U.S. Home Prices Turn Negative, Sellers Finally Give Up Ground

Dave:
When you look at a headline, there are two ways that you can interpret it. Sometimes it can cause a lot of fear and can cause you to avoid doing the deals and working on your business in the way that you should. Or you can look at news and data and information about the housing market and think about how you can make that work for you. Today on On The Market, we’re bringing you four headlines that you can interpret either way. You can decide that this is a reason not to invest in real estate, or you can see that every kind of market has its silver lining. And if you position yourself correctly, there are amazing opportunities out there.
What’s up everyone? I’m Dave Meyer. Welcome to On the Market. We got the whole gang here today, Henry, Kathy, and James joining us for a wonderful spring version of our on the market’s headlines. And I’m going to start with a story. And I don’t know, I guess you could see this as positive or negative. I’m curious about your opinions. But I think after years, four years of people saying this was going to happen, housing prices, at least according to realtor and basically according to Redfin as well, have turned negative on a national basis. It’s been holding on flat for a while. Should also mention that we’ve had inflation adjusted prices have been negative for four straight years, but the number you see on Zillow, the nominal home price is now turning negative. So curious, are you guys seeing this in your market and what do you make of this?
I

Kathy:
Was just going to say, it’s kind of a tale of two markets. There’s more than half the country is actually positive and doing really well. That’s kind of the Midwest and probably where Henry’s sitting. But the volatile markets like California and now Texas fits into that and Florida, Idaho, they have been more negative. I can tell you right now, if you ever wanted a house in Malibu, it is on sale. It is on sale. They’re slashing- Really? When they slash in Malibu, it’s not by a few thousand, it’s literally by millions. So come get your house.

Dave:
Yeah, I think that’s true. We’re seeing definitely a tale of two markets, actually about fifty fifty for major markets, positive and negative. And none of them are super to the extremes anymore. I guess like Punta Gorda, like a couple places in Florida are kind of extreme, but they’re kind of all hovering around that middle area. And I’ll just say, I know a lot of people, if you own a large portfolio, this doesn’t sound great. If you’re flipping, it might hurt. But I think it’s time. I think it’s just time that we see prices go down a little bit. I think we’ve been in a correction for a while because inflation adjusted prices are down. And I think the thing that’s making me most encouraged is this report from realtor.com that I’m reading here. Asking prices have finally gone down. And I think that’s sort of a sign that sellers are finally accepting the market we’re in.
Because the reason for a while prices have been flat is because people have just been waiting and waiting and waiting and days on market are going up and you’re negotiating. I think we can get to a healthy housing market if sellers just accept prices are two or 3% lower than they were a couple years ago. I don’t care that your neighbor during COVID got 19 offers. We’re not in COVID anymore. We’re not there. Yeah. We’re not there. Just lower the price by like 3% and you can sell your house. Or

Kathy:
Hold it. Hold it if you don’t want to take the cut.

Dave:
Exactly. But I think that reality is good. We all need to be on the same page and I think we’re starting to get there.

Henry:
You said this is bad news for Flipper’s day, but I don’t know that it is bad news for Flippers because of the reality check that sellers are having. I’m seeing great opportunities. We’re buying great deals right now with great spreads. We’re underwriting conservatively. And so yes, bad news for flippers in that you can’t go sell for the tippy top highest ARV possible anymore, but that’s okay if you’re buying it right and sellers are a little more open to more reasonable offers now.

James:
Isn’t part of this like the hangover from the spring market though? I feel like people jump into this real quick. What I was reading the other day, it was like April 10th through the 15th is like the best time to sell a house. And I feel like this happens now every May. Last May, it was like, “Oh, what just happened?” Because we were going really quick and all of a sudden, well, someone made some choices overseas and the water got put on the flames and everything has stalled out. But I mean, I’m still seeing transactions. There’s just less buyer activity. I feel like everyone needs to prepare for bad summer markets. I mean, going forward, I got 10 houses I got to list in the next three weeks. I’m not super excited, but going into this summer market, I need to be very aggressive with my price.
And if I’m not hitting my ARV, that’s okay, but I got to price it correctly because if you price it too high when the market starts cooling down, that’s where you got to do your $400,000 price drop or your major price drops. And so it’s just really, really important to put the right magic number on this thing and don’t get greedy.

