Predictions for 2026

The Real Estate Espresso Podcast

Predictions for 2026

Spotify Google Podcast Apple Podcast Subscribe via RSS Leave a Review

Welcome to the Real Estate Espresso Podcast, your morning shot of what’s new in the world of real estate investing. I’m your host, Victor Menasce.

On today’s show we’re looking forward to 2026. I’m going to make some predictions for the upcoming year.

The first is that the US is going to continue to assert an America-first agenda. The degree to which that’s effective is going to be based on how domestic companies and other nations respond. So far, the response has been to double down on manufacturing in Mexico and, to a lesser extent, in Canada.

My second prediction is that the Republicans will lose the midterm elections, meaning the contested seats that might have gone Republican will indeed be won by Democrats. I predict the Democrats will take back the Congress and possibly the Senate. That would leave the White House isolated with its hands tied to get much done.

That’s why we’re going to see a lot of activity from the White House to get as much done as possible in 2026, armed with the knowledge that they might lose the midterm elections. If you thought 2025 was something, next year is going to get dialed up to 11.

The extent of the election outcome will depend on whether strong leadership emerges in the Democratic Party and the degree to which people who had previously voted for Trump will now change direction. There’s a lot of American business owners who had previously supported Trump who have been directly harmed by the international trade war. They view this as a self-inflicted wound.

The tariffs domestically and the narrative on the street is that they’re ineffective, so there’s a general loss of support for the economic policies.

The economic metrics in the US and Canada will show increasing productivity and declining employment at the same time. I believe 2026 will be the first year that AI makes major inroads into American businesses. That means that permanent job losses will occur on a wider scale and social discontent will rise, just as it has in Europe.

When the population at large is unhappy with the business establishment, the political pendulum tends to swing left. Now you could argue the Trump White House is not ideologically conservative. Conservative means to conserve, to conserve institutions, and the White House has been actively working to dismantle institutions.

It’s not yet at the point of causing social unrest, but that’s where it is headed unless governments and businesses find a way to increase the social safety net for skilled, displaced workers. The traditional narrative of go to school, get a good education, get a good job, work for a big stable company, retire comfortably, that is going to be challenged.

So far, the adoption of AI in major enterprises has been to upgrade the automated attendant function of the call center. No real humans were replaced in this automation. Voice recognition is merely a functional upgrade to the clunky phone menus of the past, you know, press 1 for sales, press 2 for customer service, press 3 for accounting, and so on.

The use of chat tools in the desktop has made people a little more productive. These days, an AI tool can do a full grammar check; there’s no excuse for sending documents with spelling and grammar mistakes. But nobody’s going to lose their job just because Gemini or ChatGPT can help them do their job better.

AI is starting to eliminate some of the more mundane jobs in the tech industry. The big question is what’s going to happen next. The world of AI is still in its infancy. Autonomous agents will absolutely transform jobs. But so far, the penetration of autonomous agents is very low; many of them are still under development.

I think 2026 is going to be the first year we’re going to start to see a lot of those deployed in real-world settings. The big question is what this is going to mean for landlords and, hence, real estate investors.

If there’s downward pressure on employment, that translates directly into downward pressure on collections. If people lose their job and they can’t find a new job for a long time, that translates into higher economic vacancies.

Landlords will also have to contend with the use of AI agents performing illegal activities. It’s going to change the way security is done in buildings. We assume that humans will not scale the outside of a building because humans have a sense of self-preservation and it’s too dangerous, but it’s not that hard to design a robot to break into a building through an open window on an upper floor.

That’s going to become increasingly common; so will the use of drones for criminal activity. This is going to transform the way we think about security for our properties.

Unemployment is going to be higher. The Fed is going to be seeking to stimulate the economy through monetary policy. That means lower interest rates, and ultimately that is going to be paired with fiscal stimulus from the government.

The Canada–US–Mexico trade agreement is coming up for review in 2026, and you can expect another round of intense negotiations as the US tries to extract more concessions out of both Canada and Mexico. That’s going to translate into more trade uncertainty.

Even with increasing tariffs in China, we’re seeing reports of a widening trade deficit. I think that this is being somewhat misinterpreted. It’s not that Americans are buying a lot more stuff from China in the face of tariffs. China has become more and more adept at manufacturing higher-value goods.

China was known for manufacturing cheap consumer goods that you can buy at Walmart. The country’s grown tremendously in capability from the days of manufacturing Christmas ornaments that are destined for the dollar store.

Ten years ago nobody in construction would consider buying windows from China. Today I know several window suppliers that have achieved Energy Star and the numerous other required certifications for use in North American construction. I know several builders who have used high quality windows from China. I know several folks that are using high quality kitchens from China, much higher quality than what we can find in North America.

A decade ago nobody was buying excavators from China. Now they’re not dominant, they’re not appearing everywhere in North America. But I’ve personally used a Chinese excavator myself.

So as China delivers more and more high-value products, the trade deficit is going to continue to widen, despite the tariffs. The US has lost its manufacturing edge and it will take a strategic campaign in the West to value manufacturing in the culture. It’s going to take a lot more than tariffs to punish the economy into the desired behavior.

It takes a much more concerted and sustained effort over a longer period of time to affect the kind of change that’s needed to bring globally competitive manufacturing back to the US.

So 2026 is going to be another year of adjustment, of economic slowdown, and of a slowing in investment. The bright spot in investment is going to continue to be artificial intelligence, but the markets will become more demanding of a real connection between investment and profitability. I believe that scrutiny is going to be much tighter for both debt and equity, and that’s in particular for AI and AI-related projects.

In real estate, I predict it’s going to take another 24 months for the excess supply of apartments in many US and Canadian primary markets to be absorbed. In particular, a lot of product built in the last few years is similarly positioned in an A-minus segment.

New construction starts will be slowed in the first half of 2026, and that means those who have the guts to build will get great pricing. They’re likely to enter the market with little competition when their project is complete.

The transition in office is going to continue, and some offices will be repurposed as residential, but not in large numbers. Capital for investment is going to continue to be the constraint.

Overall, we still have a K-shaped economy. That is to say we don’t have a single economy. It’s growing for a small segment of business leaders at the top, and it’s shrinking for everyone else. These issues are structural in the economy; they’re not political, although politicians will continue to get their share of the credit or the blame.

As you think about that, have an awesome rest of your day. Go make some great things happen. We’ll talk to you again tomorrow.

Stay connected and discover more about my work in real estate and by visiting and following me on various platforms: