The general consensus amongst many market makers in 2026 is a carbon copy of 2025, but slightly more tempered. Nothing wrong with a more somber and palliated forecast, given the heretical nature of 2025, which saw many unforeseeable events. Even jaded fellows such as myself were impressed. To name a few surprises in 2025 – that likely won’t make a reappearance in 2026, include the following: Given the excessive near hypnotic hoopla over Artificial Intelligence, the acceleration of this tech science was unprecedented this past year and was particularly vulnerable to cyber threats. Other outliers included a late surge in buyer activity in Fall 2025 (no one saw that coming, despite high interest rates), the increasing cost of homeowner overhead as a result of climate change (think insurance rates), and the rise of geopolitical events affecting buyer behavior.
Real Estate Outlook in Commercial
Here’s a bullet list of top highlights to expect in year 2026 of the year of our good Lord over the next 12 months – God willing. And in the light of divine positivity, commercial is discussed first given the sedate nature of residential in 2026, as notated above. Here goes for commercial:
- Overall Sentiment: Increased confidence and optimism across the industry, with expectations for stronger fundamentals, returning capital, and better operating environments.
- Office Market: Turning a corner, with demand focusing on premium Class A spaces as attendance stabilizes, while lower-tier properties struggle.
- Industrial & Logistics: Continued e-commerce driver, with supply slowing and vacancy rates expected to tighten after peaking mid-2026.
- Data Centers & Digital Infrastructure: The top investment area, fueled by the Artificial Intelligence boom.
- Multifamily: Facing near-term headwinds from record new supply, leading to softer rental growth despite strong underlying demand.
- Retail: Fundamentals remain solid with low vacancy and steady rent growth, particularly in quality spaces. (Source: Deloitte & Touche 2026 Commercial Real Estate Outlook)
Market Outlook in Residential
Fortunately, and to lighten the mode a bit, it’s not as if residential real estate is expected to go to Hell in a Handbasket, per se. As a disclaimer, not certain why the religious overtone for this year’s predictions, since real estate is a fairly agnostic science. Could be because the time of year – since forecasts are written during a religious themed month that includes the likes of Christmas, Kwanzaa and Hanukkah. But here goes, and in the interest of brevity, more bullet points:
- Buyers: More negotiating power, better selection, but still need significant savings for down payments.
- Sellers: More competition, requiring realistic pricing and potentially offering concessions.
- Home Prices: Expect slow, modest appreciation (Zillow: +1.2%, Redfin: +1%, Realtor.com: +2.2%), as supply slowly catches up, preventing sharp declines.
- Inventory: A gradual increase in available homes is expected, though still below pre-pandemic levels nationally, creating more balanced conditions.
- Affordability: Improving affordability is anticipated as wage growth potentially outpaces price hikes, though high rates remain a hurdle.
- Sales: A modest increase in home sales is forecast as the market becomes less “stuck,” with more choice for buyers. (Source: Zillow Market Research Real Estate Data – 2026)
Summary
Despite a tranquil and placid forecast for residential in 2026, there will be more movement in some areas; given sales are expected to rise, interest rates are expected to lower, and the pricing on residential product will slow down. Commercial on the other hand is a whole different ball of wax, where one can expect a whole lotta hollering from the back pews as buyers will raise prices and more trades will be at record highs. Until then, rest easy and say a pray to the real estate Gods, in that there are more winners then losers over the next year. Amen.
Author Bio:
Real estate writer D. Sidney Potter is based in Southern California. He has a PhD (ABD) from the University of Arizona, a law degree (Juris Master) from Florida State University College of Law and a bachelor’s degree (BA) from Cal Poly Pomona in political science.