Chen Zhao

Economic analyst and forecaster for Redfin

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Key positions and views

Mortgage rates will remain structurally higher for longer, stabilizing in the low 6% range throughout 2026 without any sustained dips into the 5% range.

The path to improved housing affordability will be a slow, multi-year process, primarily driven by home price growth lagging behind wage growth rather than by a sharp drop in prices or rates.

The U.S. housing market will experience significant geographic divergence, with Sunbelt markets like Florida and Texas continuing to weaken while Midwest metros and NYC suburbs show strength.

Technology, specifically AI, will become integral to the home-buying process, functioning as a 'matchmaker' to help consumers navigate complex decisions about where to live.

The Federal Reserve is in a constrained position, unable to cut interest rates significantly due to inflation risks, which serves as the primary anchor for elevated mortgage rates.

Podcast consensus on Zhao

Points of consensus

▶All claims originate from a single source, Chen Zhao of Redfin, presenting a unified forecast. The core consensus is that the housing market is undergoing a slow 'reset' rather than a sharp correction, with affordability as the central issue.Apr 2026

▶The forecast consistently points to macroeconomic constraints, particularly Federal Reserve policy, as the primary factor preventing a significant drop in mortgage rates below the 6% range.Apr 2026

▶There is a consistent view that housing market performance will diverge geographically in 2026, with Sunbelt markets remaining weak while suburbs of New York City and Midwest metro areas will be strong.Apr 2026

▶Technological and structural changes are presented as key trends, with AI poised to become a 'real estate matchmaker' and the National Association of Realtors (NAR) shifting its focus toward advocacy.Apr 2026

Points of debate

▶The analysis presents a tension between the prediction of a slow, multi-year (5-6 years) recovery in affordability and the forecast of a 30% increase in mortgage refinance volume in 2026, which suggests a more immediate financial incentive for some homeowners.Apr 2026

▶A potential conflict exists between the Federal Reserve's stated intention to shift away from mortgage-backed securities (which could exert upward pressure on mortgage rates) and Zhao's prediction that rates will remain stable in the low 6% range.Apr 2026

▶The forecast notes that while persistent affordability challenges will cause social shifts like delayed family formation, existing home sales are still expected to rise slightly in 2026, indicating resilient demand despite the financial strain.Apr 2026

▶Zhao predicts rents will begin to rise in the latter half of 2026 due to slowing multifamily construction, even as the broader for-sale market continues to struggle with severe affordability issues, highlighting a divergence between the rental and ownership markets.Apr 2026

Key themes

▶The Great Housing 'Reset'Apr 2026

This theme encapsulates the core prediction that the housing market is not crashing but undergoing a prolonged, slow adjustment. Key facets include mortgage rates stabilizing in the low 6% range and home prices growing slower than wages, which is a necessary but gradual step toward restoring affordability over a potential five-to-six-year period.

For investors, this suggests a market favoring patience and long-term holds over short-term flips, with modest, wage-pegged appreciation rather than the rapid gains of the early 2020s.

▶Geographic DivergenceApr 2026

Zhao predicts a significant split in regional market performance for 2026. The pandemic-era boom markets in the Sunbelt, particularly Florida and Texas, are expected to remain weak, while more affordable markets in the Midwest and the suburbs of New York City are forecast to be the strongest.

This signals a potential shift in real estate investment strategy away from high-growth Sunbelt states towards more stable, and perhaps undervalued, markets in the Midwest and Northeast.

▶Macroeconomic Constraints and Fed PolicyApr 2026

The Federal Reserve's actions are portrayed as a primary constraint on the housing market's recovery. Zhao argues the Fed is unlikely to cut rates significantly due to inflation risks and its intention to shift its portfolio away from mortgage-backed securities, effectively setting a floor for mortgage rates.

Analysts should closely monitor the Fed's balance sheet management, as the move away from MBS could introduce volatility or upward pressure on mortgage rates, potentially challenging the stability predicted in the forecast.

▶Structural and Technological EvolutionApr 2026

This theme covers predictions about fundamental changes in the real estate industry. It includes the growing role of AI as a 'real estate matchmaker' to help buyers navigate complex decisions and a predicted shift in the National Association of Realtors' (NAR) strategy to focus more on advocacy while allowing local MLSs greater autonomy.

These shifts suggest the real estate transaction process is becoming more technologically driven and potentially more fragmented organizationally, creating opportunities for new tech platforms and localized market expertise.

Source episodes

Sentiment over time

Not enough data for timeline

Changes over time

2025

Predicts the fraction of homes being delisted from the market will increase to 5.5% from 4.8% in the prior year.

2026

Forecasts that mortgage rates will remain stable in the low 6% range (6.2-6.3%) and will not sustain a drop into the 5% range.

2026

Predicts a key step toward improving affordability will occur, with home price growth slowing to a rate below wage growth.

2026

Forecasts a slight increase in existing home sales to 4.2 million, alongside a 30% increase in mortgage refinance volume.

H2 2026

Predicts that rents will begin to increase slightly in the second half of the year due to slowing multifamily construction.

2026-2032

Suggests the full process for housing affordability to return to pre-pandemic levels will be slow, potentially taking five to six years for buyers to notice significant improvement.

Suggested prompts

How do Chen Zhao's predictions for regional market divergence (Sunbelt vs. Midwest/NYC) align with broader demographic and economic migration trends? &nearr;What are the potential second-order effects on consumer spending and economic growth if Zhao's prediction of a multi-year affordability crunch and delayed family formation comes to pass? &nearr;How might the Federal Reserve's stated shift away from Mortgage-Backed Securities conflict with or support Zhao's forecast for stable mortgage rates in the low 6% range? &nearr;Given Redfin's role as a market participant, how might their promotion of AI as a 'real estate matchmaker' influence the market dynamics they are also predicting? &nearr;

Key concepts

Mortgage Rates 1 ep Housing Affordability 1 ep Regional Housing Markets 1 ep Federal Reserve Policy 1 ep Real Estate Market Predictions 1 ep Real Estate Technology & AI 1 ep National Association of Realtors (NAR) 1 ep Rental Market 1 ep Climate Migration 1 ep

Notable quotes

“The first one is about mortgage rates. So right now, mortgage rates are in the low sixes, 6.2, 6.3%. We think they're staying here.”

Chen Zhao · The Great Housing Market “Reset” Begins (2026 Redfin Predictions)

“yes essentially at home prices are going to be growing slower than wages and this is the step that you need for affordability”

Chen Zhao · The Great Housing Market “Reset” Begins (2026 Redfin Predictions)

“we think that the places that we're really seeing that are among our weaker markets, you know, in the Sunbelt in Florida and Texas, these are going to continue to be the weaker markets in 2026.”

Chen Zhao · The Great Housing Market “Reset” Begins (2026 Redfin Predictions)

“the prediction is that ai will become a real estate matchmaker... We think that AI is really increasingly going to help people decide where to live, which homes to buy.”

Chen Zhao · The Great Housing Market “Reset” Begins (2026 Redfin Predictions)

Report last updated: Apr 21, 2026

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