For years, real estate headlines have been stuck in extremes. Either the market is about to collapse… or prices are about to explode again. But 2026 doesn’t fit neatly into either narrative.

According to Redfin’s latest housing market forecast, 2026 is shaping up to be something very different: a reset. Not a recession. Not a boom. And definitely not a return to the frenzy of 2020–2022.

A reset means slower, more balanced, and more strategic—and in a complex, high-demand market like Los Angeles, that distinction matters more than people realize.

Let’s break down what’s actually happening—and what it means for you.

Mortgage Rates: The New Normal (For Now)

Mortgage rates remain the single biggest driver of buyer behavior. Redfin predicts that rates will stay in the 6% range throughout 2026, averaging around 6.3%, with a possible dip into the low-6s toward the end of the year.

That aligns with what most credible economists are saying—and with what I’m seeing on the ground in Los Angeles.

The key thing to understand? Rates are not dropping quickly, and they are not returning to 3–4% anytime soon.

That doesn’t mean buyers are stuck. There are ways to get below 6%, such as paying points, negotiating seller credits, or using temporary buydowns. I’ve had clients close in the high-5% range using these strategies—but they only make sense in the right situation.

The bigger takeaway for LA buyers is this: waiting solely for rates to drop may cost more than it saves. Inventory, pricing, and competition matter just as much as interest rates. In a low-inventory market, strategy beats timing.

Home Prices and Affordability: Slower, Not Softer

One of Redfin’s most misunderstood headlines is that affordability will “improve” in 2026. At first glance, that sounds unrealistic—especially in Los Angeles.

But here’s what they actually mean.

Redfin projects that nationwide home prices will rise only about 1% in 2026. That’s a major slowdown compared to previous years. When slower price growth is paired with slightly lower mortgage rates compared to 2025, monthly payments rise more slowly than they have in the past.

That doesn’t mean housing suddenly becomes affordable in LA.

Property taxes can increase. Homeowners insurance in California is more expensive—and harder to secure—than ever. Maintenance and repair costs are real, especially for older homes.

So affordability isn’t “fixed.” The pressure just isn’t accelerating the way it was before. For many buyers, that breathing room alone changes the conversation.

Home Sales: Why Inventory Is Still the Problem

Redfin predicts home sales will increase by only about 3% year over year in 2026. That number might sound low—but it’s realistic.

Why? Inventory.

Millions of homeowners are still locked into 2–3% mortgage rates. These “golden handcuffs” keep people from selling unless they have to. And in Los Angeles, people don’t move casually.

Inventory here is driven by life events: job changes, family shifts, divorce, estate sales. Not upgrades.

Until that changes, inventory stays tight, mobility stays limited, and sales growth remains slow. This isn’t pessimism—it’s reality.

For buyers and sellers alike, timing alone isn’t enough. You need a clear plan.

Rents: Quiet Pressure Building Again

Redfin expects rents to rise about 2–3% in 2026, roughly in line with inflation. In many parts of Los Angeles, that may actually be conservative.

Why?

• Buying remains out of reach for many

• Apartment construction has slowed

• Rental demand hasn’t disappeared

I saw rental activity soften briefly in parts of LA last year, but if affordability stays tight, pressure on rents will return. That affects renters, investors, and homeowners alike.

Changing Family Dynamics: Not a Trend—A Strategy

One of the most important parts of Redfin’s forecast has nothing to do with prices.

High housing costs are reshaping how people live.

We’re seeing more roommates, delayed household formation, and fewer people starting families early. Homeowners are renting out rooms to offset mortgages. Friends are buying together. Multi-generational living is becoming common—even in new construction.

In Los Angeles, this isn’t a lifestyle trend. It’s a survival strategy.

Why Los Angeles Plays by Different Rules

Redfin points out that more affordable markets in the Midwest and Northeast are heating up, while places like Texas, Florida, Austin, Nashville, and Miami are cooling after years of rapid growth.

Los Angeles is different.

We’re geographically constrained. We don’t have an overbuilding problem. Demand doesn’t disappear here—it just shifts. That’s why LA doesn’t crash the way other markets do. But it also means growth is slower and more controlled right now.

AI in Real Estate: Helpful, Not Replacing Humans

Redfin predicts AI will increasingly help buyers figure out where they should live based on lifestyle, commute, and budget. That’s already happening—and it makes sense.

But AI isn’t replacing real estate agents.

It can’t negotiate. It can’t walk a property. It can’t spot red flags or protect your interests in a high-stakes Los Angeles transaction. Technology is evolving, but human guidance still matters—especially in a market this nuanced.

The Bottom Line

2026 isn’t about fear or frenzy.
It’s about adjustment.

Slower price growth. Limited inventory. Strategic buyers. Realistic sellers. A market that rewards preparation over speculation.

If you’re buying, selling, or just trying to understand where Los Angeles real estate is headed, this is the year to stop waiting for extremes—and start planning intelligently.

If you have questions, reach out. Clarity beats guessing every time.