It is that time of year when headlines about next year’s market begin to dominate conversations with our buyers and sellers. To navigate this, it is important to understand the psychology behind these reports. I generally avoid making predictions, so in this article, I am breaking down what the experts claim will happen, reviewing their track record, and providing a case for both a modest market boom and a potential bust for the Northern Virginia and DC market.
First, realize that the parties releasing these reports are biased. Their objective is to perpetuate the idea that it is always an advantageous time to buy or sell. The 2026 headlines are set: Redfin calls it "The Great Housing Reset," while Compass labels it "The Next Era of Housing." These two predictions say almost the exact same thing for very different reasons. Both predict minimal price appreciation: 1% from Redfin and 0.5% from Compass. Redfin argues that appreciation will stem from a continued lack of inventory. Compass predicts a 10% increase in inventory that will be met perfectly by an increase in buyer demand. Essentially, Compass suggests supply and demand will align so precisely that prices will remain flat while Redfin suggest that should such an increase occur, it would almost certainly cause prices to decline.
Both narratives are crafted for agents to paint an optimistic picture for whomever their audience is, buyers and sellers. It is worth noting they were both wrong about 2025. Redfin predicted 4% price growth, 5-10% more home sales, and higher rates. In reality, prices declined or stayed the same, sales remained historically low, and rates were almost a point lower.
The story of 2025 was that demand never completely waned; it simply stalled, repeatedley. The market functioned in a cycle of starts and stops that tested the skill sets of agents and the patience of sellers.
Sellers benefited from low inventory and a booming stock & crypto markets in the first quarter, which gave buyers the confidence and cash to compete. However, that momentum hit a wall in the second quarter. Economic uncertainty, fueled by headlines around DOGE and layoffs caused buyers to pull back. Homes sat on the market longer, and many sellers were forced to accept less than they originally anticipated.
Demand returned in the third quarter, but the surge was met by a significant increase in inventory. This included new listings and a backlog of homes that failed to sell in the spring. This influx of demand absorbed the quality inventory, while a record number of sellers chose to pull their homes off the market rather than reduce their prices. By choosing to withdraw instead of discounting, sellers effectively put a floor on the market and prevented any significant price declines.
While the fourth quarter stalled again due to the government shutdown and general year-end uncertainty, we have noticed an uptick in buyer activity over the last two weeks. This suggests the pattern of resilience will continue into 2026. Homes that are priced correctly are beginning to sell quickly. The current pool of buyers is small but motivated. Those who must move, and have watched their other assets appreciate while they waited on the sidelines, are finally moving forward.
The central question is whether the current cycle of starts and stops will continue. In the last few months, we have seen a record number of sellers exit the market. New listings have hit their biggest drop in over two years, and pending sales have declined. At the same time, demand has stalled. This combination has created a frozen market where neither side is willing to blink first.
Where does the supply come from in 2026? I see three primary sources that could break this stalemate:
The Case for a Modest Boom: If mortgage rates settle in the low 6% range and inventory remains suppressed, the "small but strong" demand could lead to a very active spring market. In this scenario, the lack of options forces buyers to compete. This would result in modest price gains, increased seller confidence, and a higher volume of transactions than we saw in 2025.
The Case for a Bust: If the 10% inventory surge predicted by Compass actually happens, but buyers remain sidelined by high costs or economic uncertainty, the market could shift. A sudden influx of supply without a corresponding drop in interest rates would force a correction. Sellers would be forced to compete for a limited pool of buyers, finally breaking the price plateau we have lived through for the last 18 months.
The "Reset" promised by big brokerages assumes a "Goldilocks" economy where the market perfectly balances itself without any major economic or political shifts, which more acutely affect our market. My data shows a different reality. At Glass House, our seller pipeline for 2026 is stronger than in years past, and we are seeing a similar trend with our peers.
Notably, very few of these sellers are also buyers. These are people exiting the area, downsizing, or selling investment properties. This represents a genuine increase in net inventory rather than a typical reshuffling of homeowners.
Net/Net, I am optimistic that the market will be fine, provided you understand the current buyer's mindset. Today’s buyers are almost reluctantly participating. They are facing high rates and significant appreciation, making them highly critical of the product they are purchasing.
If you want to succeed in this environment, you must treat your home like the high-end product it is. There are no shortcuts. In a market where buyers are cautious and choices are increasing, your presentation and pricing are your only real levers. Price well, invest in proper preparation, and remember that you are selling to a sophisticated audience that expects value for their dollar.
For buyers, as always, proceed with caution, avoid competing when possible, and approach the market with skepticism.