Welcome to the Skeptical Investor Newsletter. A frank, hopefully insightful, dive into real estate and financial markets. From one real estate investor to another.

This week, we’re talkin’ real estate chatter at Davos World Economic Forum on an unusual topic, US housing policy. And I track down hard data to build a picture of the real estate market momentum coming into 2026.

Let’s get into it.

This week is the 2026 World Economic Forum - which draws ~3,000 world leaders from 130+ countries, including ~65 heads of state, 850+ CEOs. The theme this year is “A Spirit of Dialogue,” seems quite apropos to today’s world events.

Participants are expected to talk about:

Frankly, although the event does usually throw off a few insightful tidbits, it’s normally fairly irrelevant for our purposes. Much of the event happens behind closed doors in smoke-filled rooms. It's like power networking for the world elite.

But this year, several administration officials have said the President intends to unveil new US housing policies during his speech on Wednesday. More US cabinet officials than ever will be attending the event, and rumor is there will be several public-facing housing-related announcements, potentially surrounding reducing real estate transaction fees.

More specifically, I think they could float a few trial balloons on a variety of housing affordability-themed topics, such as:

It’s a little off topic to talk about US real estate in Davos, but hell, if I were in this adorable Swiss town, I’d be absolutely compelled to talk about real estate.

Looks pretty damn lovely.

Hey developers, can we get some of these lovely little low-rise apartments here in Nashville? Looks far better than the rectangle box drab y’all are building lately.

But I digress…

Positive momentum for the real estate market in 2026 is building.

Anecdotally, my lead inflows from both seasoned, but mostly newer, real estate investors are up 33% from this time last year. This is across all marketing platforms and social media almost equally. A very bullish sign for 2026.

Loan officers are reporting positive momentum in homebuying too. Here is what one mortgage broker is seeing in the DC area:

Now, anecdotes from operators in the arena are helpful, but optimistic projections can mask underlying vulnerabilities. We need more.

Consider this your wake-up call.

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So, let’s look at some hard data.

Mortgage interest rates are in the zone. In fact, any time rates “fall below 6.64% and approach 6%, housing data tends to improve, especially in positive weekly purchase application data (Housing Wire).”

Last week we got the first numbers in 2026. We were up +16% from the previous week and +13% YoY.

And the Mortgage Bankers Association index has just climbed 16.9% WoW, reflecting the 13% yearly advance. Statistaforecasts 2026 originations at $2.1 trillion. Yet, with unemployment edging up to 4.2% in late 2025, demand could soften if job growth slows to the expected 1.5% in 2026.

We will watch the labor market, but so far, a good signal.

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Ok, back to business.

As the labor market normalizes/softens, mortgage rates have come down to near their lowest levels YoY, on trend with the Federal Reserve cutting interest rates. Albeit slowly.

Today, mortgage rates are sitting at 6.07%.

Remember, mortgage rates track the 10-year Treasury bond rate and the difference between two is called the “spread.” 30-year mortage rates dipped to 6.06% last week, with the 10-year Treasury yield at 4.17%–4.24%, narrowing the spread to 1.84–2.01 points from 2025 peaks. Spreads since 2023 have been elevated, closer to 2.59.

Yet historically, mortgage spreads have ranged between 1.60% and 1.80%, so today we are finally approaching a normal mortgage market. This normalization—down from 8% highs—has boosted affordability indices by 5%. While spreads remain 50 basis points above historical norms, we are likely coming in for a landing in 2026. If spreads returned to their normal range, mortgage rates would be 0.59% to 0.39% lower than today’s level, meaning mortgage rates would be 5.63%-5.83% (Housing Wire). This is without any further reductions from the Fed.

Counterpoint: if the downward inflation trend reverses, rates could rebound to 6.5%. This is why we track the spread.

After 4+ years we are finally near normal inventory levels, which is a requirement for a healthy functioning real estate market. Gone are the savage shortages of 2020-2024. December 2025 levels were up 12.1% yearly, to 1.18M units listed for sale, equating to 3.3 months’ supply. 2026 is expected to bring a return to 80k+ new listings/wk, which is the low end of normal (we typically range between 80k-100k) (Housing Wire).

Home sales are showing signs of upward momentum as well. The National Association of Realtors reported existing-home sales increased by 5.1% in December, bucking the seasonal, slower winter trend.

2025 was quite depressed, tied with the lowest year since 1995 (ResiClub).

Which meant the most momentum was with those who had the means (below).

The momentum is building. NAR forecasts home sales to jump 14% this year.

Remember, we are still undersupplied in total. NAR estimates we need 1.5 million more homes built to keep up with household formation.

Nevertheless, all this is still quite positive for 2026.

There is a lot of negativity among academics, political pundits, TV business analysts, and, of course, social media.

Call me skeptical.

The economic foundation looks robust, with the Atlanta Fed revising its GDP Q42025 estimate up to 5.3%, a historic number. Really good.

Inflation looks close to the Fed’s 2% target and lower tax policies and AI productivity should be a tailwind for 2026 economic growth (I prefer Truflation estimates, below).

Tangent Alert! You know what’s really inflating? It’s not shelter or rental prices its…Disney trips!

The cheapest 1-day Magic Kingdom ticket is up ~190% (100 to 290). For peak-demand days, it’s up ~335% (100 to 435), since 2000.

Shelter inflation is up 69% over the same 25 year timeframe.

What the actual F?

But I digress…

While the Fed is not likely to cut rates in January, it is more likely than not that interest rates will further shrink in 2026 as inflation continues it’s marched downward, spreads compress and the labor market normalizes.

I expect three cuts this year, one more than the consensus analysts’ estimate.

If so, we should see housing sales above 4.5 million for the first time since 2020, up 500,000 from 2025.

And rates below 5.9%.

2026 is going to be a banger.

And with that, I'll leave you with a few lines from the Broadway musical “How to Dance in Ohio:”

Let’s keep the momentum going.

Until next time. Stay Curious. Stay Skeptical.

Herzliche Grüße,

-The Skeptical Investor

P.S. Need a little push to get to the next level in your real estate journey? You can consult with me, The Skeptical Investor. Get professional advice from someone who actually owns real estate. Want to Grow? Get clarity on how to grow your business or scale. Stuck? Get answers to your problem, let's hop on the phone and figure it out.
No "guru" trying to sell you an expensive course. No BS. No fluff. Only results. I'll give you my frank, brutally honest advice. Schedule a call with me today.

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