2026 Real Estate Forecast: Will Prices Rise as Rates Fall?
What does the 2026 housing market have in store?
If you’re a buyer or seller hoping for dramatic shifts, here’s the honest outlook: it’s going to be a slow burn—not a sudden spike. In this video, I break down what the smartest economists are saying about where home prices and interest rates are headed—and why California's housing crunch isn't going away anytime soon.
Spoiler: it’s not going to be a buyer’s market.
1. Interest Rates Will Likely Fall (But Not Crash)
Experts agree: rates are expected to gradually decline in 2026.
We’re not talking about a plunge back to 3%, but you might see rates drop into the 5–6% range
This slight shift is expected to unlock buyer demand, especially from those who’ve been waiting on the sidelines
More buyers = more competition = upward pressure on home prices
Key takeaway: Waiting for rates to drop significantly might backfire if home prices rise faster than your buying power.
2. Home Prices Will Keep Rising—Slowly
The days of double-digit annual price jumps are likely behind us, but modest appreciation is still on the table.
Expect ~2% growth per year in most East Bay markets
That means buyers hoping to “time the market” may find prices have inched up while they waited
Supply remains tight—especially in areas like Walnut Creek, Lafayette, and Moraga
Local angle: We simply haven’t built enough homes in California for decades. Even with rate relief, demand will continue to outweigh supply.
3. Why It Won’t Be a Buyer’s Market Anytime Soon
Many buyers are holding out for a better deal. But in California, that strategy might not work.
Here’s why:
Inventory is low and builders aren’t catching up
Millennials and Gen Z buyers are still entering the market
Prop 13 and Prop 19 are keeping many would-be sellers in place
Unless there's a dramatic economic shock, sellers will still have the upper hand
Reality check: It’s not about waiting for the “perfect time.” It’s about getting the right home, at a rate you can afford, before prices move further up.
4. What Buyers Should Do in 2025 to Prepare
If you’re planning to buy in 2026, don’t wait until January to get serious.
Here’s your game plan:
Get pre-approved now so you’re ready to act
Track neighborhoods you’re interested in
Work with a local agent who knows off-market inventory
Ask about rate buydowns and seller credits—they’re still out there
5. For Sellers: Opportunity Is Still Strong
Sellers: you may not get 15 offers in 3 days like in 2021, but you’re still in a strong position.
If rates fall and demand picks up, 2026 could be a sweet spot for selling
Prepare now: clean, stage, and make minor updates
Price realistically, and work with an agent who understands shifting buyer psychology
Conclusion: 2026 Is About Strategy, Not Timing
The 2026 market won’t be dramatic, but it will reward buyers and sellers who are prepared. Lower rates will bring more movement, but not enough to turn the tables completely.
Whether you're buying or selling, the key is working with a local expert who understands both the data and the nuance.
Have questions about how to prepare for 2026?
Contact the 5 Star Team today. We’ll help you make smart moves, no matter what the market throws our way.