2026 Real Estate Forecast: A Wealth Cycle or Wishful Thinking?

LAGUNA NIGUEL, CA – December 30, 2025 – As the real estate industry navigates the final days of a challenging year, one major brand is issuing a forecast that is anything but timid. Realty ONE Group International is confidently projecting that 2026 will mark the start of the next significant wealth cycle in real estate, a bold prediction that stands on the pillars of declining interest rates, shifting investment patterns, and a philosophy of disciplined preparation.

The firm's CEO, Kuba Jewgieniew, suggests the stage is set for a market comeback defined by renewed demand and competitive conditions, particularly in affordable, supply-constrained markets. The company anticipates transaction growth could exceed 20 percent. But is this an industry-wide consensus or a lone voice of optimism? An examination of economic forecasts and market data reveals a complex picture, one where opportunity is intertwined with significant economic headwinds.

The Economic Levers of a Rebound

At the heart of the optimistic forecast is the widespread expectation that the Federal Reserve will continue to lower interest rates in 2026. This sentiment is largely shared by major financial institutions, creating a tailwind for the housing market. Economists at Goldman Sachs project two rate cuts totaling 50 basis points, bringing the federal funds rate to a 3-3.25% range, citing controlled inflation and a cooling labor market. Similarly, J.P. Morgan Global Research anticipates further cuts, while futures markets are pricing in a rate as low as 2.75%.

The historical precedent for such a stimulus is strong. Lower interest rates directly reduce the cost of mortgages, unlocking affordability for millions of potential buyers. Following rate drops in 2015, Canada's housing market saw prices surge nearly 40% over two years. More recently, the record-low rates during the pandemic fueled a historic housing boom, with national home prices climbing over 50% between March 2020 and March 2022.

Even the modest rate relief seen in late 2024 and 2025 has begun to re-engage buyers. The National Association of Realtors (NAR) noted that if the average 30-year fixed mortgage rate falls to 6%, an additional 5.5 million households could become financially able to purchase a home, potentially boosting existing-home sales by 14% in the coming year.

A Chorus of Caution Amidst Optimism

While the prospect of lower rates provides a clear basis for optimism, Realty ONE Group's vision of a "major comeback" is more bullish than the forecasts of some other industry analysts. Many experts, while acknowledging the positive momentum, point to persistent hurdles that could temper the recovery.

Affordability remains a "binding barrier," according to economists at Zillow. Even with lower rates, years of rapid price appreciation have pushed homeownership out of reach for many, particularly first-time buyers. While this demographic is slowly returning to the market—accounting for 30% of purchases in mid-2025, up from a historic low of 24%—their ability to participate fully will depend on the delicate balance between wage growth, home prices, and borrowing costs.

Furthermore, macroeconomic uncertainty looms. J.P. Morgan, despite its positive outlook for equities, assigns a 35% probability of a U.S. and global recession in 2026, a risk that could derail consumer confidence and housing demand. This underscores a divergence in market indicators; while the S&P CoreLogic Case-Shiller index showed accelerating home prices in early 2025, Zillow's own index painted a picture of a greater slowdown, highlighting the complexity of reading the market's true temperature.

The 'Great Rotation' Back to Tangible Assets

A key component of the bullish forecast is the idea of a "great rotation" of capital. Jewgieniew asserts that real estate is poised to regain its status as a preferred safe haven for investors seeking stability. "We're watching capital rotate," he stated in the company's announcement. "When markets become uncertain, history shows that real estate regains its role as a preferred store of value."

This theory is supported by market dynamics. Real estate, as a tangible asset, often serves as a hedge against inflation and equity market volatility. Historically, the relationship between the stock market and housing values is not always parallel. As of late 2025, the 12-month correlation between the S&P 500 and the Case-Shiller Home Price Index was negative, suggesting that capital may indeed flow between the two asset classes as investors rebalance their portfolios.

Lower interest rates are expected to amplify this trend. Sectors sensitive to borrowing costs, including real estate, are predicted by firms like Goldman Sachs to be primary beneficiaries of the Fed's easing cycle. This shift could attract both individual and institutional capital away from more volatile equities and back into income-producing properties, providing another layer of demand for the housing market.

Preparedness as the New Paradigm for Success

Beyond macroeconomic trends, Realty ONE Group argues that the true winners of the next cycle will be determined not by market momentum alone, but by strategic preparation. "The winners of the next cycle won't be the loudest," Jewgieniew cautioned. "They'll be the best coached, the most disciplined, and the most human. Markets don't reward noise. They reward clarity, consistency, and culture."

This philosophy emphasizes that the groundwork for success is laid during downturns, not after recovery begins. The firm, which brands itself as the "UNBrokerage," points to its own strategy of investing heavily in proprietary business coaching, agent support systems, and a people-first "COOLTURE" during the recent market slowdown. This approach, they argue, has positioned their network of over 20,000 professionals across nearly 30 countries to scale intelligently as demand returns.

This focus on internal investment reflects a broader industry lesson: brokerages that prioritize agent retention, technology, and training during challenging periods are often better equipped to capture market share when conditions improve. Those who wait for positive headlines may find themselves chasing the recovery rather than leading it.

Where Will the Recovery Take Root?

The predicted rebound is not expected to be uniform. The forecast specifically highlights "highlights affordable and supply-constrained markets" as the initial epicenters of renewed activity. In these areas, even a modest improvement in affordability can unlock significant pent-up demand, which, when met with limited housing stock, quickly leads to competitive bidding scenarios and price appreciation.

NAR data identifies several metropolitan areas poised to benefit most from a drop in mortgage rates, including Atlanta, Dallas, Minneapolis, Cleveland, and Kansas City. These markets represent a cross-section of the country where home prices have not become as detached from local incomes as in some coastal hubs.

Early signs of this pressure are already visible. The Case-Shiller index reported strong annual price gains in cities like Cleveland and New York through mid-2025, indicating robust demand even in a higher-rate environment. This is coupled with a national trend of stalling inventory growth as existing homeowners, reluctant to give up their historically low mortgage rates, hesitate to sell. This tightening supply ensures that as more buyers enter the market, competition for available homes is likely to intensify, providing the fuel for the price growth and transaction volume that Realty ONE Group foresees. The coming year will reveal whether this disciplined preparation and favorable economic shifts will indeed usher in the next great wealth cycle for the industry.