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2026 – The Shape of Things to Come for the U.S. Market

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The U.S. housing market in 2026 is quietly shifting in favour of value‑hunters, and that plays directly into the hands of us Aussie/Kiwi investors looking at affordable cities like Detroit rather than the usual coastal hotspots. Instead of chasing palm trees and postcard locations, the best opportunities now sit in smaller, more affordable metros across the Midwest and Great Lakes region, where entry prices are low, rents are solid, and the numbers actually stack up.​

2026: a new phase for US housing

The U.S. market is moving out of the boom‑and‑bust pattern of the pandemic years and into a slower, more sustainable phase. After a long run where prices raced ahead of wages, several major forecasters now talk about 2026 as the start of a “new era” in which household incomes finally catch up and affordability begins to improve rather than deteriorate further.​

Mortgage rates are expected to sit in the low‑6% range through 2026, higher than what Australians might remember from headlines about 2-3% U.S. loans, but now relatively stable, which is helping buyers and sellers re‑engage. At the same time, more listings are slowly coming back to market, which takes some heat out of bidding wars without tipping the country into a crash.​

Why affordability now drives performance

The narrative of 2025 has been housing affordability.  We have heard this catch cry in Australia now for years, but the U.S. is feeling the pinch now as well, particularly since the property boom just after the pandemic, and with wages all but stagnating.

The key shift for 2026 is that price growth is no longer led by glamorous coastal cities; it is led by places where locals can still afford to buy. Analysis of the top projected markets for 2026 shows a clear pattern: smaller, inland metros with lower price points but solid employment are expected to outperform on both sales and price growth because they offer better value than their closest high‑cost capital cities or coastal hubs.​

For Australian investors, this is the equivalent of seeing regional centres with diversified economies quietly outpace the “blue‑chip” suburbs that everyone talks about but fewer can afford. When price‑to‑income ratios get too stretched, demand simply shifts to the next‑best location where the mortgage is manageable and quality of life is still attractive, and that’s exactly what is happening in many U.S. inland markets.​

 

The rise of the Midwest and Great Lakes

When you follow the data rather than the marketing brochures, a particular cluster of U.S. regions stands out: the broad Midwest and Great Lakes corridor, running through states such as Michigan, Ohio, Indiana, and parts of upstate New York and Pennsylvania. These are not the sun‑and‑sand destinations that might dominate Instagram, but they are home to large workforces, deep rental markets, and house prices that often look surprisingly cheap to Australian eyes.​

Fresh U.S. rental yield research on single family homes shows that many of the cities delivering gross rental yields above 10% sit in this belt. Names that appear repeatedly include Detroit and other Michigan cities, alongside markets like Toledo, Cleveland, Gary, and Rochester, places where purchase prices remain far below U.S. national averages while rents have held up. For income‑focused investors, that combination of low buy‑in and solid rent is exactly what you want.​  These areas also have a number of properties in distress conditions, just waiting for flipping investors to pick up at bargain prices, ready to renovate.

Detroit: a case study in “cheap, not broken”

Detroit is a good example of how the numbers have changed, and why it deserves a second look from Aussie and Kiwi investors who might still associate it with the downturns of a decade ago. Local forecasts describe the outlook for 2026 as cautiously positive: price growth is expected to be modest rather than explosive, with improving listing volumes and ongoing demand from both owner‑occupiers and renters.​

What makes Detroit compelling is the spread between what you pay and what you can earn. In and around the metropolitan area, investors can still find houses at price points that would barely buy a car park in inner‑city Sydney or Melbourne, while gross rental yields often sit in the low to mid‑teens according to recent yield rankings for Great Lakes markets. This means:​

  • The dollar risk per dwelling is low.
  • The rent can often cover principal, interest, and running costs with a buffer.
  • Even modest capital growth compounds well on a small, cash‑flow‑positive base.

For Australians and New Zealanders used to negatively geared property and hoping for capital growth to do the heavy lifting, this style of U.S. market offers a very different, and arguably more defensive, profile.​

Landlords: why lower cost also means lower risk

Another important 2026 theme is risk management. In many expensive U.S. cities, existing owners are reluctant to sell because it would mean giving up ultra‑cheap pre‑2022 loans and taking on a much higher rate, a dynamic often called the “lock‑in” effect. In lower‑priced markets across the Midwest and Northeast, that lock‑in is less severe because the total loan size is smaller, so the move from a 3% rate to a 6% rate is painful but not fatal.​

For landlords, that lower purchase price translates directly into lower downside if a property sits vacant or needs a rent reduction to keep a good tenant. Rather than tying up AU$800K – AU$1 million equivalent in a single dwelling in a premium U.S. city (or even Sydney or Melbourne!), savvy foreign investors can spread similar capital across several houses in more affordable metros, diversifying across neighbourhoods, tenant profiles, and local economies. In essence, you trade prestige for resilience.​

Demand is increasingly coming from elsewhere

One of the more telling trends in recent U.S. reports is how much buyer interest in these affordable metros is now coming from other parts of the country.  In some of the leading value markets, around four in ten online listing views are from out‑of‑area residents, often from higher‑cost cities along the US East Coast.​