Dave:
Honestly, I think it works better right now. I don’t sell as many properties as James Henry as you guys do, but it seems to be working better right now to price low just to get foot traffic in. I went and looked at a deal in Seattle here yesterday. They had an open house on a Friday afternoon. I was like, no one’s going to be there. There was like 25 people there because they priced it well. And I’m selling a property in Michigan right now. I deliberately went in low. We got six offers in the first weekend. It works well and they’re over asking. If you’re pricing low right now actually seems to be a better strategy. And I think it’s taken longer than I expected for people to adjust, but hopefully we’re finally there.

Henry:
I mean, I’m doing something that I haven’t done in a few years, which is the whole tail strategy for a property right now. I mean, my agent told me that they listed a property in as is condition and they got so many offers on it in a short period of time because they were listing the house at under its market value. Yes, it was distressed and yes, it needed work. But I think what you’re seeing is there is a subset of people who are struggling with being able to afford a home who have the skillset to be able to fix up the home themselves. And they’re buying these opportunities because they can afford them and then they’ll just fix it themselves and live in it. And that is an option for a certain subset of buyer who can’t afford what would typically be the lower end of a price point for a renovated or new property, but they can get into something that maybe needs some work if they’re willing to do the work.
So we’re actually testing that on a property I’m putting on the market next week to see what happens.

James:
So when you’re doing your whole tail, Henry, how much you’re selling as is, I mean, do you get it financeable and clean it up and

Henry:
The

James:
Carpets are smelly, you swap the carpets, you get rent ready or are you

Henry:
Truly like- Yeah, pass an FHA inspection.

James:
So when you do that, you make sure everything is financeable no matter what.

Henry:
Yeah, it’s got to be financeable, but typically a house is going to sell on the low end here for 225 to 275. That’s the lowest you’re going to get a decent home for. And we’re going to sell this for 180. So it allows people to get into a home for a price point that is pretty unheard of.

Dave:
Well, I think that’s as encouraging. I think it’s a sign that we’re getting back to reality where people are on the same page, which is a positive thing in my opinion. Let’s move on to our next story. James, what are you bringing for us? All

James:
Right. So the article I brought in, because it’s actually very relevant to what I got going on right now, because I’ve been seeing it, is it says auction.com, this is on housing wire. Quarter one, 2026 foreclosure auction activity is nearing pre-pandemic levels. Foreclosure and REO auction activity has moved closer to Q1 of 2020. And what this talks about is the year over year for quarter one is up 36%, but you do have to kind of look out for this because someone was asking me, they’re like, “Oh man, foreclosures are really rising.” And actually that’s down from the year before. And I always laugh at these articles though, because last year it was like they were up 60, 70%. Now we’re up 30%. The year it was up 70%, I saw no deal flow from foreclosure activity. Now I’m actually starting to see quite a bit of deal flow coming my way that has foreclosure or tax foreclosure or symptoms of distress.
And I’ve probably seen more deals sent to me off market in the last 90 days, actually I would say 60 days than I’ve seen in the last two years.

Henry:
Really?

James:
And I think what it is, is a lot of these foreclosures, they’re actually deals. They’re not like over leveraged properties. These are homes that are beat up. They were deferred for a while and they are coming our way and they are rough. The last one, the price was so good, but I was like, I don’t even know if I can buy this. I just had my trash guy out there and he quoted the trash removal of this property at $55,000. That’s how much was there. I’ve never spent that much on trash before.

Henry:
I’ve bought a house for $55,000.

James:
Well, this one was cheap too. I was like, oh, this is so cheap. This is a no-brainer. But I’m like, there’s a lot of garbage there. And it was a half acre lot that looked like a dump. And I was like, oh, this is actually too expensive based on the garbage at that amount. God,

Dave:
If there’s too much garbage for James, that is terrifying.

