BiggerPockets Real Estate Podcast - The Correction Will Get Even More Severe | Sept. 2026 Housing Market Update

Episode Date: September 25, 2026

More homes are for sale now than any time in the past six years. Mortgage rates just shot up to above 7% with no relief in sight. Markets are seeing (substantial) price cuts, and there could be much more to come this winter. So, is a crash on the way, or is this lukewarm correction simply becoming something stronger than we had imagined? In this September 2026 housing market update, we’ll cover it all! First, we’ll talk about the massive change in mortgage rates this month, what’s caused it, and whether any relief is on the horizon. If rates stay high and more buyers are booted from the market, sellers will need to act—that means price cuts, concessions, and negotiating power for the buyers that remain.  But will this turn into a full-blown crash, or are there too many macroeconomic legs propping up the housing market? Dave gives his full risk report and shares where he thinks interest rates could end up hovering. Plus, the tactic he’s using to get 10%, 15%, or even 20% off real estate deals while sellers have their backs against the wall. In This Episode We Cover What caused mortgage rates to surge earlier this month to the 7%+ range  Why prices could drop even more in winter and the serious discounts Dave is finding  Some of the best and worst real estate markets in the U.S. (which are holding up?) Chances of this market flipping from a correction to a housing market crash  What happens as buyers exit the market with the most homes for sale in six years? And So Much More! Check out more resources from this show on ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠BiggerPockets.com⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ and ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠h⁠⁠t⁠t⁠ps://www⁠.biggerpockets.com/blog/real-estate-1335. Interested in learning more about today’s sponsors or becoming a BiggerPockets partner yourself? Email ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠[e-mail]⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠. Learn more about your ad choices. Visit megaphone.fm/adchoices

There are more homes for sale in the U.S. right now than at any point since 2020. And mortgage rates are near 7% with no relief in sight. Are these signs of an impending crash? Or isn't an opportunity to stock up on properties at a discount? On this Bigger Pockets September housing market update, we're digging into the big changes we've seen to the housing market in recent weeks, and things have definitely changed. So I'm going to explain where the risks lie and how savvy investors can use these new market dynamics to build a bulletproof portfolio for the years to come.

Hey, everyone, welcome to Bigger Pockets. I'm Dave Meyer, chief investment officer, housing market analysts, and real estate investor for more than 16 years. Today, we have our monthly housing market update. And I do this every month, go through the numbers, the recent. and data to keep you up to date. But this one, September, feels a little bit different, to be honest, because for most of 2026, the story has been kind of that nothing has happened. We're in the great stall. Things have varied a little bit, but we've had the same big picture story. Rates have sort of stayed in this band. Inventory is sort of grinding away. It's not really moving that much. Prices are creeping up slowly. And kind of, it's been boring.

But August broke that pattern in a couple of places that we need to talk about. And the market has actually started to change a little bit faster. And I think we're getting a very clear signal for the first time in a while on where the market is going for at least the rest of the year for 2026 and maybe even for the next couple of years. So we're going to hit on a few big stories. First, we definitely need to talk about mortgage rates. They've shot up, as you know, and this matters a lot. but we got to talk about why they're going up and where they're going to go.

Secondly, we're talking inventory and a surge in supply, and how that can be either a very good or very bad thing for investors depending on your individual approach. And I'm going to share some regional housing data because, of course, there's only so much we can learn from national data. And we'll talk about different regional events and how inventory and pricing are trending around the country. Lastly, if we're talking about,

about rising mortgage rates and increasing supply, we got to talk about risk because those are two of the things that can bring prices down in the housing market. And so we're going to end the show with the risk report. It's something we do every month here on the housing market updates. So that's the plan for the show. One quick thing before we start, if you get value out of these monthly updates, don't forget to hit subscribe. I am terrible at remembering to ask. But today I remembered, so do me a favor and subscribe. With that, let's get to our housing market update first up we're talking about mortgage rates big picture here rates have gone up a lot over the course of the year they're now hovering above seven percent

