The Zillow Pivot

Zillow went into 2026 on the record so confident, even optimistic.

Their official forecast called for home values to grow 3.4% this year with more sales and improving affordability. The housing market was finally supposed to catch its breath after two years of buyers sitting on the sidelines waiting for something. Maybe it was rates, prices, inventory…maybe it was certainty but 2026 was supposed to be the year they got it.

Then February 28th happened.

Fast forward to today. Zillow quietly dropped their April forecast. In March they predicted 3.4% price increases. They released their April report this week and they dropped that projection to just .3%. That's not a rounding error or typo. That's a 3-point-plus revision in a single month and I don’t think enough people are talking about it.

What changed between March and April? One word: WAR.

Just before the U.S. attacked Iran on February 28th, rates had just dipped into the mid-5’s for the first time since 2022. The 30-year fixed hit 5.98% on February 26th. Two days later, the war officially started. Oil prices surged from $71 a barrel to over $115 in a single week - the first-time crude crossed $100 since Russia invaded Ukraine. 

Here's why that matters to your mortgage rate in case you’re new here and have never thought about oil and real estate in the same sentence.

Higher oil prices feed inflation. Inflation kills bond demand. When bond demand drops, yields rise. And mortgage rates follow bond yields like a shadow. The conflict triggered what the International Energy Agency called the largest supply disruption in the history of the global oil market. It is echoing the 1970s energy crisis through supply shortages, currency volatility, and real risk of stagflation. That's not some fancy hyperbole. That's the mechanism that was quietly repricing your buying power while everyone was watching the news.

As of today, the University of Michigan's consumer sentiment index is sitting at levels comparable to the summer of 2022. That was when inflation hit 9% coming out of COVID. Twelve-month inflation expectations jumped to 4.7% this month, up from 3.8% in March. The largest single-month increase in a year. And this drop in confidence isn't demographic. It crossed every political party, income bracket, age group, and education level. I’m pointing this out because that's not a political sentiment reading like everything else we see/hear/ready nowadays. It is simply a human reaction at the guttural level.

So, what does Zillow's downgrade actually tell us?

It tells us that even the most optimistic institutional forecasters are catching up to what the market felt weeks ago.

Here's the thing about Zillow's original forecast that I haven't been able to shake: they went on record at the start of this year saying mortgage rates would not fall below 6% in 2026. That felt like a bold prediction, but they drew a line in the sand.

Rates crossed below 6% in February and it definitely ignited the market the way everyone expected. Then the war pulled them back up. And now here we are in late April with the 30-year sitting around 6.05%, shorter-term loans finally dipping back below 6% … and Zillow trimming their outlook anyway?

Like I’ve said: This isn't a rate story anymore.

Buyers coming into this Spring Buying Season are more concerned about the economy and mortgage rates than they were about home prices.  Which is a stark change from earlier this year when it was clear they were just sick of waiting. That's what no forecast model fully captures right? The feeling in people's chests when they're about to sign a thirty-year commitment while the world feels like it's on fire.

Zillow can model inventory. They can model rate trajectories. They cannot model the moment a buyer looks at their partner across the kitchen table and says I don't know if right now is smart. This explains why we are experiencing disconnected (aka micro markets) markets within the same cities or even the same zip codes.

Most people assume war = rates spike = buyers disappear. That's just the surface read though.

The deeper read is this: war creates a confidence tax on every financial decision a household makes. It doesn't have to directly touch your industry, your job, or your neighborhood. It just has to be loud enough and uncertain enough to make people pause.

We've been here before. Post-9/11. The Gulf War. Every major geopolitical shock has a version of this story. A brief window where the math still works, confidence hasn't caught up yet, and the buyers who moved anyway quietly captured the opportunity while everyone else waited for the all-clear signal that never officially comes.

Inflation is now at a three-year high, driven by oil prices tied to the war. The Federal Reserve has made no clear indication of its next move, but current speculation points to holding rates where they are - no cuts, no hikes. That means we're in a sustained period of uncertainty with a side of elevated cost of living.

That's the war tax. It's psychological before it's financial.

Here in Reno, I'm watching something that should give everyone pause.

We are living in two housing markets simultaneously.

There are listings hitting the market right now with multiple offers in the first weekend. Sellers getting what they asked for. Clean closes. And then - sometimes on the same exact street - there are homes sitting. Price reductions. Days on market quietly climbing. Crickets.

Same city. Same week. 

I've said it for years and I'll say it again: every house is its own market.

The national headlines, the Zillow forecasts, the rate averages – they are real data, but they're averages. And averages flatten the most important story, which is that pricing precision, condition, and timing are doing more work right now than any macro trend. In a low-confidence environment, buyers get choosier. The homes that are priced right and show well are still moving. The ones that aren't are paying what I’m going to start calling the “Confidence Tax.”

This isn't doom and gloom.

My goal is to give you clarity. The buyers who understand this moment - who recognize that paralysis has a price too, that the "perfect time" is a myth dressed up as a strategy - are the ones making moves right now. Strategically.

And the sellers who are pricing their homes for a reality that existed before February 28th are finding out the hard way that the market has already moved on.

I want to hear from you.

Whether you're in Reno or somewhere else that feels like it's living in two different markets right now where some homes fly and others sit untouched - what do you think is driving that split?

Is it price? Condition? Location within the location? Or is it something harder to quantify? Reply and let me know your thoughts, even if you disagree with everything I said today.