Henry:
That’s got to be unheard of. I need to see pictures of that. Oh my

James:
God. But what I am seeing is there is a little bit of a trend and it is something like, because a lot of investors are also talking about how there’s no deal flow. And it is. We’re kind of in this kind of slow market, but it’s kind of

Henry:
Stagnant

James:
To where the opportunities really aren’t there. I know we bought less houses over the last 60 days than we were buying six months ago, but this is definitely something that people want to start watching in their local market. What’s going on? There’s not a lot of activity going on in that market and the deal flows are starting to come out. And the numbers are good. I will say that. When they’re coming to me, I’m like, okay, this is actually really workable. And so we’re seeing a trend, but even though it’s like a shock at 36%, it’s way down from the year before and we’re getting in more normalized foreclosures, but that’s where it gives us that steady, steady deal flow.

Dave:
Yeah. I mean, I’m not surprised by this. Foreclosure’s going up, reverting back to where they were pre-pandemic, that was just going to happen.That’s going to happen. I wouldn’t even be surprised if they went above that. If you read the average state of American consumer, people are stretched. It could go up. We’re seeing it go up in FHA. We’re still a very, very, very long way away from where we were in 2008. So I’m personally not seeing anything that suggests we’re heading there. But James, do you think this is a sign of distress and more to come or is this just sort of backlog from the last couple of years starting to hit the market?

James:
Right now, I feel like it’s backlog that’s coming through, but I do think that this is going to spike again. I mean, affordability, I don’t know how people even are making some of their payments on these houses with how much things are costing. Things are really expensive. So I’m surprised it’s actually down so much year over year. I would’ve thought it would’ve stayed par and flush, but the good thing about that for investors and for sellers that do want to sell their property that may be in foreclosure, you don’t have to look through a thousand deals to find that one. There’s actually just decent deal flow coming out where people are like, “Yeah, you know what? I got to get rid of this. ” Almost every one of them that are being sent to me are all vacant too. They’re not owner-occupied properties.

Henry:
I think this is probably just pretty normal, the amount of foreclosures that we’re seeing, just kind of a return to normal. But I do think we’re going to start seeing more foreclosures for the same reason we’re starting to see investors make shifts. So a lot of investors who bought properties in 2023 to late 2024 are either in situations where they’re looking to get rid of those properties or they’re looking to have to throw a lot of capital at them to get them to produce the numbers because of the rates and all the expenses that were so high. But I think we’re also going to see a lot of those single family home buyers who bought homes at those times, either try to figure out ways to refinance to get their rates down, or you might see some of those homes. And I’m thinking on the lower end of the affordability spectrum.
So for those like first time home buyers, they were buying the home that they could barely afford at a 8% interest rate, 9% interest rate. I did read some articles in my research that said that there was a spike in refinance applications. I bet there’s a lot of those people looking to refinance, and if they can’t refinance or if they’re just in a situation where now they can’t afford that home because it’s just a little more expensive than they thought, maybe their taxes went up, maybe their insurance has gone up. If you were barely affording that home when you applied for that loan back in early 2023 and 2024, then it’s probably less affordable now as things are tightening up and maybe income has an increase like you want to. So I think you’re going to start to see some of those come back if they’re not able to refinance.

James:
That’s what I was looking at before the show is REOs are up a lot
From bank owned sales. And so the transactions on those, in 2024, it went up 1.4%, 2025, 1.3 to 1.4, and then Q1 of 2026 were up 1.6%. And I have noticed that, that there’s a lot more REOs for sale on market and those are the ones I feel like there must be a lot of deed and lose going on because I’m not seeing them go to the sale, but we’re seeing a little the cleaner houses, the bank owns are just kind of cleaning up and it is actually beaten up the flippers resale market when people are going to sell on some of these more affordable markets, the REOs are rolling out and people are buying those.

Dave:
So James, what do people do if they want to take advantage of some of these deals? How do people do that?

James:
Well, first thing is you want to research your local laws and your state laws. How do you approach this? But the good thing about foreclosure data, it’s really easy to get now. Back when I was knocking doors, it was hard to get. Now you can get it anywhere and you can get it from your title companies. There’s third party providers. And what you want to do is you want to target foreclosures or anything when you’re targeting off market is look at the tax assessed value and what they owe on it. And that allows you to shrink your list down. If someone owes 200 grand, you want that property to be worth at least 275. So you can pull a percentage of debt versus the tax assess value, pull that list, and then it’s all about drip marketing.

