially the disconnect between buyers and sellers right now. So that owner's had to cut $75,000 already. It's still sitting on the market two months later. They're having an open house. We'll see what it ends up selling for. But I dug into the numbers on this and I want you folks to pay attention to what I'm about to show you because I think this reveals why the housing market feels the way it does to both buyers and sellers. So if you were to buy that house here at $799,000, your mortgage payment inclusive of taxes insurance would be $5,700,000 a month according to Zillow. And that's just crazy folks. That's wild. $5,700,000 a month mortgage tax and insurance. That's $70,000,000 a year almost. Which means gross household income would need to be probably close to $300,000 in order to take on that mortgage payment. Now the owner of that house according to homes.com has a mortgage of around $480,000 and an estimated interest rate of around 3.7%. Meaning that the owner of that house who's selling it has a payment including taxes insurance of $2,600 a month. And so this is where things get interesting. Existing owner has a $2,600 a month payment. New buyer would have a $5,700 a month payment. So a new buyer might be looking at that like, oh my gosh that's so overpriced. $799,000. $5,700 a month. I can't afford it. But the owner of that house might be looking at it like, hey my payment's only $2,600 a month. I could probably rent that thing out for $3,400 a month if I wanted to and actually make some cash flow. And it's this disconnect between the payment that existing owners have and the payment that new buyers have which is leading to this depression in the housing market where demand is at the lowest level of all time and where prices haven't gone down enough to bring the demand back in. So I just thought that was kind of an interesting observation. And if you guys kind of go and look at houses, I want you to start thinking in terms of what the seller might be thinking. Homes.com is actually really good. They show the mortgage on a lot of these houses if you scroll down. They show the mortgage. And the lower the payment, the lower the interest rate, probably the less likely the owner is going to accept the low ball offer or below market offer. The higher the payment, the higher the interest rate, more likely they will accept it, especially if they've already moved out and it's vacant. But I ran that address through our listing tool analyzer which we're working on. And we're still making some improvements to it. We'll have it out for our premium members in the next two weeks. But I ran it through there and we're showing a competitive offer would be around $730,000. So it's currently listed at $799,000. We're saying a conservative offer would be $730,000. So another $70,000 to go. If it did get that price, it would be about 40% appreciation from its 2019 price. Now 2019 was seven years ago. So if you assume maybe three to four percent appreciation over seven years compounded, the house just through that would be worth around $680,000 to $690,000. We're saying conservative offer at $730,000 based on the per square foot valuations. I think that'd probably be a fair price, right? If it sold for $500,000 in 2019, would selling for $730,000 in 2026 in a great area seven years later be worth it? I mean folks, Nolensville, south of Nashville, Williamson County, this is one of the most desirable places to live in the U.S. Has some of the highest home prices in the U.S. Actually, it's one of the most overvalued housing markets in the U.S. You can see Williamson County, Tennessee to the south of Nashville, 31% overvaluation, number 10 among large metro areas most overvalued. Again folks, you can see this is very different from a lot of the sites I've walked you through in recent videos. There's actually trees here, there's water features, there's even rolling hills in the background. You can see this is kind of the quintessential American neighborhood. The problem is a lot of home buyers, most home buyers, just can't afford these prices. And that's the ultimate rub in the housing market right now, the disconnect between buyers and sellers. And Zillow, they're downgrading their forecast. I think the sellers better pay attention because what I think is happening is the sellers with lower mortgage rates are thinking that they're in a privileged position. They're thinking that their mortgage is worth a lot and they're thinking that values are never going to drop. But what those sellers need to realize is that values are already dropping in a lot of areas. Zillow's forecasting prices to drop in half the cities in the U.S. in the next year. And that the longer we sit in this situation, the more owners of these homes will eventually have 6% to 7% mortgage rates. Over 20% of mortgage holders now have a rate above 6%. That's more than the percentage of people with a rate below 3%. We're just going to see more and more owners with a rate above 6%. So some of these sellers might think, oh, I have a 3% rate or 3.5% rate. I'm not going to cut the price. But folks, in a year, your neighbor might have a 6.5% mortgage rate and they will cut the price. So I think the sellers can only put off where the market's heading for so long. And my goal out there for you guys is to help you all as home buyers, investors, and sellers better understand the market, help you guys as buyers get a better deal, help you guys as sellers better price your home. We have the ReVenture Listing Tool Analyzer on the screen right now. We're going to be launching this in the next two weeks for our premium subscribers. If you want to get on the list, if you want to get an email to become a beta tester for the ReVenture Listing Tool Analyzer, sign up for ReVenture Premium right now. It's only $39 a month, folks. Very affordable price compared to how much you could save. As many of you now know, I just purchased a property in Atlanta using the ReVenture Listing Tool Analyzer, using ReVenture's Is it worth $39 to save $160,000? Well, I think the answer to that's obvious. Go to www.reventure.app right now. Sign up for that annual plan. You're not going to want to miss this data. You're not going to want to miss this new feature, the Listing Tool Analyzer. This is going to change the game for you guys as buyers and investors.