A New Year Signals a Shift in the U.S. Housing Market

According to the Chief Economist at Compass, Mike Simonsen, there are four driving themes to
watch as the U.S. housing market enters a new era in 2026.

• Inventory
• Home Prices
• Mortgage Rates
• Home Sales

Here in the Silicon Valley, we know that what happens at a national level is not always what we
experience, but it’s interesting and important to look at the big picture, as this does affect our
inbound and outbound migration, mortgage rates, and our plans around where we choose to
live in the future.

The period of frozen mobility which started in 2022, known as “The Great Stay,” is starting to
show signs of thawing. The mortgage rate lock-in is fading, more homeowners are looking to
move, and in many companies, work-from-home has remained, allowing for more options when
it comes to where you can choose to live.

Signs of “shadow inventory” and “shadow demand” have been observed when studying the data
on the number of sellers who took their homes off the market (by November, nearly 60%
nationwide), and the number of buyers who started mortgage applications (up around 20% year
over year). This points toward pent-up activity with buyers and sellers that are waiting for the
right conditions to make their moves.

Additionally, across the country, incomes are starting to rise faster than home prices, home
prices are starting to normalize, and “days on market” in most states are at 50 days and higher,
allowing buyers to negotiate with sellers in a more balanced environment.

In his report, Mr. Simonsen notes however, that several areas are “stand-out markets.” He says,
“The Bay Area is experiencing an AI-driven boomlet, with rising rents and early signs of
stabilization in San Francisco’s long-declining condo market, while Silicon Valley remains
intensely competitive due to chronic inventory shortages.

And here in the Cambrian neighborhood of San Jose, we are already seeing early indicators of
a robust and healthy market forming for 2026. With strong local demand, limited inventory, and
consistently desirable schools and amenities, Cambrian is well-positioned for a vibrant year
ahead.

If you would like a copy of our Chief Economist, Mike Simonsen’s full report, please email me at
Kirsten.Reilly@compass.com and I will email you a copy.

We are booking consultations NOW for Spring home sales!

Your Local Realtor,
Kirsten Reilly | Broker Associate
(408) 835-2962