as of this recording recording right in the middle of september they are about seven point two percent the highest they have been in over a year now you'll remember about two years ago we were getting mortgage rates briefly in the eights but starting at the beginning of this year we were closer to six. We're at about 6.1%. So we've seen a significant increase in mortgage rates over this year. And the reason they're going up so quickly is really important because it tells us whether they're going to go back down. Or if this is something we just need to get used to. So what is driving up mortgage rates? The short answer is yields, treasury yields. You might have seen that the yield on a 10-year U.S. Treasury is now above 5%. This

is the highest it has been in quite a while. 30-year treasuries, highest point they've been in 30 years. And the reason this matters is that mortgage rates are directly tied to the yield on a 10-year U.S. Treasury, not what the Fed does. If you're not familiar with what a treasury is, it's just a bond. It is a bond issued by the U.S. government where investors lend their money to the U.S. government, and the yield is how much interest or the interest rate the government pays to those investors. So right now, if you wanted to lend the government money for 10 years, you would get a 5%

annual return. That's what a five-year yield means. And this is notable because it's gone up a lot. And what has driven these yields up and therefore taken mortgage rates up with them is basically just inflation. Now, inflation is caused by a lot of things, but the primary thing that's happened this year is the war in Iran. There's no end in sight.

It's causing energy shocks. it's causing increasing fertilizer prices, which is increasing food costs. Diesel is at the highest it's been on record, which increases the cost of everything that goes on a ship, which is everything, right? So that's driving up inflation. We also have tariffs, which are inflationary, contributing to inflation. That's not what's causing this acute spike in mortgage rates, but it plays a role. And the last thing just is the national deficit, right?

we have this massive national deficit, and bond investors are worried that to pay off that deficit, the government's just going to print a lot of money, which will cause more inflation. And so I know this is sort of big macro stuff. It's not as directly related to real estate. But the reason I am telling you this is because if you want to know, are mortgage rates going to go down? You have to ask yourself this question. Is inflation going down? I hope yes.

But there is no end in sight to the war in Iran. tariffs have been up and down and I think they're just going to remain volatile for a while. The national deficit, there's no chance we're getting that under control anytime soon. And so if you ask me, I don't think mortgage rates are coming down anytime soon because I don't see inflation getting any better. Now, the Fed is probably going to raise rates over the next couple of months, a couple of times. That could help a little bit. But I do think until the energy shock that we're going through gets better, we're not going to see inflation come down in a meaningful way.

So my outlook for mortgage rates going into the end of 2026 is that they're going to stay near 7%. Hopefully they'll come back down to the high 6thes. I actually think that's probably the most likely. But are they getting below 6.75? Probably not. Right. So this is, I know, frustrating.

Everyone wants mortgage rates to come down, but it is not unexpected. I've been saying this for years. I've done tons of episodes on this podcast, on the on the market podcast, saying mortgage rates are unlikely to come down. Because if you study this, it's kind of obvious that this was going to happen. I think it's just that a lot of people in our industry have been wanting mortgage rates to come down and saying that they're going to come down because they feel like it's an inevitability because they went up so quickly

that of course they have to come back down. That's not really how it works. The bond market rules the world and the bond market is telling us that borrowing costs are going to be higher across the entire economy and mortgages and real estate are not exempt from that.

So for investors, you got to plan on higher rates. I've been saying it and screaming it And I'm going to scream it some more. Rates aren't coming down. We're not going to see a number with a five in front of it for a long time. I don't see that coming anywhere in the future. Certainly not in 2026, probably not even 2027.

And who knows what happens after that? Because this stuff is sticky. There is structural stuff going on outside of real estate that is impacting borrowing costs. And the net effect of all of this is lower affordability, which pulls demand out of the market. It also lowers supply, too, so that doesn't mean there's going to be a crash. We'll talk about that in a little bit. But it does mean deals are going to be harder to pencil in the short run. That is only in the short run. Because if you think about over the long run, what's going to happen is that prices are going to come down. I feel pretty strongly about that

one year ago. I made a prediction that prices were going to come down in 2026. We're actually probably closer to flat right now, but I do think they'll be negative for the year when we get to December and see what actually happen. But I think they're going to have to come down even more in the coming years because affordability is just too strained. Now, I know that sounds like a reason to panic, but I don't think it is. I actually think prices should come down. I know if you own a bunch of real estate, you don't want to see the value of your properties come down on paper. But for the market to restore some semblance, of health and balance where deals are affordable and easy to get again, prices are going to need

to come down a little bit. And that's a good thing. That actually means that cash flow is easier to find because rents, even in these kinds of scenarios, don't really fall as much as home prices do. Historically speaking, of course, something can be different in the future, but that's usually how it works. And rent-to-price ratios typically get better. And I'm going to dig into all of that data, but we do have to take a quick break. We'll be right back. Most investors only think about insurance when something goes wrong. A tenant injury, storm damage, loss of rent. Then suddenly, the cheapest policy doesn't feel like the best one anymore.

