Home prices hit a record high in early 2025, but then fell, recovered and returned to almost exactly where they started.
Rural, Zillow predicts that house prices will rise by a modest 1.2% in 2026. But of course, all real estate is local, and national trends hide major differences in the local markets.
So which one cities predicts Zillow Unpleasant see the largest profits and losses in 2026? What trends underlie these movements? And how do I invest to benefit from these trends?
Top 10 cities for expected profits
Looking at Zillow’s latest 12-month home price projections, the actual top 10 are micro markets that tell us little about larger trends. However, when we take out the top 10 cities of “significant size”, some trends start to emerge:
- Atlantic City, NJ: 5.3%
- Knoxville, TN: 4.3%
- Green Bay, WI: 4.1%
- New Haven, CT: 4%
- Hartford, CT: 3.9%
- Manchester, NH: 3.8%
- Appleton, WI: 3.7%
- Erie, PA: 3.1%
- South Bend, IN: 2.9%
- Lexington, KY: 2.8%
Most of these towns feel decidedly ‘unsexy’, located in the Rust Belt or the old and quiet Northeast.
Austin Glanzer, Wisconsin native and real estate investor 717 Home buyers told BiggerPockets it makes perfect sense. “Cities like Appleton and Green Bay combine stable job demand with relative affordability, which is precisely what is driving price growth in the Midwest’s secondary markets,” he added. “Buyers who are priced of primary metros are still able to find viable housing here, creating sustainable demand rather than speculative growth.”
Top 10 cities for expected losses
On the other end of the spectrum, Zillow projects these cities to be the largest to lose:
- New Orleans, LA: -4.7%
- Shreveport, LA: -4.3%
- Fairbanks, AK: -3.2%
- Austin, TX: -2.6%
- Corpus Christi, Texas: -2.4%
- San Francisco, California: -2.2%
- Denver, CO: -1.3%
- Cheyenne, WY: -1.1%
- Sacramento, CA: -1%
- Colorado Springs, Colorado: -1%
That list definitely looks different than the first one, largely located in the Sun Belt or the once rare West. Many of those cities saw it sky-high growth in the not too distant past.
“Many of these cities saw a boom during the pandemic and the peak of remote migration,” notes investor Pavel Khaykin of Pavel buys housesin a conversation with BiggerPockets. “We are witnessing a correction driven by factors such as elevated inventory levels, high mortgage rates dampening demand, affordability constraints and high property taxes.”
Trends that will take place in 2026
The cities projected for stronger than average price growth in 2026 share several things in common. “In Midwestern cities like Green Bay and Erie, supply remains tight and employment is stable, but prices are still accessible compared to national averages,” explains Lesley Hurst, owner of Penn Charter Summaryto BiggerPockets. “Markets like this tend to outperform during uncertain cycles because they are driven by the demand of end users, not by investors who go after it valuation.”
Home prices in these cities remain closely tied to local incomes and fundamentals, unlike markets that led the way, such as San Francisco, Austin and Denver.
Most credit industry analysts expect mortgage rates to remain above 6% through 2026. Zillow certainly does that, and Redfin agrees, predict 6.3% average rates for 30 years. So don’t expect interest rates to affect house prices.
What will help raise house prices is the lack of supply of new homes. Zillow notes that 2026 looks like it will see the fewest new homes since before the pandemic.
Don’t expect fireworks in most real estate markets in 2026. “It’s a rebalancing after a period of unsustainable growth,” says Khaykin.
Yet the shift to a buyer’s market in single-family homes and a balanced multifamily market offers plenty of opportunities for investors.
How I invest in real estate in 2026
I plan to continue investing similar to mine investment strategy 2025because I see the same trends driving the market.
Stable multi-family home with a high income
I will continue to invest in real estate every month as a small dollar investor through a co-investment club. We meet every month on a Zoom call, explore a new investment together, and each member can invest with $5,000 or more.
We’ve seen success with Midwestern multi-family properties with strong, predictable cash flow in the past two years. These typically pay 8% to 10% in distributionsand we plan to continue investing in it this. In many cases the operator plans to refinance them within three to four years, to return our investment capital even if we stay our ownership interest and continue collecting cash flow.
We also like investing in property tax relief. The operator works with the local municipality to set aside some or all of the units for affordable housing, in exchange for a partial or full reduction in property taxes. These come with some protection against recessionbecause the affordable units generally have a waiting list and 100% occupancy, and demand only increases when times are tight.
I recently wrote about how multifamily is one of the few asset classes that are clearly not in a bubblebecause it already burst its bubble three years ago. It’s hard to say the same for stocks, gold and many other types of investments at this point.
Country
We also have good experiences with land investments. The short lead time for land flips allows operators to quickly reduce their purchase prices when prices drop.
In terms of recession risk, we plan to reinvest with an operator we like that installs manufactured homes on lots and sells them to first-time homebuyers at half the local average price. Even in a recession, there will always be demand for homes at half the price.
Conservative industrial seller leaseback
Finally, we have had success with conservative industrial seller-leaseback investments. These work best when the single industrial tenant has a long history of success, and could be replaced of another tenant pays a higher rent per square meter if he defaults.
For example, not so long ago we invested in one where the tenant had an order backlog three year long. Their customers include the US Navy. They’re not going anywhere.
Other miscellaneous investment properties
Over the years, I’ve invested in dozens of states and cities, with dozens of operators, in virtually every asset class.
What I’m looking for
I don’t have a crystal ball and I don’t know what the next popular asset class will be will be, or the next hot market. I gave up the prediction game a long time ago.
Today I have an open mind and Ordinary look for asymmetrical returns. I look for experienced, incumbents who have invested across market cycles, and for deals that have kind of additional protection against downside risk.
You can sit on the sidelines and watch your money lose value due to inflation. Or you can join a co-investment club to assess risks and invest smaller amounts together with a community of other investors. I choose the latter.
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