This mirrors what Australian investors have seen domestically, capital city buyers looking to regional centres or interstate for a better balance of price and lifestyle. As high‑income households relocate or buy investment properties in cheaper markets, they bring new capital, put upward pressure on rents, and support gradual price appreciation without the speculative spikes that can precede a correction.​

What this means for Australian investors in 2026

For Australians and New Zealanders considering or already running U.S. residential strategies, 2026 favours a disciplined, affordability‑first approach rather than a headline‑driven chase for the most famous ZIP code. Here are a few practical takeaways:​

  • Focus on value corridors, not just big names.  Target states and cities where price‑to‑income ratios are reasonable and rental yields remain in double digits, particularly in the Midwest and Great Lakes region. These areas may lack glamour but often deliver the sort of cash flow us Australian investors rarely see at home.​
  • Use Detroit‑style markets as portfolio anchors.  Cities with improving fundamentals, modest but positive growth expectations, and strong rent‑to‑price ratios can form the stable income core of a U.S. portfolio.
  • Think in AUD and risk terms, not just yields. When converted back to Australian dollars, the entry price per property in many of these U.S. metros is low enough to allow diversification across multiple homes, which is difficult in our local markets. That diversification, combined with high gross yields and a more balanced national backdrop, is what makes 2026 particularly interesting for Australian investors prepared to look beyond the obvious.​

By reframing the U.S. market through an Australian lens, focusing on affordability, income, and risk per dollar invested, cities like Detroit move from being “distressed stories” to being practical, high‑yield workhorses that can anchor a global residential property strategy.​

Whether you’re looking at a rental strategy (buy & hold) or more interested in the short-term, active flipping strategy, the U.S. market holds something for everyone and offers excellent diversification to an existing portfolio.

If this is of interest to you and you’re not sure how to get into the U.S. market, or want to get some help honing your existing strategy, book a call to chat with us below!

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How will the U.S. Elections affect the Housing Market?

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The U.S. is slowly edging towards the Presidential elections and with less than 3 months out, it seems the management of the economy will be a major issue for voters. This appears to be one of the more ‘volatile’ election campaigns we have seen in a long time in the U.S.

Both sides seem to be pushing heavy into the economic agendas, but the outcome, or headwinds investors may see are very different with each party.

Technically I don’t have a horse in this race, so we can look on the elections from a relatively ‘unbiased’ view.  Generally, for us as foreign investors, it is more around the impact on the housing market that the policies of the elected party have that is of more interest, but we also need to keep an eye on the reactions to the election as consumer sentiment can also affect markets.

In this election though, housing seems to have become a more ‘prominent’ issue due to higher mortgage rates, low inventory levels, and housing shortages in several states, all making for (in U.S. terms) a very expensive market (median house prices in the U.S. are still at record highs – US$495,100 for end of 2023 according to the Census Bureau and Dept of Housing & Urban Development).

Firstly, both parties have claimed to want to impact the housing shortage/cost of housing.  Kamala Harris and the democrats have said they will provide a US$25,000 down payment (deposit) assistance for first time buyers.  Now I can assume this will work similar to government first home buyer schemes we have had in Australia over the years.  Strangely enough though, just like here in Oz, when the prices are high due to under supply of properties, making it easier to buy properties, does not in fact fix the problem, but makes it worse…

Further her plan includes: creation of 3 million new housing units within the next 4 years, tax credits for developers who build starter homes/units (assuming this is more aimed at lower cost homes) and a US$40 mil fund to tackle the ‘housing crisis’.  To me this is all just words, and we have heard this and similar promises here from our government and it almost always leads to naught…

Trump and the republicans, on the other hand, have not directly tackled housing, but policies are more aimed at tax cuts, particularly for businesses, increased tariffs for imported goods, and looking to reverse a few of the green energy subsidies and mandates that the Biden administration championed.  Further comments/promises include reducing inflation and lowering interest rates.

This is interesting from two points.

Firstly, Trump’s policies, from a high-level overview could be regarding as inflationary. His claims of reducing taxes and increasing tariffs could certainly lift prices, causing inflation, so it would be interesting to see if his administration would monitor this closely.

Secondly, technically the president does NOT have any sway with the Federal Reserve Bank who sets the interest rates, and he is certainly not a fan of current chair Jerome Powell, the presidents do put forth candidates for the chair of the Fed and there was even talk that Trump could look to replace Powell as early as 2026, but this has dialled back some now, and with Powell’s stint up in 2028, Trump has said he would let Powell serve our his term, but then could nominate someone more willing to listen. This is also a little ironic as Powell was Trumps nominated candidate previously.  All in all, he would have little ability to control interest rates, other than ensuring the economy was healthy.

Then there is the claim from Trump that if elected he will attempt to ease economic pressure by devaluing the U.S. dollar…

Now, whether that is even possible is up for debate but there is no doubt that some of his policies could put pressure on the USD.

We spoke above about the powers the oval office has on the Federal reserve and lowering interest rates can generally lead to a weaker USD, but this would be difficult, particularly if Trump was looking to go against monetary policy to do this.  In his favour, it appears that rate cuts are on the horizon anyway, so he may just applaud this and roll with it, so to speak.

