This Week: Davos and a Real Estate Market Health Check-In
Today’s Interest Rate: 6.07%
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.
The Weekly 3 in News:
Gas prices are down bigly. Drivers are predicted to spend $11 billion less in gas money this year than last year (USDoE).
National Association of Realtors: “2026 is the year of recovery (NAR).”
Has the US ever bought part of a country before? Why yes, in fact, much of the US is land that was purchased, including: the 1803 Louisiana Purchase from France for $15 million, 1819 Florida Acquisition from Spain for $5 million, 1854 Gadsden Purchase from Mexico for $10 million, 1867 Alaska Purchase from Russia for $7.2 million, and… 1917 U.S. Virgin Islands Purchase from…. guess where… Denmark! For $25 million…. to name a few. The world is… complicated (U.S. Census).
World Economic Forum in Davos: A Platform for Dialogue Amid Division
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:
geopolitical cooperation,
trade policy,
economic growth,
AI deployment, and
human capital and the environment.
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:
Allow homebuyers to draw on their 401(k) without penalty for a down payment on a home. Administration officials have often cited downpayments as a target item for housing policy, making the point that since 2020, median downpayments have risen from $17k to $35k (Fox). Folks can already invest in real estate assets with their IRA accounts, so why not their primary residence with the 401k? (Sidenote: Folks should be careful. A primary residence is not an investment. It is a forced savings account, and thus may be a poor investment for your 401k dollars. Feel free to read my thoughts on this at length in previous articles here).
Reduce Federal Housing Administration (FHA) fees, mortgage insurance premiums, and cancel the life-of-loan requirement to pay for mortgage insurance.
A larger planned purchase of Mortgage Backed Securities to put further downward pressure on rates.
More details on the proposed ban on large investors purchasing single-family homes (if you want to know more about why this is a nothing burger, I highly recommend this article).
Eliminate the tri-merge credit report requirement for lower-risk GSE-backed loans.
Targeted capital gains tax relief on the sale of a primary residence.
Expanded multifamily lending from Fannie and Freddie.
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…
Momentum is Building in US Real Estate Markets
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.
US Housing Data Points: Positive Growth
So, let’s look at some hard data.
Mortgage Purchase Application 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.
My Skeptical Take:
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…
Fed Cuts 3 Times in 2026
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:”
Building momentum
The very beginning
Building momentum
The energy spinning
Moving with purpose and picking up speed
Has taught me the one lesson I’ll ever need
The first step to succeed
Is building momentum— How to Dance in Ohio
Let’s keep the momentum going.
Until next time. Stay Curious. Stay Skeptical.
Herzliche Grüße,
-The Skeptical Investor
