What's going right for them?

Well, interest rates are still high, but they are down from a year ago.

So even though they're not as low as we had expected them to be maybe at this time of the year, they're hovering right around 6.5% after having been close to 6% in February, um, they're still better than they have been, especially for the spring season, any time in the last several years.

So it's, it's a bit of a not good as it, not as good as it could be, but still pretty good news for buyers.

It's providing a nice tailwind, especially for first-timers who tend to borrow more money.

Um, we're also seeing home prices still go up, but not at the pace that they had been going up.

So sales prices were up 1.3% compared to a year ago.

Um, how important are interest rates and what's your outlook this year?

How important are interest rates and what's your

outlook this year? Interest rates are important, especially to those younger first-time buyers who tend to need to borrow more money in order to get into the housing market and make that first home purchase.

They're not bringing in accumulated equity, which is pretty substantial given the run-up that we've seen in home prices.

My outlook for mortgage rates is that we're going to see them kind of hover in this 6.5% to 6.25% range.

What's happening in the Middle East has had a big impact on inflation and therefore on mortgage rates.

And that makes it a little bit more challenging than usual to predict.

As long as that conflict is sort of in an active mode, I think we'll see mortgage rates stay closer to that 6.5% range.

I mean, there's a lot of bidding wars in this area, even as you're describing people paying below asking.

So now let's turn to the, uh, next topic, uh, which is how could this affect generational wealth in the future? Uh, does it lead to widening gap between homeowners, renters, between, uh, the baby boomers, millennials, and other generations?

Yeah, so baby boomers have a lot of equity in the real estate market.

Millennials are trying to get there, and then they're still navigating through, you know, having a significant mortgage and having to pay down that debt.

Um, uh, especially millennials who bought in the pandemic period when interest rates were low, they're in a much better position than millennials who hadn't quite gotten there yet, or even Gen Z, who are trying to navigate today's higher home prices and higher mortgage rates and rents that are softening, but still quite high.

It is a challenging time to buy a home.

It's not impossible, but it is certainly harder than it has been for previous years.

Um, you know, in conjunction with South by Southwest, we, realtor.com, did a report on generational wealth in the housing market.

Mm-hmm.

Has that passed?

No, but the lock-in effect has definitely improved.

In fact, in the latest data, we saw that we hit a bit of a milestone in lock-in improvement, which is that there are now a greater share of homeowners with a 6% mortgage or higher than there are those that have a 3% or less mortgage.

So the lock-in effect is very slowly loosening its grip on the housing market.

Every bit that mortgage rates come down, that obviously makes a difference for some households because now the market rate may be below their current rate.

And so moving that might have been a big expensive proposition before might become affordable.

And for others, even if the market mortgage rate is not below the rate they have on their outstanding mortgage, anytime you reduce that gap, it changes the cost for that household.

If I want to sell my house in the spring market, can I still expect to get a good price and have a fast sale and maybe even multiple offers? Or has that ship sailed?

We're going into a big recession." Do you think that's the case?

That's not my projection moving into 2026.

I think it's gonna be a good, not great year for economic growth, so right on, maybe a little behind trend growths.

Um, a little bit slower.

I do think inflation is still going to be something that measures higher than the Fed's 2% target, so I think inflation is gonna be back in the 3% range.

Um, which is, you know, not exactly where it needs to be, but certainly not as bad as it has been over the last few years.

Unemployment, I do think is gonna move up a little bit, but not above 5%.

Where are we going on overall sales? And will we ever get back to that level?

Is there some kind of tipping point in the market where a certain level of mortgage rate actually incents people to jump in big time?

We have seen that mortgage rates in the low sixes are generally correlated with higher home sales.

Not, I wouldn't call it a surge, but home sales in the mid 4 million range as opposed to the, you know, 4 million or lower.

So I think mortgage rates are gonna be low enough to get sales up to the 4.1, 4.2 million, so a little higher than they have been in 2025, which is closer to that 4.1 to 4 million range, but not a lot higher than that because we're not seeing a whole lot of change.

I think every bit that mortgage rates move lower is a difference maker for some households, so it's more like a dimmer switch rather than an on-off switch.

As we see mortgage rates move lower and stay there, I think we'll see more activity come back to the housing market.

What do you guys see as the economy next year? There's a lot of people out there saying, "Oh my goodness, we're going into a big recession." Do you think that's the case?

case?That's not my projection moving into 2026.

Where do you stand on that?

Yeah, I mean, I think if you look at the data, homeowners tend to have a significantly higher net worth than renters, and a big part of that is the fact that they own their home and have a lot of equity in their home.

You know, the, um, the data on home equity suggests that it's close to a record high, um, so that's a significant, um, con- contribution to most Americans' nest eggs.

If we look at the, the latest data on the flow of funds, the total value of owner-occupied real estate is 48.1 trillion, and equity in that real estate is 34.7 trillion.

So that, that's a lot of money, um, that, that homeowners have and can access.

And I think it's hard for renters to build up that same amount of, of a nest egg.

I mean, there are studies that show that, you know, for some people, if you could take the money that you would've spent on a mortgage and invest it in the stock market, that you might be better off in the long run, you might have more money.But that presumes that we can all, in fact, do that.

What other tips do you have for buyers right now in the market?