2026 Year in Review and Year Ahead

It’s the beginning of a new year!! Time to look at how our market has changed over the course of the year.

Rates

As Jerome Powell’s term comes to a close, the Fed is under significant pressure to lower rates. If employment issues continue to grow, the Fed will likely have greater opportunity to cut rates and potentially create opportunity for lower rates. However, if Trump is able to push for banks to put a cap on interest rates for credit cards, credit might be harder to come by including mortgages.

Rent growth 2026

Because inflation has still been relatively high, most landlords will be able to increase rents by 8% until July 31, 2026. That is a drop by .9%. The general rule of thumb is 5% plus CPI with a cap of 10%. This doesn’t mean that all rents are up by 8%. Rent growth both nationally and locally is supposed to by relatively flat aside from those that are under market.

Year over Year changes in Sales Price

This past year, our average sales price held with a few peaks through our high sales season. With the optimism of lower rates on the horizon, oftentimes, the same home becomes more affordable with refinance opportunities. In areas like coastal Orange County where property is generally perpetually desirable, we are less likely affected by the threat of unemployment. We are also likely to benefit from the upcoming legislation in Los Angeles County between the mansion tax, red tape frustration and rent control.

Affordability

Affordability has improved by about 5%. We continue to improve affordability even if only by a marginal amount. If employment continues to be a challenge, which should give the Fed room to reduce rates, affordability should continue to improve.

Inventory

Inventory and months of supply has been trending back down by about 17%. The market is certainly buoyed. We have a lot of elements trending back into the sellers favor: interest rates, affordability and lower inventory. .

Year over year volume of sales

One of the bigger jumps is the volume of sales. At over 25% jump in the volume of sales, our market is certainly still moving. Demand continues to be strong. People still like housing as an investment. And people still need a place to live.

List price versus Sale Price

This ratio stayed very tight ranging from 97-98% of purchase price. Many sellers have proven that they’d rather pull their homes from the market, or rent their home if they aren’t getting the number they want. However, moving forward, we may begin to see a bit of a divergence where some homeowners who are affected by employment struggles or turned their home into an ATM machine might be under pressure to sell and forced to find the market. This is likely to be a small percentage of the market, but there will be some.

Year over year changes in days on market

Average days on market didn’t change much. Properties were generally on market for less than 70 days suggesting strong demand.