Dave:
So you’re basically saying that has to be worth enough so that you can pay off the bank and still have a cushion to make some money, right?

James:
Yeah. And even better get the homeowner money, right? Because it’s like when there’s equity, it makes it a lot easier transaction because the seller can move on, get a second start on life, but then you’re also working smart. And so you want to look at your local market. And for us, it’s always been 75% of the tax assessed value or lower that node amount has to equal that, or there’s no point of us chasing it.

Dave:
That’s great advice. Thank you. Appreciate that. All right. Well, we got to take a quick break, but we have two more headlines for you right after this. Stick with us. Welcome back to On the Market. I’m here with Henry, Kathy, and James going over the most recent headlines that are making news and capturing our attention. So far, we’ve talked about home prices turning negative, including sellers lowering their asking prices. Finally, foreclosures approaching pre-pandemic levels. Kathy, what do you have for us?

Kathy:
Well, this is breaking news. It’s HUD and USDA rescind the rule tying new homes to 2021 energy code. So basically the US Department of HUD is rescinding the 2024 Federal Housing Administration Energy Efficiency Building Code requirement. You couldn’t get an FHA or a HUD loan if the new home didn’t meet these requirements, but you still have to meet requirements. It doesn’t mean that regulation is just disappearing and you could just build anything and it doesn’t have to be energy efficient. These were just extra. It was enforcing the national energy efficiency standard would’ve added about 20 to 31,000 additional fees.

Dave:
Whoa, 20 to 30,000?

Kathy:
Yeah.

Dave:
Oh my God.

Kathy:
Yeah, an additional cost, which is just not sustainable. Wow. So that has been rolled back and that’s good for builders. That will get builders to feel more confident about going in and people being able to finance.

Dave:
I mean, that’s got to be, what, 10, 20% of a budget for a new build, right?

Kathy:
Yeah. There’s already fees of up to 100,000 on average to build. And this added onto that with this new rule that was passed in 2024.

Henry:
So do we think this means builders are going to build more supply now?

Kathy:
Well, it just is going to make it a little less expensive for them to build. And the biggest concern is if they didn’t do it, they wouldn’t get the financing, so they had to. So the article goes on to say it doesn’t make a huge difference because new homes are still unaffordable. So you subtract 20 to 30,000. It’s not going to help a lot of people. It will help some people. All

Dave:
Right. But this is nationally, right, Kathy?

Kathy:
Yes.

Dave:
Yeah. So I guess, I mean, depending on the price point, that could be meaningful. Some new homes in Midwest, Texas, they’re 250. You take 20 grand off that. That’s a meaningful savings. That’s true. I don’t know. Obviously it takes a while. I assume it’s not retroactive, so this will take a while for it to work its way through the system. This is new underwriting for the builders, but I don’t know. Maybe I’m just grasping at anything that will help improve affordability, but it sounds like it could up a little bit. Obviously, it’s not a very big part of the market, but it could help a little bit.

Kathy:
Yeah. Yeah. The article was a little bit negative in terms of it will be a slow trickle of difference, but still the right direction. And again, it was the 2021 International Energy Conservation Code. So it was in 2021, but enforced in 2024. So builders haven’t been as effective because it’s fairly recent.

Dave:
But recent trends showing construction’s going down, right? Yeah. Yeah. So we’re seeing less building. I don’t know if maybe it’s enough to get them back in, but I feel like builders are mostly reading the macro environment more than any individual policy like this. That’s just my sense of it. I

Kathy:
Mean, anything helps, right? Anything helps. If you’re building a hundred or a thousand homes, that’s a lot of money. That’s a big difference.

Dave:
Right. That’s true. That does matter.

James:
Yeah, because the big expenses on that code is going to be your insulation. When you have to go from standard bat to rigid, it can two to 3X your insulation cost. But the one thing I’m wondering, I’m like, does it really matter in most cities though? Because the cities also require a certain building code on what-

Kathy:
That’s right.

James:
And so I was just listening to this. I’m like, well, every city I work in is still going to enforce the code, so it doesn’t really matter. But this could be more affordable markets. But I mean, I got a city right now that’s putting me into this code on a house that we’re not even taking drywall off the wall. So I’m like, “What is going on? ”

Dave:
It’s so weird.

