Happy New Year!
As we turn the corner into 2026, let’s start by looking backwards.
Despite the fact that 2025 GDP and job growth outperformed most predictions, the housing market generally underperformed. Why? Because what truly drives behavior in real estate isn’t just the numbers — it’s how people feel.
2025 was a year marked by feelings of uncertainty. Consumer sentiment was weak, and volatility was high. So, the decision to buy was generally delayed — not dismissed, but delayed.
But, here’s the shift: In Q4 of 2025, we started seeing things turn. Inventory ticked up. Multiple offers returned. Optimism crept back in.
This is why we’re heading into 2026 with confidence. And we’ve got the data — and the on-the-ground stories — to back it up. Let’s dig in…
By the numbers
(Predictions + What’s Driving Them)
1. A Resilient Economy with Room to Run 📈
In 2025, despite the fears, California’s economy showed up:
- GDP grew 1.3% (vs. 1.1% forecasted by the economists at the CA Association of Realtors)
- Job growth hit 0.9% (almost double the forecasted)
- Unemployment held at 4.3%
But the big lesson? A strong economy isn’t enough. You need confidence and clarity — and we think 2026 will deliver more of both.
2. Inventory Is Still Constrained — And Getting Worse 🏘️
Not to sound like a broken record, but California isn’t building enough homes. Period.
- We issued only 559,596 residential building permits from 2020–2024, which is less than half that in Texas (1.2M+) and a little more than half of Florida (954K).
- The 2020s are on track to be the lowest decade for new home permits in California history
This continues to push prices higher over time, especially in the Bay Area.
3. First-Time Buyers Are Back — and They’re Ready 👩💼
Despite some challenges, we believe that the next several years will be standout years for first-time buyers.
- Homeownership in California is just 55.5%, far below the national average (65.1%)
- Yet, the benefits of homeownership are well documented across many factors, particularly in terms of net worth of homeowners.
Only 32.1% of buyers in California in 2025 were first-timers — the lowest in 6 years (long run average is 37.1%). HOWEVER, 78% of renters surveyed said they still plan to buy in the future.
We also know there’s a major education gap:
- 63% of renters would consider buying if they knew low down payment options were available
- 50% wrongly believe you need more than 20% down to buy
We’ve been seeing the push for higher homeownership rates among this segment over the last few years with various governmental programs and policies. We expect to continue to see these incentives. For example, credit score. Rules for Mortgages are changing in 2026 to make it easier to qualify.
(As a sidenote: We’ll be doubling down on first-time buyers in 2026 & beyond. We believe it’s where the opportunity — and the need — are greatest. And, frankly, where we are uniquely positioned with a super dialed process that we’ve thoughtfully perfected over the last decade.)
4. When Rates Drop… Things Will Move Fast 🔮
Brian Buffini, one of the most well-known and trusted real estate professionals in the country, predicts 2026 will be the “Return of 2019” — a year defined by reasonable rates, rising buyer confidence, and strong sales volume.
- Buffini’s analysis: 550,000+ extra home sales if rates fall from 6.8% to below 5.8%
- Current CAR forecast has 30-year rates dropping to ~6.0% in 2026
5. Merger & Acquisition Wave = Market Bottom? 💰
2025 was a landmark year for real estate M&A, including:
- Rocket acquiring Mr. Cooper and Redfin
- Compass acquiring Anywhere Real Estate
- CoStar acquiring Domain
- CoreLogic receiving major investment
Historically, this type of consolidation signals a market bottom — as big players make moves when they believe value is about to climb.
Final thoughts
We’re heading into 2026 with grounded optimism. Buyers are circling back. Multiple offers are returning. Sellers are waking up. And, historically in the Bay Area, when momentum builds, it builds fast.
So whether you’re a first-time buyer, a seller finally ready to make a move, or someone curious what 2026 could hold for your home or investment — now’s the time to start the conversation. 🏡
Let’s talk strategy. The year is just beginning, but the window of opportunity is already open.
Our collective wins
3BD | 2BA | 1890SF | $2,250,000
San Mateo
Sometimes you just know! I met these amazing clients and set up our first tour. As I quickly got to know them more closely, I knew this was going to be the one! A truly special and well cared-for home, and I couldn’t be happier for them!!
2BD | 2BA | 1673SF | $1,770,000
Mission Bay, SF
Congrats on finding your home in your dream location! And, on the FAB price! It only took working through a mountain of HOA documents and a few curveballs during the transaction, but we preserved and the results paid off! Welcome home.
4BD | 3.5BA | 2996SF | $4,200,000
Central Richmond
We always say that we are here for you as long as it takes. For some clients, that means moving insanely quickly and getting keys in 30 days (or less). For some, it takes years to find that perfect match. After over 2 years, we could NOT be happier for this incredible family of four (+ 🐶) on their new, PERFECT home! We beat out multiple offers to win it for them, just in time for their kiddos’ first Thanksgiving and Christmas! ❤️🎄
