Q4 2026: where real estate is headed and how to invest in it.

By Danté M. Shackelford, Founder and Managing Principal of EMx Lending
Updated November 5, 2026

This is the written version of our fourth quarter market update webinar, recorded in late October 2026 with Future Davis, associate broker and team lead at The Elevated Collective at eXp Realty. It covers the national cycle, two local markets (Detroit and Hampton Roads, Virginia) and the moves we would make in the next 90 days.

The national read: late expansion, De-risk posture

Four facts define the macro picture right now:

• Inflation is back, and the Fed raised rates again in September.
• Mortgage rates are close to a full point higher than a year ago.
• Pending home sales are starting to soften.
• Growth is still solid. The latest GDP report came in at 3.4%, ahead of the 3.2% expected, and unemployment is low.

Put together, that is a growing economy late in its cycle. One of the recession indicators we watch most closely, the Sahm rule, is well below the 0.50 level that would make us call a recession.

We think about investing by cycle stage, not by "buy now" or "wait." There are six stages: Recovery, Expansion, Late Expansion, Peak, Slowdown and Recession. Each one has a posture:

Three things would change our call. A reset in stock valuations, which are expensive today, could move us back toward Grow. Rising mortgage rates or a rising Sahm rule would keep us in De-risk but closer to Peak or Slowdown. A Sahm rule reading of 0.50 or higher would make us read Recession.

How reliable is the cycle read?

We built the MarketTrack Cycle Backtest to answer that. It runs our method month by month from January 1978 through September 2026, using only the data available at each point. Over those 48 years it read all six recessions as Recession, and it had investors in a De-risk posture 4 to 24 months before each one began.

In 2007, for example, it already read housing as Correcting while the economy still read Expansion, and it moved to De-risk about 10 months before the recession officially began in December 2007. That start date was not announced until the following year.

It is not perfect. It read two months of Recession in mid-2024 that never came, and in long late-cycle stretches like the late 1990s, De-risk can feel early. Even then, investors who stayed careful in the late 1990s did far better than over-leveraged flippers when the 2001 recession arrived. See the full backtest results.

Two clocks: the economy and your housing market

The economy sets your posture and how much risk to take. Your local housing market decides how to buy. Nationally we read housing as Balanced, but local markets differ, and the city of Detroit reads Correcting.

Detroit: a two-speed market

• For-sale prices are down 2.8% from a year ago, and homes are taking about 43 days to sell.
• On the rental side, vacancy is lower than a year ago and heading toward its long-run average of about 4.3%.
• Rents are up 3.1% year over year.

How to buy in Detroit now: focus on Core Plus rentals, meaning rented properties under market rent that need light work. Underwrite at today's rent, not next year's. If your plan depends on a sale, take 10% off today's comps. Skip gut rehabs. If you still flip, do one at a time and buy at about 60% of after-repair value.

Hampton Roads, Virginia: cooling, but supply is tight

• Median sale prices are down in four of the five main cities, Norfolk being the exception.
• Months of supply are well under a balanced market, so sellers still have buyers.
• A three-bedroom rental tends to pencil out between about $150,000 and $200,000. Most homes at $240,000 and up won't clear the DSCR test.

How to buy in Hampton Roads now: spreads on flips are still good, but keep flips under six months and be careful with exit values. Be very cautious with ground-up construction that won't sell for 12 to 18 months. Rentals work if you can find them under about $240,000.

The strategy playbook for this stage

A few rules run through all of it. Judge every deal on net operating income and free cash flow, not on the interest rate alone. A 10% rate on a property that clears $5,000 a year beats a 3% rate on one that loses $100 a month. Look for stale listings, estates and tired landlords who are reacting to headlines. And if you can, put a little more down and set more cash aside.

Same rate, very different cash flow

Rates matter less than the rent compared to the price. Using the same leverage and rate:

Your next 90 days

• Getting started (0 to 1 properties): buy one rental if the numbers check out. In Detroit, look hard at 2 to 4 unit properties.
• Growing (2 to 10 properties): consider pulling equity out of a strong property to buy the next income property, and look for Core Plus deals in both markets.
• Established: build reserves and review the whole portfolio. If a property has thin cash flow but real equity, this may be the time to sell it and reinvest in a better one.

What agents are seeing on the ground

Future Davis shared what her team is seeing with retail buyers and sellers in Metro Detroit:

• Buyers shop by monthly payment, not price. A home that cost $1,700 a month now costs about $1,850, and that changes who can buy.
• Deals are falling out of contract more often than the national average, usually when the buyer sees the real payment late. Get buyers pre-approved and clear on the payment before they fall in love with a house.
• Many sellers are still pricing off last spring. Homes priced too high sit, and buyers assume something is wrong. Price it right, or plan the price correction up front.
• With homes sitting longer, buyers have more room to negotiate. Write the offer and start the conversation.

Questions from the webinar

We answered these in full on their own pages:

• What credit score, down payment and documents do you need for a DSCR loan?
• How does rehab funding work, and what happens after the 12-month term?
• How does refinancing a bridge loan into a rental loan work?
• What proof of flipping experience do you need?
• Why put 25% or 30% down when 20% is available?

Make it specific to you

This update is the general read. Client Partners get it applied to their own situation: their cash, goals, portfolio and local market, written into an Investment Policy Statement and a one-page Buy Box they can hand to an agent or wholesaler. That is the Investment Plan and Market Analysis work in the 7 Pillars of Profit.

This is general education, not investment, legal or tax advice. Loan terms are general guidelines, depend on credit, experience and the property, are subject to change and are not a commitment to lend. EMx Lending makes business-purpose loans on non-owner-occupied investment property in all states except Vermont, North Carolina, North Dakota, South Dakota, Idaho, California, Arizona and Nevada.