Transcription
Zillow has once again cut their housing market forecast for the rest of 2026 into 2027. This is a big deal if you're a home buyer, investor, or seller because Zillow, in my opinion, tends to be more optimistic about the housing market. So, when they lower their forecast, it means they're seeing something that's worth paying attention to. And you can see this in the Zillow home value and home sales forecast report.
They're now forecasting home values to rise only 0.3% over the next year. This represents a downward revision from last month's forecast as expectations for stronger inventory growth relative to sales weighs on appreciation. However, I dug into this data further market by market and found a lot of different cities where Zillow is now saying the quiet part out loud that they're expecting home prices to drop by more. You can see these cities on this spreadsheet which I downloaded from Zillow's website. Metros in blue are areas that by March 2027 they expect prices to drop. These include Los Angeles, Dallas, Houston, DC, Atlanta, Phoenix, San Francisco, Seattle, Minneapolis, Denver, along with a bunch of other markets. It looks like Zillow's forecasting a majority of areas to go down over the next year.
Now, this shouldn't be a surprise if you guys have been watching my channel. I've been reporting to you for much of the last couple years about how the housing market's slowing and how prices are now starting to drop. But I think what is different now in the spring of 2026 is that more of the mainstream in the housing market is now acknowledging this. Zillow has the most data pretty much of any housing market provider. Additionally, we're now seeing outlets like Redfin reporting that there's a record number of home seller price cuts.
But the unfortunate reality on the housing market today is that even with prices starting to drop in many different cities, they're still way too high and the affordability is still way too constrained. and that the average American really uh isn't interested in buying a house at today's prices and today's rates and that we're likely going to continue to see very low buyer demand in today's market due to this lack of affordability. And it's truly a historic lack of affordability.
On this graph, we're looking at the mortgage cost as a percentage of income in the US going all the way back to 1967. And you could see the problem in today's housing market immediately. In 2026, the typical home buyer needs to pay 38% of their household income on mortgage tax and insurance costs to buy a house. You can see that there's been two other periods in the last 60 years where this has happened. The 2006 housing bubble as well as the early 1980s mortgage rate bubble when rates went to 18%. And so we're quite literally in unprecedented territory with how expensive it is to buy relative to income. And what I think we're going to have to see is this mortgage cost as a percentage of income is going to need to drop closer to the long-term median, which is 27% before buyers start coming back into the market and before home prices start growing again. You can see prior to the pandemic, it was actually very affordable to buy a house. You would only spend 24% of your household income to buy. Now it's 38%. No wonder people are dropping out.
And on this map, you could see the different states measured by their mortgage cost as a percentage of income. And this is a map where you really don't want to be in red. If your state is in red, that means it costs a lot to buy a house relative to how much money people make. The worst state, the worst offender is California. 62% of the median household income in California, which is 105,000, is required to buy a house. Meaning that most people in California don't even have a shot of buying a house. Uh you could see most of the west coast in the US has this really elevated mortgage cost to income as well as parts of the Northeast including New York, Massachusetts, and New Jersey as well as Florida where it's 48%. Conversely, there's more affordability here in the Midwest in Ohio, West Virginia, Kentucky, Indiana, and Iowa. the mortgage cost to income ratio is less than 30%. Meaning local buyers can still actually qualify for mortgages and buy houses, which is one reason why home values are still going up in these states in the Midwest due to the higher affordability. It's also why prices and values are going down on the West Coast and going down in Florida.
And it's interesting, you know, you look at the home value map and you see certain states are down 2% year-over-year, 3% year-over-year, and that doesn't feel like a lot. However, when I look at certain listings, I'm seeing bigger and bigger price cuts on individual listings. Certain sellers are starting to run into a bit of a financial situation in this market and some of them are really starting to cut the price. Like on this listing in Aurora, Colorado, this is to the east of Denver. And as some of you might now know, Colorado is a market where this correction starting to really gain a foothold. This is a house built in 2024. the owner bought for $425,000 less than 2 years ago. They now have it listed for $400,000 as of April 2026. That's a $25,000 loss in only 15 months that the seller on this house, which looks pretty nice, is accepting. Here's another house in Nashville, which just sold. It's a three bed, two bath house, 1500 ft². The seller originally came to market around 340,000 and the property ended up actually selling for $300,000, 11% below list price or 40,000 below list. Here's a house in St. Petersburg, Florida. They just did a $44,000 price cut to 355,000. Now, this is one that they bought for $430 in 2023 and now I've listed for 355. So, they're taking a $75,000 loss from peak pricing on this house.
And the reason I'm showing you all these listings is not to say to you that housing is cheap or that you need to rush in to buy a house. However, I do want you all to understand that values are dropping in about half of America right now. And that even if some of those declines, say 2% year-over-year in a city or zip code, you can often find listings where sellers are willing to play ball at 10% 15% below list price or where they're taking 25 to $85,000 losses from what they bought for for a couple years ago. And if you're someone who's been waiting to buy in this market, I encourage you to view this as good news. You're starting to find negotiating leverage. you're starting to find that you actually have some opportunity for the first time in a long time to get a discount, to get a deal. And so, if you have been waiting, I think now is actually a good time to start getting out there and making offers.
In the end, to get a house at a discount, to get a house at 100,000 off or 50,000 off, it requires making offers below list price. And that's ultimately what I did when I bought my place in Atlanta. Many of you now know that I purchased the property uh for 160,000 below the 2023 price. And what I want to do now is just actually show you the text conversation I had with the realtor when I made my initial offer on the house and how they responded so you guys can kind of see how it goes and you guys can know what to expect if you do want to get a big discount. I uh my discount was 160,000 from the 2023 price, 110,000 from the 2021 price. Um they had the house listed at like 415 grand. I got it for 330. How did I do that? Well, the first thing I did everyone is that after I toured the house and after I sent the realtor liquidity verification, I told them that um realistically I think my offer will be substantially below list price as I need to make it work from a rental perspective if I were to eventually rent it out. Would it be worth proceeding? So I, you know, let them know like, yeah, I'd like to make an offer, but it's going to be below list. And they said, you know, sure, send us what you're honestly considering. So that's an important point, everyone. Like when you make a below list price offer, let them know ahead of time that it will be below list and kind of explain why.
You can then see I offered 315. Now again folks, this house sold for $4.97 in 2023, was listed for around 415. I offered 315 all c all cash offer with a 10 to 14-day close. No financing, no appraisal, short DD, no no repair requests. And then they said it's significantly below what they're looking for, but they'll review. They didn't countered at 400,000. I said, "Thanks for checking. That doesn't work. I'm interested. I'm reviewing the numbers and can come back with a counter." They said, "Yes, please submit a counter." Just to frame it, folks. House was bought for 497 in 2023, 440,000 in 2021. It was listed for 415. I offered 315. 100,000 below list. They rejected it and countered at 400. You know, some people might say at that point like, "Oh, give up. It's over." No, I was just like, "Okay, uh, I'll maybe think about countering." Now, I actually didn't counter. I didn't do a counter to that. I let it sit. And then 2 weeks later, they came back to me and says, "Would you be interested in submitting an offer at 365?" I said, "Thanks for the followup. I've looked at several properties since. I need to refresh my memory a bit on the numbers." And then I said, "I can't make 365 work, but I can do 330 at this level. Would work for me for a rental." and then they accepted.
Now, obviously, my situation was a little unique. I had the ability to make an allcash offer, which obviously helped me. I could also do a quick close, 14-day close, no appraisal. That obviously helped me. However, for some sellers, having a preapproval with a big down payment with a conventional mortgage is as good as cash. So, you don't need all cash to be able to get these discounts, but you do need to be preapproved. You do need to have a substantial down payment. If you're only putting 5% down, you're going to have a difficult time securing a house at a discount. If you're putting 20 to 25% down and you can verify the liquidity with the listing agent, they're going to take you way more seriously. And it's just really important that when you make these offers, you do it respectfully and you explain kind of where your head's at and why you're making the offer that you're making and where you need to be. I explained it using kind of the rental rate scenario. I'm running the numbers. here's where I needed to work as a rental. You can also say, you know, you're concerned about where the market might be in a year. You just want to make sure that you buy ahead of the market a little bit.
