It’s been a while since I wrote a newsletter. An entire month, actually, which is one of my longer gaps over the past year.
I chalk that up to June being my busiest month of the year, which is fairly typical in real estate. It is the culmination of the spring market, with closings piling up just as inventory reaches its peak. Add two 11-year-old twin girls on summer break, and there is not much time or brainpower left for anything beyond my core responsibilities
But there is another reason for the delay: not much has changed. If you want data on inventory, prices, etc, visit my post from May of this year, because not much has changed :)
Over the past four years, the market has swung irrationally between hot and cold at least a dozen times. Consistency was rare, which made my perspective from the ground especially valuable. Over the past few months, however, the market has become surprisingly predictable. Everyone seems to be on edge, waiting for the next shoe to drop, a meaningful change in interest rates or simply a reason to feel excited about entering the market again. That collective hesitation has created a more muted and cautious marketplace for most buyers and sellers. Yet the same pattern continues to play out: the market remains extraordinarily difficult for most people and strangely charmed for a select few.
After nearly twenty years in real estate, what stands out most about this market is not that it is universally strong or weak. It is that two completely different markets are operating at the same time.
For buyers looking for a renovated home in a top school district, particularly one that appeals to affluent move-up buyers, competition remains very real. Those buyers should expect limited leverage and may still need to compete aggressively.
The awkward part comes when those same buyers turn around to sell the starter home they are leaving because of the schools, size or some other shortcoming. They often expect to receive the same treatment they just encountered as buyers. In many cases, they will not. It is almost the inverse of the old Realtor cliché that it is always a good time to buy or sell. For many move-up buyers, this market has somehow managed to be a difficult time to do both. When has that ever happened?
The repetitiveness of the market has at least made the outcomes easier to predict. Lately, my expectations for how a listing will perform or how a buyer’s offer will be received have been almost eerily precise. Not because the entire market is predictable, but because the same divisions keep repeating themselves.
I recently listed a home where the sellers initially hoped to ask $825,000. We ultimately listed at $800,000, still hoping the lower price would generate multiple offers. I predicted that we would probably get multiple offers, two in fact, but that does not mean multiple good offers. That is exactly what happened.
I made that prediction because I had watched nearly the same scenario unfold with another listing the week before. On the other side, I have consistently advised hesitant buyers to submit the offer they are comfortable making, even if it is below asking and there is competition.
There is a pervasive assumption that a new listing, or even the mention of another offer, means buyers must immediately become aggressive. It simply is not true. I can think of dozens of transactions where the mere suggestion of competition, whether it ultimately materialized or not, prompted an inexperienced agent and anxious buyer to submit an unnecessarily strong offer out of fear of missing out.
There are exceptions, especially for the best homes in the most competitive neighborhoods. But this is also one of the least affordable markets we have ever experienced. Mortgage rates are hovering near 7 percent, inflation is a concern and uncertainty is everywhere. There is no reason to act irrationally simply because another offer may exist. Buyers are not alone with their concerns. Below-asking offers can work, even in multiple-offer situations. In the right segment of this market, they have been working consistently.
I recently came across a graphic showing just how dramatically home prices have outpaced earnings. Over the past decade, home prices increased by roughly 55 percent after remaining essentially flat during the decade before it. Wages, meanwhile, rose only about 31 percent.
The comments were filled with debate over how that gap eventually closes. Do wages catch up, or do home values come down? But that misses the more interesting question: If incomes have fallen so far behind housing costs, where is all the money still supporting these prices coming from?
I see part of the answer in my own neighborhood in Vienna, VA. Between 2015 and 2020, a new home in the Town of Vienna typically cost around $1.5 million. I am not naive enough to suggest that was affordable for most people, but the typical buyer was a young family, usually with elementary-school-aged children. Nearly every new neighbor looked a lot like us.
Over the past three or four years, that has changed dramatically. The homes have become much larger with prices now ranging from $2.5 million to $3.5 million, but nearly every buyer moving into them has been an empty nester. They have been great neighbors, but as someone raising children here, the shift has been a little disappointing.
More importantly, it reveals what is supporting this market. Purchasing power is increasingly coming from existing home equity, accumulated wealth, investment gains and family money rather than wages.
That helps explain how affordability can be historically terrible while home prices remain remarkably resilient. One comment beneath the article said it better than I could: “Fundamentals are broken. Money printing has created extraordinary distortions and an enormous concentration of wealth.” It may be overstated, but it captures why offering meaningful and honest commentary on this market has become so difficult.
I do not expect the second half of 2026 to bring a dramatic reset. The more likely outcome is a continuation of what we are already seeing, only with fewer buyers and sellers as the normal seasonal slowdown takes hold.
Mortgage rates will continue to dominate the conversation, but small movements will not change much. A drop from 6.5 percent to 6.25 percent will not suddenly improve sentiment, unlock inventory or make homes affordable again. It would take a meaningful and sustained decline to convince homeowners with low rates to sell or bring sidelined buyers back in force.
That means the divide should continue. The best homes in the best locations will remain competitive because there are never many of them available. Homes with compromises, particularly those that are dated, poorly located or aggressively priced, will face a smaller and increasingly selective buyer pool.
I also expect more inventory from owners who purchased during the past few years. Some will be responding to ordinary life changes, while others will be confronting payments they expected to refinance by now. The entire faction of Realtors screaming "Date the Rate, Marry the House" should be flogged. Those buyers are starting to feel the pressure of those high rates.
The economy remains the largest variable. If inflation stays elevated and mortgage rates move above 7 percent for any sustained period, the market will shift firmly into a buyers market, same as we have seen time after time these last four years. If rates fall meaningfully, demand will probably return faster than inventory, recreating what we saw during the first quarter.
My base case is not a boom or a crash. It is more of the same: a selective and uneven market that rewards quality and punishes wishful thinking. Buyers will find opportunities, but probably not on the homes everyone else wants. Sellers can still achieve respectable results, but only if their price reflects the market they are actually in. The second half of 2026 will be defined by who understands which market they are in.