Kathy:
Well, I think the difference in this is that FHA will now finance if it doesn’t meet the IECC code, the International Energy Conservative Code. They couldn’t finance before, now they can. But you’re right, a local city planner may still require it.

Dave:
So it might not actually lower the cost for the builder, but at least you might have more demand because more people can qualify to buy the home.

Kathy:
Yes. Yep.

Dave:
That’s good. Yeah. I mean, that’s good too. All right. Well, maybe it’s something. I’d love to see the bill that the Senate and House has passed to help bring on more supply to actually get signed into law, but that is stalled like everything in our government, but maybe things will start moving in the right direction. All right. Well, we got to take one more quick break. We’ll be right back with one more story. Stick with us. Welcome back to On the Market. I’m here with Kathy, James, and Henry going over the latest headlines. Henry, you’re last up. Bring it home for us.

Henry:
All right. Well, I am bringing in an article at Zillow’s March 2026 rent report. The headline of the report says that renters gain more than $2,300 in breathing room as rent growth hits its slowest pace since 2020.

Dave:
Oh, okay.

Henry:
As of March 2026, US asking rents increased by 1.8% year over year, up to a typical $1,910. Yes, that’s asking rents. You’re

Dave:
Going to ask for a lot of things.

Henry:
Yes. What you want to ask for ain’t really got nothing to do with nothing, but it’s the data point, right? But that’s a return depositive growth after a period of pretty much flat pricing, and it remains the slowest annual pace since 2020. Single family rents rose 2.5% and multifamily grew 1.3%. So all of that is somewhat decent news, but the key here is that income growth is currently outpacing rent hikes. So it’s increasing affordability. I think that they’re estimating that this is putting about $193 per month more in renter’s pockets compared to the previous year.

Dave:
That’s a lot.

Henry:
Yeah. Almost $200 a month more for people.

Dave:
That’s a lot. Oh wow.

Henry:
That’s good.That’s

Dave:
More than a thought you’re going to say. Wow.

Henry:
That’s positive for affordability.

Dave:
Yeah.

Henry:
So doing the math, it’s saying that renters are saving more than $3,000 a year in places like Austin or Tampa or Denver where it’s very expensive. So I mean, is this the greatest news in the whole world? Not super great, but more affordability in a market like this is absolutely positive. I’m sure this isn’t the case for every single renter in America, but if you’ve got rent growth slowing and income rising, that means more affordability for people, means people might actually be able to afford their rent in a lot of places.

Dave:
Yeah, I get it. This is a mixed bag. No landlord wants to see their rent going up lower than the pace of inflation. I feel like that’s kind of the barometer, right? Yeah. We saw inflation go up to three and a half, rents are only going up 1.8. Your cashflow is probably going down, right? So that is hard and that stinks. And I don’t want to sugarcoat that, but I do agree with Henry that more affordability in the long run is going to restore the housing market to a better place where things are more predictable. And we don’t have these years when rents go up 20% and then they go down 3%. Hopefully we can get back to a place where rents and home prices grow near the pace of inflation. That’s what it was for decades. That’s what hopefully it will get back to again.
I don’t know what you guys think, but as an investor, that’s just all I want. If you can get predictability, you’re fine. It doesn’t need to be these crazy growth times. You just need a more predictable market. And this is just kind of one of the unfortunate things that have to happen to get back to that.

Henry:
I mean, if you just think about what $193 back means, what the article kind of talks about is, look, if you have an extra $193 back in your pocket, that’s $2,300 a year that you have more to spend on things that are more expensive now. Yes, gross are more expensive now. Gas is more expensive now, but having a little bit more money in your pocket allows you to be able to pay for those things or allows you to be able to save up for a down payment so that you can afford a home, which is also better for people like me who flip houses. So trickle down effect. We’re stretching it a little bit here. I get it. This isn’t everybody that’s going to be in this boat. I get it, but it’s positive news and we’ll take it when we can.

Kathy:
Yeah. It’s really important for investors to hear this and because so often I’ve seen pro formas where there were assumptions that rents were going to go up a certain amount.

Dave:
Oh my God, yes. Every single day. Every year. Yeah.