And I ultimately fully believe that this is attainable for a lot of you out there, especially if you're in one of these markets where prices are dropping, where Zillow has a downward forecast, where Reenture has a downward forecast. This is definitely attainable if you visit enough properties, have an eye on the seller situation, understand if it's a declining market. And on that point, I just want to show you guys something related to Zillow's forecast. I dug into the numbers on Zillow's forecast and I actually compared Zillow's forecast to Revententur's forecast. We ran the numbers and we found that from February 2025 to 2026, our forecast achieved a correlation coefficient of 66 across the largest metro areas in the US. You can see that here. Zillow's forecast only achieved a correlation coefficient of.17. So Reentur's forecast was approximately four times better than Zillow's forecast in predicting prices from 2025 to 2026.
And the thing to really understand is that it totally depends on your local neighborhood. For instance, we're zooming in here on New York City, uh, as well as surrounding areas in Queens and New Jersey up into Westchester County. And what you notice is that there's big differences in the forecast depending on the zip code and neighborhood. If your area is in blue on the 2027 forecast, on the one-year forecast, that means prices are forecast to drop. If your area is in red, that means prices are forecast to go up. So, we can see here there's parts of the Bronx where we're forecasting prices to drop. Certain parts of New Jersey where we're forecasting prices to drop. But if you go up to Westchester County or northern Jersey suburbs, there's still a lot of bidding wars. Prices could go up 11%. Very similar trend in San Francisco. San Francisco is a market that's now turning up. You could see we now have positive forecasts in most of downtown San Francisco. However, if you go out to Oakland, we still have negative forecasts. If you go out further on the East Bay, we have uh negative forecasts. It's in blue.
And one thing I hate seeing is when people don't have the full data uh in a market and as a result, they're confused about what's going on. And this was actually a comment from my Twitter account or ex account that shows this. I posted something about how uh Dallas's housing market is starting to go down. And someone uh named Kyle responded and said, "Nick, I'm in Dallas University Park, Highland Park, and prices are not dropping at all. My house has gained about 200,000 in value since purchased last summer. I'm just not seeing the downturn on the ground." I see comments like this all the time where people say, "Well, no, there's not a downturn in my market. Uh, my neighborhood's doing better." Or people say, "No, there is a downturn in this area. What are you talking about? That area is not going up." There's a lot of disagreement and confusion on the housing market. But sure enough, when you go to Revententure app and you look at the forecasts in Dallas, you can see exactly what Kyle is talking about. We have a positive upward forecast for University Park in Highland Park, these northern suburbs that he's talking about where there's still bidding wars and prices are going up. Our forecast is catching that. However, in the rest of DFW, prices are dropping and are forecast to drop as much as maybe 10%.
And so that's why it's so fundamentally important that if you're a serious home buyer or a serious seller investor this year that you know that forecast for your market, you know where your market stands in the hierarchy of prices going up or down. Is it a buyer market? Is it a sellers market? Because without knowing that information, you're going to be flailing as a buyer or seller. You're going to be uh walking in the dark. Uh, you could be overlisting or underlisting your home as a seller, not realizing what's coming. Or as a buyer, you might be submitting offers way too high if the market's about to go down. And ultimately, if you're in one of these cities and neighborhoods where prices are dropping, you need to get out there and start making offers below list price so you can secure a house at a big discount. The opportunity is there for you guys right now.
To do that, everyone, access the data on Reventure app. Download our mobile app and search your zip code so you can find the areas with the biggest forecasted declines as well as the areas with the biggest forecasted gains and so you can know where your neighborhoods fit on that list and make more educated offers as a result. And it's less than.1% over the course of the year of the cost of buying a house in the US. is going to give you invaluable data to make a more educated decision and to hopefully save money on your purchase or not leave money on the table if you're a seller. To get started, go to ww.reventure.app app or download our mobile app and search your zip.