What’s Actually Normal, What’s Changed, and How Buyers & Realtors Should Think About It

If you listen to headlines long enough, you’d think the housing market is either broken beyond repair or one rate cut away from exploding again.

Neither is true.

The real story going into 2026 is much quieter — and much more useful.

This market isn’t abnormal.
Expectations are.

Before buyers and Realtors can make good decisions together, we need to reset the frame around three things:

  1. Interest rates
  2. Home prices
  3. The real affordability drivers no one talked about ten years ago

Let’s start where most conversations go wrong.

The Rate Conversation Is Framed Wrong — Here’s the Correct Lens for 2026

For roughly a ten-year stretch between 2008 and early 2018, mortgage rates lived in a narrow band — generally 4.5% to 5.5%.

That decade trained expectations.

An entire generation of buyers, homeowners, Realtors, and even lenders came to believe that was the natural resting place for mortgage rates.

So when rates moved higher, the reaction wasn’t ignorance — it was anchoring.

But when we step back and remove the distortions — the housing bubble, the pandemic emergency, and the inflationary extremes of earlier decades — a clearer truth emerges:

The Real Operating Range for Mortgage Rates

Historically, modern U.S. housing markets function best when mortgage rates live between:

5% and 7%

That range:

  • Has existed repeatedly across economic cycles
  • Supports lending without artificial stimulus
  • Allows buyers to qualify, move, and refinance over time
  • Built most long-term U.S. housing wealth

By that standard, today’s rates are not extreme.
They’re simply sitting toward the upper half of the normal range.

Rates didn’t break the market. Expectations did.

So Why Does Housing Feel So Much Harder Now?

Because rates are only one piece of the payment — and the other pieces reset upward at the same time.

This is where affordability actually tightened.

1. Home Prices Reset Upward

The floor price of housing is meaningfully higher than it was a decade ago.

That matters because:

  • Even entry-level homes now carry larger loan balances
  • A 1% rate change hits harder on a $450,000 loan than a $250,000 loan
  • Buyers feel payment pressure faster

The issue isn’t just the rate — it’s the principal the rate is applied to.

A normal rate on an inflated price doesn’t feel normal.

2. Property Taxes Compounded

Property taxes didn’t just rise — they stacked.

  • New buyers inherit today’s assessments
  • Long-time owners are often protected by caps
  • Two identical homes can have wildly different tax bills

This creates confusion and frustration for buyers who compare payments without understanding tax history.

3. Insurance Became the Wildcard (Especially in Florida)

Insurance is now the most underestimated affordability risk in the transaction.

Unlike rates:

  • It’s non-negotiable
  • It’s volatile
  • It can jump mid-ownership
  • It’s often discovered too late

In Florida especially, insurance is no longer a footnote — it’s a deciding factor.

You can refinance a rate. You can’t refinance insurance.

The Real Affordability Equation

This is the sentence most people never hear — but should:

Mortgage rates returned to a normal operating range, but prices, taxes, and insurance reset upward at the same time.

That’s the squeeze.

Not high rates.
Not a broken market.
A stacked payment.

What the Experts Are Really Signaling for 2026

Once you view the market through this lens, the forecasts make more sense.

Mortgage Rates

Most projections cluster in the low-6% range through 2026 — not cheap, but workable.

Home Prices

Expect modest movement, not dramatic swings:

  • Some flat markets
  • Some softening
  • Some still strong regions

This is not a crash forecast. It’s a normalization forecast.

Inventory

Inventory continues to improve, but:

  • Still below pre-2020 levels
  • Still constrained by low-rate lock-in

More choice — not excess supply.

Sales Activity

A gradual thaw:

  • More buyers re-enter
  • More sellers adjust expectations
  • Fewer “easy” deals, more deliberate ones

2026 isn’t a boom year or a bust year — it’s a decision year.

What This Means for Buyers and Realtors (Together)

This is where alignment matters.

The winning strategy going into 2026 is not:

  • Waiting for 3%
  • Chasing headlines
  • Forcing numbers to work

The winning strategy is:

  • Payment-first analysis
  • Early insurance and tax review
  • Smarter pricing and negotiation
  • Seller concessions and buydowns
  • Long-term ownership planning

This is how housing worked before anomalies distorted expectations.

Structure beats timing. Clarity beats guessing.

Final Thought

2026 doesn’t look like a return to the past — and it doesn’t need to.

It looks like a market where:

  • Buyers who understand the full payment move forward confidently
  • Realtors who explain reality earn trust
  • Well-structured deals close more smoothly

The market isn’t broken.

It’s just asking better questions now.

Author Attribution
Clay Edmonds is the Corporate Educator and a Senior Loan Officer at Complete Mortgage LLC in Hollywood, Florida. He created MortgageSimplified.net and serves as its chief content creator with the purpose of simplifying the mortgage financing process for consumers.

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