Compass Releases 2026 Market Outlook predicting an uptick in affordability, but it's not suggesting what you might expect.
VIEW THE 2026 MARKET OUTLOOK REPORT HERE
What the 2026 Market Outlook Really Says About Affordability
The Compass 2026 Market Outlook shows increasing housing affordability nationwide-but not for the reason many people expect.
Here in the Bay Area, there’s a common belief that affordability is improving because home prices are continuing to freefall. While that is true in certain segments - most notably condos in Oakland - it’s not the full story.
In fact, many neighborhoods and home types have quietly been ticking back up in value over the past year. Buyers are still competing fiercely for homes in Berkeley, well-maintained (and insurable) properties in Oakland’s strongest neighborhoods, and the historic, architecturally significant homes of Estudillo Estates in San Leandro.
So what is moving the needle on affordability?
The Real Driver: Income Growth Outpacing Home Prices
For the first time in a long time, incomes are rising faster than home prices.
Since 2020, the ratio of home prices to income has hovered above 5x, meaning the average home cost more than five times the average income. At the height of unaffordability in 2022, that ratio peaked at roughly 5.6x.
(Averages are imperfect - especially nationwide - but they’re still useful for understanding macro trends.)
Since that 2022 peak, the ratio has been steadily declining. Compass’ forecast suggests that by 2026, the ratio will likely fall below 5x. That shift moves housing from “Severely Unaffordable” to simply “Less Affordable.”
We’re still a long way from the 4x ratio traditionally considered “Affordable,” but the direction matters - especially for first-time buyers who’ve been waiting on the sidelines.
Is This Bad News for Sellers? Not at All.
Affordability isn’t just about prices—it’s about prices relative to income.
As incomes rise and home prices grow more slowly, more buyers qualify. Add in gradually declining mortgage rates, and the buyer pool expands further.
For sellers, this can actually be excellent news. More qualified buyers means more competition - but only for homes that are properly prepared.
And that brings us to the reality of today’s split market.
Why Preparation Matters More Than Ever in a Split Market
In our current market, some homes sit for weeks—or months—while others receive multiple offers.
Buyers today are stretching to make their down payments and often don’t have extra cash for deferred maintenance or major updates. Unlike prior generations, many buyers also have little appetite for DIY projects.
Homes that need “just a little work” don’t merely receive lower offers—they often receive no offers at all. Investors step in, but end users move on.
If you’re considering selling in the next year, preparation is critical. My team approaches updates strategically and conservatively - only investing in improvements that will deliver a measurable return and ensure your home isn’t overlooked. The goal is not over-improvement; it’s precision.
Where Might the Best Deals Be in 2026?
If you’re a buyer looking for value, it’s impossible to ignore the continued softness in Oakland’s condo market.
Since 2020, condo prices - particularly in Oakland - have declined steadily due to several compounding factors:
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Increased inventory and reduced demand following the shift away from shared living during COVID
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State-mandated inspections and repairs for elevated wood balconies, often resulting in special assessments
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Rental challenges caused by HOA restrictions and local rent regulations
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Rising HOA dues driven by:
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Years of deferred maintenance coming due
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Increasing insurance costs
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The expense of required inspections and repairs
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While it's always possible, the price of condos, will continue to fall, as long as you have several years for recovery it could be a decent time to buy. Keep in mind, condos don't appreciate as rapidly as single family homes, but at these prices, it might not matter as much.
Don't leave your investment to chance - call a REALTOR®
If you're thinking about making any moves, call me today and let's go through your options. You're going to want a professional on your side!
Nicole Easterday
(510) 410-3761
Nicole@NicoleEasterday.com