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Welcome back to the Bigger Pockets podcast. I'm Dave Meyer. Today, we are doing our September housing market update. Before the break, we talked about mortgage rates and why they're high. And I said that I think the rubber's going to start to hit the road. We're going to see prices come down. Better deals are going to start to come this winter. And there are a couple reasons for that. First and foremost is just seasonality.

Prices always go down in the winter. Even during the strongest markets, you see these. ebbs and flows throughout the seasons, and the winter's just not a popular time to buy a home, and with that lower demand, you usually seem lower prices. But I think a couple of other things are starting to converge here that show that prices are going to start coming down in a more meaningful way. And I'm not saying there's going to be a crash. We're going to talk about whether a crash is likely or not in just a minute, but just

hear me out on the inventory stuff because this will make a little bit more sense. As of right now, at least according to Redfin, the total amount of homes for sale as of August, you know, last month's data, was 1.53 million. And this is a step up. It's up 4% from July. And 4% might not sound like a lot, but 4% month to month is unusual. That is an unusually large change in the amount of supply. And the reason we care about supply is because prices are dictated by supply and demand. And we already know that when mortgage rates go up, there's less demand, right? Less people can afford to buy home. So what you really need to track in these scenarios is what's going on with supply, because if supply also falls, then prices stay in equilibrium.

That's what's happened the last four years. Everyone's been calling for a crash since 2022, but I've been repeatedly saying prices were not going to crash because if you looked at the data, even though demand went down, supply also went down. But right now, when demand is going down, supply is starting to go up. Now, it went up 4%. That is, it went up 4%. That is. not an emergency, but we're starting to see this divergence where people, instead of saying, hey, I'm just going to wait this out, they're choosing to sell. And this is going to create a much stronger buyers market. When there is a big difference between the amount of people selling, if there are more people selling than more people buying, and there are a lot more people selling than buying right now, that's when buyers have their best opportunity. And when buyers have good opportunity and their choice of properties that they can buy from, that is when prices go down.

Right? Because just think about this logistically. If you're a seller, how do you compete for the buyer pool? If they're, I'm just going to use simple numbers. If there are a thousand sellers, but only 600 buyers, how do you get the 600 buyers to buy your property? You lower your prices. You give them a better deal. You give better value. When that happens in aggregate, prices come down, right? When all the buyers are out there flexing, showing that they don't have to buy your particular property, what kind of deal can you give me? That's when you get better pricing. And so the reason I think the rubber's going to hit the road and we're going to start seeing this happen in the winter is this divergence between supply and demand. Now, I don't personally think this

is an emergency just yet. I don't think a crash is on the horizon, but I think the correction is going to to go from, you know, just being a modest flat pricing to probably modestly negative pricing. I have not made my predictions for 2027 yet. I will do that in a couple of months, but I would not be surprised if by the end of the year we saw national housing prices down 1%, down 2%. So nothing crazy, but we've been sort of waiting for this to happen. Four years of low affordability, and the market has held up really, really well. But I think with these higher mortgage rates, everything going on with AI, the concerns in the labor market, we're going to start to see home prices come down. Now, of course, what I'm talking about is

national data. And there's a lot of regional variants. There are places that are seeing big declines right now. Where I live in Washington State, the Seattle metro area, we're seeing a lot of declines. If you look at places like Houston, Texas, another massive market, big declines there, Austin, Texas, a lot of Florida, even some areas of the Midwest that have been resilient, like Detroit, are starting to see declines and increases in supply. Of course, a lot of places are still doing well, primarily the Midwest and the Northeast. Places like San Francisco are seeing exceptionally strong housing markets right now. That's just why you have to look at local data.

