01/11/2026
Stalemate or Setup? My Take on Housing as We Head Into 2026
From what I can see, the housing market right now is difficult to read and even harder to predict. In my opinion, we’ve been stuck in a bit of a stalemate between buyers and sellers. Sellers have been reluctant to meaningfully reduce prices, while buyers are largely sitting on the sidelines waiting for both prices and interest rates to come down. While 30-year mortgage rates have fallen significantly from their peak a couple of years ago—now averaging in the low-6% range—2025 still saw low transaction volume, limited single-family construction, and largely stagnant rental pricing. Based on my research, this combination has kept both owner-occupants and investors cautious, even as there remains clear underlying demand for housing.
From a real estate investment perspective, I continue to see hesitation. Despite solid GDP growth, roughly 6 out of 10 people say the economy isn’t working for them, and I think that sentiment shows up clearly in housing decisions. Over the past several years, large increases in home values have been accompanied by rising property taxes, insurance, and utility costs—some up as much as 50% over five years—while rents have not kept pace. In my opinion, this has made real estate harder to justify as an investable asset class in the short term, particularly with debt service costs still elevated. Even though lower interest rates in 2026 could push capital out of treasuries and back toward appreciating assets like real estate, I believe many investors remain hesitant given the current risk-reward balance.
Here in Boise and the Treasure Valley, we’ve been fortunate. Our market didn’t see the sharp declines experienced in some other regions, though reports do point to softening, with some estimates showing price declines of up to 7% year over year. While the pace has slowed from its peak a few years ago, people are still moving to the valley, and I believe that trend will continue. Given the ongoing shortage of entry-level and affordable single-family homes, I believe that segment of our market will remain relatively solid. That said, the days of automatic 10% annual appreciation appear to be behind us. I also look to short-term rentals as a leading indicator, and as an Airbnb owner and manager, I’m hearing more concern about occupancy rates, increased last-minute bookings, and softer demand—particularly in vacation markets that boomed over the past few years. Affordability remains a real concern across the board, especially for younger buyers. At best, 2025 felt like a sideways year. Whether 2026 brings an affordability crisis or a renewed opportunity driven by lower interest rates and stagnating prices remains to be seen. Only time will tell.
I’m available if you have questions, need guidance, or want to talk through your specific situation.
Sincerely,
Josh Lee Knight
Knight Property Management