Alternatively, increases in oil mining and removal of bans on gas exports, as he has suggested he will do, could also put some pressure on the currency. As a climate change sceptic, Trump has promised to open more oil fields in the Gulf of Mexico and lift the moratorium on drilling in the Alaskan Artic.

Generally, energy prices can have a significant impact on consumer sentiment and can be considered inflationary.  Lower energy and fuel prices can help reduce costs of living and therefore inflation, which may then lead to the Fed looking to cut rates, and therefore, possibly drive the USD a little lower.  It’s a long shot, but if used in conjunction with other levers, could have some minor effect.

Threats of tariffs and/or trade negotiations could also be used, and Trump believes he can use the threat of tariffs to force other nations to make concessions with their currencies.

Trump was quoted by Businessweek in saying “Man, is it good for negotiation. I’ve had countries that were potentially extremely hostile coming to me and say, ‘Sir, please stop with the tariffs. Stop.’ They would do anything,”.

He said the threat of tariffs was effective against Japan and China and can point to some success with this tactic. During Trump’s time in office, the dollar declined 5.5% against the yuan.

Now, whether he can influence the USD is yet to be seen.  He can certainly point to the decline of the USD against the Yuan from his first term as evidence he can “get the job done” but most of his other polices are seen to be more inflationary.  Tax cuts, more government spending, and tariffs on imports are all likely to add to inflation, and subsequently interest rates and therefore more likely to inflate the value of the dollar rather than reducing it.

Overall, there is little in policy for either party that is going to have a massive impact on the housing market over the next 4 years.  If the first home buyers grant, by any other name, is implemented, this could put additional pressure on an already lower inventory market, and give some fuel to a hotter residential market, combined with the likelihood of lower interest rates over the next 18 months.  These are the main two points I will be watching closely.

In terms of currencies, a country’s currency will rise and fall with the strength of its economy in general, relative to its peers so if either party’s goal is to strengthen the economy it will be difficult to devalue the dollar relative to other currencies.

While political unrest can certainly quieten markets down, this generally does not last long.  For us here as foreign investors, it is ‘steady as she goes’ with looming rate cuts expected to buoy a relatively stagnant market, but strong market growth is NOT a strategy we deploy for the U.S. market whose strengths in cashflow and the ability to generate manufactured growth far outweigh any market growth strategies that we cannot control.  We have one of the best growth markets right here in Australia, but for cashflow and manufactured growth strategies, the U.S. is extremely strong and looks to remain that way for time to come.

If your keen to look at implementing cashflow strategies in the U.S. give us a call, we would love to assist.

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Whats in Store for the US Market in 2019?

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Looking back at 2018, we experienced a year of high expectations that largely did not disappoint. Markets continued to stabilise, economic promise grew along with property values, and the revitalisation of cities nationwide provided opportunities and population growth.

It was a good year for investors. But now, we have to ask ourselves: what does 2019 have in store for U.S. real estate? What national trends will shape the markets on the whole, and what do we have to look forward to…or keep an eye on?

This is what you need to know as we look ahead for 2019.

Top Predictions for the U.S. Real Estate Market in 2019

Balance is the word.

As we consider factors like growing inventory and the slowing of appreciation and asking prices, the word that comes to mind is balance. In 2019, we expect to see the return of more traditional housing markets that offer less frenzied, more evenly paced opportunities over the extreme environments we have seen booming in the last decade. These will be the exception. Savvy negotiators may be able to snag a great deal, and some markets are still on that rise – Detroit for example.

If buyers start to slow down, they will rent while waiting for the market conditions to change, thereby strengthening the rental market.

What’s the deal with interest rates?

Interest rates were at their lowest recent point post-recession in 2008. The federal government controls short-term interest rates, while the market dictates long-term rates. When the government changes the rates at which banks are allowed to borrow money, it can take several years to shift the economy on the whole, while the trickle-down affects the average consumer, where it has an almost immediate impact on things like credit cards, student loans, and yes…mortgages.

Interest rates are moving from a decade of being historically low to 5 and 6 percent as we enter 2019. Economists and real estate experts alike are concerned that this could hinder consumer spending power and make the burden of mortgages greater. In regards to housing, it may deter buyers even as housing prices are expected to fall. But most of this is what we would call “Sticker Shock” Its simply that interest rates have been at record lows for so long people lose sight of the fact that 5-6% is still quite cheap (remember the 15-20% of the 80’s and 90’s!)

Good news too though is that if buyers start to slow, the will rent for the mean time while biding time for the market to change, strengthening the rental market for us Aussie investors!

What about the trade war issue?

The global economy has always been a factor in the health of our markets, real estate included. The issue here is that tariffs and trade wars on a broad, global scale, may cause issues in the US domestic economic markets. Economists worry that cold economic relations with allies and a possible trade war with China could cause economic instability by 2020.

However, none of these things are guaranteed or set in stone.

Despite these predictions, good and bad, they are just that: predictions. The best we can do is to plan for the long-term and choose sustainable, smart investments that help you secure your best financial future.