I like giving you the big picture national headlines. here because it helps you understand what's going on in a macro sense. Because when I say prices are coming down nationally, that means that for most part, not everywhere, most markets are going to experience a slowdown. So even if you're in a market in the Midwest that is growing right now 5% year over year, maybe it comes down to 3% or 2%. Or if you're in a market that's flat right now, maybe it turns negative. But you do need to go out and look at this data for yourself. luckily, there's tons of places you can do this entirely for free. Go on Redfin's data center. It's awesome. It's completely free. No sponsorship here. I just use it all the time. You should check

this out. Great place to look at inventory and price trends in your area. So go check out your local data because that's going to be really important. Like where I'm in Seattle, it's definitely down. Like you can feel it and good deals are coming. Like you see crazy deals right now compared you can buy stuff easily 10% lower than it was a couple of years ago. And I think this winter it's going to be 15%. Like that's, to me, that's what gets me excited is that there's good buying opportunities. Of course, you got to be careful. You can't just go out there and buy anything. But I do think there is going to be good buying opportunities out there. Definitely worth keeping your eyes open for because as a buyer, as a real estate investor, motivated sellers

is the best person to buy from. Someone who says, I just want to get rid of this. I'm willing to lower my price. I'm willing to give concessions in order to move this inventory. And there's just going to be more and more of those people. And so the key here is to really just buy it a discount. You really need to find the best possible deal and buy great value. Find those great properties that you can buy 5, 10, 15% under current market comps. Because then if prices go down 3% next year, you don't care. You still have equity because you bought it such a good price when you went out there. And of course, not every seller is going to be selling to you for five or 10 percent,

but that's the job of the investor. Go find the ones who will. Be patient and identify properties that are in great locations that you're going to be really happy to own 10 years from now and go negotiate a great price on it. And if you can't walk away, you don't need to rush right now, not saying you should wait forever and try and time the market, but don't rush into any particular deal because there's going to be more. There's going to be plenty in the next couple of years. There might not be a lot of inventory on the market, but the percentage of motivated sellers

who are cutting prices in a declining market is going to go up, and that's your opportunity. So make sure to keep your eyes out. Now, I am saying this all under the presumption that there is not a full-blown crash. But we need to address that because when prices are going down, it is very reasonable and it is wise. It is prudent to ask if the market is going to experience a crash. And for that, we need to look beyond inventory. We just can't look at active listings or new listings. We have to look at the health of the credit market and mortgage markets. And we're going to do that in our risk report right after this quick break. Stick with us. We'll be right back. I just booked a trip to the coast and I cannot stop thinking about it. Waking up early, walking

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moment on my trip and my place is not only taking care of, but working for me while I'm gone. Find a co-host at Airbnb.com slash host. Buying real estate has a funny way of making the future feel very real. You start thinking about mortgages, cash flow, tenants. And suddenly you realize, if something happened to me, would the people I love be okay? That's why life insurance is one of those things that's easy to put off, but is super important to actually deal with. Ethos makes getting life insurance fast and easy, 100% online. You can get a quote in seconds, apply in minutes, and potentially get same day coverage. There's no medical exam. You just answer a few simple health questions online. You can get up to $3 million

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unique potential for both passive income and consistent growth. Just visit fundrise.com slash pockets to make your first investment today. Carefully consider the investment objectives, risks, charges, and expenses of the Fundrise flagship fund before investing. This and other information can be found in the fund's prospectus at fundrise.com slash flagship. This is a paid advertisement. Welcome back to the Bigger Pockets podcast. I'm Dave Meyer. Today on our September housing market update, we've talked about mortgage rates, we've talked about price and inventory trends. Let's go through our risk report. And again, for anyone who hasn't listened to our monthly

updates, this is basically when we assess the risk of a crash in the housing market each and every month. And for this, there are different ways you can look at it. One is looking at inventory, and as we talked about, it is going up a little bit. It went 4% up in one month. Not an emergency, but if it grows 4% every month for a couple months, that might be a problem. That's something we're going to have to keep an eye on.