Kathy:
It’s like every year it’s going to go up 5% or

Henry:
Whatever.

Kathy:
5% rent

Henry:
Growth year over year, historically. So

Kathy:
Here’s the reality. The reality is that’s not a reality and sometimes it’ll go negative.

Henry:
Sometimes you’re wrong. The reality is, nope.

Kathy:
Whether you’re doing the underwriting or you’re investing in someone else’s deal and looking at their underwriting, don’t fall for that one, don’t.

Dave:
No.

Kathy:
There should be several assumptions. One, if it stays flat, if it goes down, if it goes up, and if it still works with all those assumptions, then it will be okay. But I love optimism. I hate it when it comes to real estate.

Dave:
I agree.

Kathy:
Yeah.

James:
If you’re going to try to squeeze the juice out of it, make sure the juice is actually there. The rent growth is like, be realistic. But honestly, I think this is good news. Anytime people are getting a break on things right now where they can get a little bit of extra money in their pocket, that is a huge win.

Dave:
I have a silver lining here. We talked about home prices going down. Rents are still growing. Do you know what that means? Cashflow prospects for buying new deals are getting better. And I know it’s not a lot better, but they are getting better and that’s probably going to happen consistently. This is what happens. It is one of the, like we say, markets have pros and cons. One of the pros of a correcting market is that cashflow typically gets better because as we’re seeing rent growth is slowing, it very rarely turns negative. It’s still growing right now. Home prices can turn negative. So if you look at home prices turning negative, I know mortgage rates are up right now. They’re still down from where they were a year ago, right? They were in the sevens a year ago. If you look at those things, it’s getting cheaper to acquire properties and rents are still going up.
I’m not saying we’re in the 2010s and cashflow is going to be easy to find, but it is getting easier. And I think over the next year or two, this trend will probably continue of modest rent growth, modestly declining home prices. And there is a positive benefit to that if you’re looking for cashflowing properties. They’re not going to make every deal work, but it’ll make more deals work.

Henry:
Absolutely. But it’s predictable and you can still make money renting and flipping in both of those scenarios.This is a good situation, both for the- I

Dave:
Think so. …

Henry:
The normal home buyer, home renter, and for the investor.

Kathy:
Yeah. Like I said, the tale of two housing markets, I’m used to these ups and downs in California. Like I said, when prices go up, they go up with a vengeance when they come down. They come down pretty fast too. Florida and Texas are now in that category because they’ve been such strong growth markets like California has been for so long and a lot of the places where Californians have gone, like Idaho experiencing the same thing. But when we look at the areas that are getting hit the hardest, like Austin and Punta Gorda, Sarasota area, these areas went up like 30% or more in one year in one year. So when we say that prices are coming down as much as 20, 30% in those areas from peak, it’s still above where they were before the bubble happened. So if you just look at a trajectory, these areas aren’t going down in value so much as coming back to where they should be before the frenzy happened.
But then when you go to markets that are more linear and consistently consistent, we’ve been talking about, let’s just get back to consistent. There are parts of the country that have not participated in these wild ups and these wild downs. They’re linear, they’re consistent. You can still get that. And in fact, that’s the deal today because always in these markets, you can cash flow better than the volatile ones, but now you’re also getting higher rent growth and higher price growth. So there’s always opportunity. It’s just that the volatile markets are volatile. And so don’t be afraid of them. This is the time you buy when they’re down, kick them when they’re down, basically buy them when they’re down because they’re still popular places to live. It’s still areas where masses of people are moving to.

Dave:
Absolutely. Makes a lot of sense. Well, hopefully this helped you all understand what’s going on in the market. As we’ve been talking about, I think the big takeaway here is things are mixed, but if you position yourself correctly, like we always talk about, things can absolutely work. Some people get scared by foreclosures. Some people look for opportunity. Some people get scared that rents aren’t growing quickly. Some people see that cashflow’s actually getting better. It’s really a matter of perspective and strategy, being able to adapt. And hopefully that’s what we’re helping you do every single week here with on the market. Kathy, James, Henry, thank you as always for being here. We appreciate it. And thank you all for listening to this episode of On The Market. We’ll see you next time.