But that has not happened. One month of data is not reason to freak out about pretty much anything. And I think inventory falls into that category as well. But we got to look at mortgage quality. Like, are people paying their mortgages on time? Because the most likely cause of a crash is through the credit markets. Basically, people can no longer pay their mortgage on time and they are forced to sell. They might be forced to sell even if they have equity. They might be forced to sell by a bank to avoid foreclosure. Or in some cases, people will get foreclosed on. And the reason this can create a crash is because it flood us.

the market with inventory, right? If all of a sudden a lot of people are forced to sell, then instead of using our simple example, a thousand sellers to 600 buyers, maybe you have 1,200 sellers to 600 buyers, and that puts more downward pressure on pricing, then people freak out. They put their property on the market, and it creates kind of this negative feedback loop that can lead to a crash. You know, I'm oversimplifying it right now, but that can happen. So when we look at the mortgage market, what we see is strength. It's actually doing quite well. So there's a couple of different ways to measure this, but one of them is mortgage holder equity, how much equity they have in their properties. And right now,

it is literally at an all-time high. In Q2, 2026, I know people say all-time high and they're just saying recent high. This is literally an all-time high, $18 trillion in equity for mortgage holders. That is a ton. And out of that $18 trillion, almost $12 trillion is considered tapable, which is just a weird word. But it's basically just saying, like, if you wanted to do a cash out refire or do a he lock, you could. Meaning that on average, the average borrower can take out $212,000 from their existing home to use for everyday expenses.

And so this tells us, first and foremost, that people are doing pretty well. And if they need cash to cover an emergency, they have equity in their home they can tap. They are not going to necessarily be forced to sell to, realize that money. And so that prevents that for selling and that uptick in supply that can lead to a crash. So this is sort of like a shock absorber for the industry. Like equity rich owners, they don't do distressed sales. That's what happened in 2008. That's not happening right now. In 2008, prices went down so quickly and there's so many things going on. There was a lot of people underwater on their mortgage. And right now there are some people underwater on their mortgage,

but it's very few, and it's basically only people who have bought from 2022 until now. So there is this sort of cohort of people, and it's not a lot, even in that cohort, but there is some underwater mortgages, right, that has gone up. But if you compare that to the total size of the mortgage market and the housing market, it is very, very small. So that is one piece of good news and relative strength for the housing market. Just to put this whole under water mortgaging and perspective. The number of borrowers underwater as of August 2026 is up a lot, 44% year over year. So that sounds scary. You're probably going to see that headline on social media, people trying to sell you some nonsense, right? They're going to say, look, it's up 44%. And that is

technically true. But there's something called the base effect that goes on here, where it's like going up 44% from a very low number. So it sounds like it's going crazy, but it's really not. because even though the total number is about 800,000 mortgages are underwater, that is out of 50 million mortgages, right? So we're talking about less than 2%. It's really not that much, and there's always mortgages underwater. The second thing to remember about underwater mortgages is that does not mean you get foreclosed on. People get confused about it, and they get this wrong all the time.

Your mortgage underwater does not mean your foreclosure. does not mean you're foreclosed on. Only way you get foreclosed on is if you're not making your mortgage payments. And for that, we need to look for active distress. We can look at mortgage delinquencies. And as of the last month, we have data for, the national delinquency rate rose five basis points.

That's 0.05%. So not a lot to 3.55%. Now, again, that is up a little bit, but that is still significantly below where it was pre-pandemic. In 2019, the amount of distress we had was 4.16. And so we're still below that. So all these people saying people are being forced to sell, that is just not true. Are foreclosures going up? Yes. They're going up because they were artificially low to moratoriums during the pandemic. Right now, foreclosure data, distress data is lower than it was in 2019 when zero people,

in the economy, we're concerned about a foreclosure crisis happening. So it's really important to keep these things in mind. And these are the reasons why I still don't believe a crash is the most likely scenario. Has the risk of a crash increased? In the last year, I would say yes. It probably has gone up a little bit. But I still don't think that's even close to the most likely scenario. I think what we are in for is more of a traditional correction where prices come down a little bit.

over time. It might take a couple of years, too. So I don't think it's going to be this big, steep crash thing. I think we're going to see prices grind down a little bit, a couple percentage points in the next year, next year, maybe a couple more percentage points the year after that. And so that sort of brings us to the last segment of the show today is like, what do you do about this, right? Inventory's up, demand is kind of flat, it's going down a little bit. Prices are up right now, but it's softening. It's probably going to go down. Fed's hiking rates, Like, you know, what do you actually do? I'm going to come back to that perspective because if you're a flipper right now or you're

trying to do some short-term deals, it is really risky right now. I've done some flips. I'm in the middle of some flips. And I actually think they'll do fine. But like, I don't know if I'm going to do a lot more flipping right now in Seattle unless I can get a screaming deal on the buy. Like, I'd need to get it for 60 cents on the dollar. Then maybe I can do it because you're just getting for such a good deal and you

underwrite it for hold on to it for longer. that would be fine. But it's risky. I think everyone should acknowledge that. On the other side of the spectrum, though, if you are a buyer, this is a good time. And I think it will be for the next year or two. I think we're in for at least a year or two where buyers are going to have all the power. And you need to flex that. So the number one thing I recommend for people is establishing a really clear buy box. at what price point do you feel you can buy an asset in your market where even if prices went down five or 10% over the next few years, pick a number, right?

I don't think they're going to go down 10%. I would be surprised by that. But just say 10%. If that's what makes you feel comfortable, pick 10%. Pick 15% and say, I will only buy a deal if I can get it for 15% below current market value. And then stick to that.

That's the way to do it. If you have an aggressive target like 15%, you're going to have to talk to way more sellers, but you can probably do it. Depending on your market, right? Like if you're in a strong market, if you're in Hartford, Connecticut, if you're in Madison, Wisconsin,

if you're in Indianapolis, you're probably not getting that. But in those markets, the prices aren't going to decline that much. So maybe you set your target at 5%. If you're in a market like Seattle or Denver or Austin, pick 20% or 15%, whatever. Pick a number and go out and find a great

asset that you can buy at a huge discount and then grind. That's what it takes. Go out and find the seller who's willing to meet that price because they're going to be there. But be patient at the same time. If it takes a month, fine. If it takes three months, fine. It takes six months. Fine. Go find a good asset that you're going to want to hold on to for 20 years. That's the job of the investor right now. Go find a deal. You can buy well under market comps. Your negotiation, you're negotiating. You're appreciating leverage is real. It is what differentiates this market. It is the thing the market is giving us right now. Take this fact. 60% of U.S. homes sold in August sold for below their original asking price. No one's paying an asking price right now, right? Miami, 83% sold below asking. Austin, 82%, Dallas, 80%. Go out and don't just get a discount. Go out and get a big. discount. Use what the market is giving you. And when you underwrite these deals and you stick to this buy box, make sure you are not counting on a refi. I have been railing against this date the rate,

marry the house, you can just refi in a couple of years nonsense for years. It is such bad investing advice. Underwrite with the rate you have at 7%, 7 and a quarter, whatever it is. That's how you got to do it. When you set your buy box, you got to say, I'm paying 7 in a quarter. I'm going to be paying seven and a quarter, and I'm only buying deals, that cash flow that I can buy under market comps with these realities. That's how you do it. Just be patient and diligent. You can absolutely do this. So those are my first two pieces of advice. Stick to your buy box under market comps, underwrite with the rate you have. And lastly, use local market data. Hopefully this national story that I'm telling you helps you understand the broad trends and the

pressure that sellers are going to be feeling because I think that's going to be somewhat universal. Maybe not San Francisco, but the rest of the country, sellers are going to start getting a little nervous. But use local market data, whether that's from your agent, go find a great agent on bigger pockets and talk to them about it, or you like doing research yourself, go on the Redfin data center and check this out. But go find the market data. That's how you're going to inform that buy box and be able to identify those diamonds in the rough, because there's going to be a lot of but a lot of good deal. So that's where you need to focus your time.

This is what I'm doing. It's what I see all experienced investors doing, and it's what I recommend you do as well. That's our show for today. Thank you all so much for watching this episode of the Bigger Pockets podcast and checking out our September housing market update. If this was helpful to you,

don't forget to subscribe to our YouTube channel for more information just like this. I'm Dave Meyer for Bigger Pockets. Thank you so much. We'll see you next time.