2026 State of the Economy & Real Estate

June 1, 2026.

Let me start by saying: I spent way too many years in corporate America.

And yeah, I was in senior leadership at places like Kodak and Disney…which had its perks.

But I also had zero freedom.

And here’s the part that hits a nerve for a lot of high-achieving professionals: my problem wasn’t ignorance. It wasn’t laziness. It was comfort. I was successful enough to stay where I was…but boxed in enough to hate it.

When I finally did leave, it was a clean break—except for one thing: I had to figure out what to do with my 401(k). A well-meaning friend referred me to his broker at Merrill Lynch and I transferred the whole six-figure sum.

I’ll spare you the gory details. Let’s just say I learned a lesson the hard way.

That’s how I’ll start today: one win, one lesson—because if you’re reading this, you’re probably someone who has achieved “success” inside someone else’s system… and you’re realizing the same thing I did:

You can’t delegate your family’s financial future to people for whom there’s no downside. No consequences. You have to control it yourself.

A quick look back: why my State of the Union is worth your time

My first “State of the Union for Real Estate Investors” was at Harvard 21 years ago.

• In 2005, I showed them my research and said, “Get out,” and they basically laughed me out of the room.
• In 2008 (after it turned out I was right) they invited me back and I told them, “I’m going ALL-IN in Vegas!”
• In 2011, after Vegas became the #1 buy-market in the country, they asked me back again and I said: “Go ALL-IN everywhere!”

Those weren’t guesses. They were cycle calls—based on the kind of market timing and macro pattern recognition that’s been the backbone of how our family invests.

And somewhere in the middle of all that, something bigger happened: my sons joined me. We became the Stech Family Office. And now I get to do three things every day, with my sons: Make Money, Do Good and Have Fun.

Not long ago, I was introduced at a conference as “the head of the most successful private lending family in America.” I remember thinking, wow… look how far we’ve come in such a short period of time.

And then I had the sobering thought that frames this entire article:

What you don’t know, your kids will inherit.

That’s not a motivational quote. That’s a generational law. So keep reading 🙂

Part 1: The economic update

The “shape” of this economy isn’t a single story

If you’re waiting for the economy to feel like one coherent storyline again, you might want to grab some crossword puzzles or something. It’s likely going to be a while.

Because this cycle isn’t one wave.

It’s a set of lanes moving at different speeds… and the separation between those lanes is widening.

In other words, there’s a strong argument the economy isn’t simply “strong” or “weak.”

It’s split.

The technical word for the split: dispersion

In the same economy, outcomes can disperse. They spread out.

• High dispersion= high variability
• Low dispersion= high consistency

When dispersion is high, you get big gaps in outcomes across:

• households
• companies
• and asset classes…

…all at the same time. In other words, a “K-shaped” economy.

And once you see that, you stop asking, “Is the economy good or bad?” (a low-resolution question)…

You start asking, “Which lane am I in—and what lane am I building my strategy for?”

The K-shaped economy is real (and it’s not subtle)

Look at consumer spending. In the aggregate, spending can look “fine,” in the sense that it continues to stay positive quarter over quarter (as it did in Q1, in orange).

But underneath, you can see the K.

A narrow cohort is carrying the load: the top 10%. The top 10% of income earners now account for 49% of all consumer spending.

And if you’re a high-income professional, business owner, or investor… there’s a good chance you’re in that cohort.

That’s not a flex. It’s a warning.

Because it means:

• one part of the economy continues to spend and invest,
• while the broader population is increasingly forced into trade-offs.

The stock market is split too

You may own “500 stocks”… but your outcome is not diversified

Most people look at the S&P and think: index = safety.

But in a high-dispersion environment, even “the index” can become a concentrated bet.

As you can see here, market breadth is shrinking; the top 10 largest companies now make up 40% of the S&P’s “weight” (in blue).

And even more troubling, the top 10 make up 56% of its “risk contribution” (in orange. “Risk contribution” answers the question: If the S&P moves tomorrow—up or down—how much of that move is coming from the top 10?)

When the market is cap-weighted and a handful of mega-caps keep getting bigger, you get what I call: the diversification illusion.

You own 500 companies… but your outcome is increasingly dominated by the same crowded trade.

And the internal market math is screaming that reality:

• A small group of AI-related names has driven over 75% of overall returns since the launch of ChatGPT.

• If you strip out the Information Technology sector (where companies like Nvidia, Microsoft and Apple reside) and Communication Services (home to Google and Meta), the S&P would have only returned 6%in 2025.

So the question isn’t “Is the stock market up?”

The question is:

How much concentration risk are you pretending you don’t have?

Because when leaders wobble, the entire index starts behaving like a single position.

The Fed is back… quietly

The “Sneaky Fed” and a new sheriff

After nearly four well-publicized years of quantitative tightening, the Fed has been adding to the balance sheet again—quietly, steadily, and on purpose.

When they do this—when the Fed buys short-dated government debt and credits reserves back into the banking system—you can call it what it is: liquidity support.

A form of quantitative easing…even if they don’t shout it from the rooftops. They’re trying to prop up markets (and GDP) without calling it stimulus.

Now here’s the twist: the Fed is likely in for a shake-up here soon.

The new Fed Chair—Kevin Warsh—is looking more hawkish, more interested in Fed independence, and more willing to keep interest rates high in the name of controlling inflation.

Whether or not you agree with any one political storyline, the investment takeaway is simple:

Don’t build your financial strategy on “the Fed will save us.”

Historically, easing cycles take years to play out, and they’re often messy—rates can go down, then back up, then down again.

And even with cuts, you can still live in a world where money isn’t “cheap,” credit isn’t “loose,” and borrowers still pay up for speed and certainty.

Hope is not a strategy, as the saying goes.

The labor market: why the script isn’t working this time

There’s a simple mental model most people carry vis a vis interest-rate policy and the labor market:

Rates fall → borrowing gets easier → spending rises → hiring rises.

That intuitive chain of cause-and-effect has basically held true for decades.

Which is exactly why this cycle is confusing everyone: the first part of the script happened… but not the latter.

Easing shows up first in financial conditions and market pricing. But the labor market only truly re-accelerates when employers regain hiring intent.

And right now, that intent is not coming back the way the old model says it should.

If we break it down by sector, on a “trend-adjusted” basis (i.e. a “difference from normal” basis)…

…job openings today are down compared to openings a year ago in 14 of the 17 major sectors.

Even the healthcare sector—responsible for ~53% of all hiring over the last few years—is throttling down job openings.

Bottom line: excluding the post-pandemic volatility years of 2020-2022…

…2026 is shaping up to be the slowest year for job growth in a long time.

It’s simple technical analysis:

The labeled averages step down from ~177K (2023) to ~64K (2024) to ~33K (2025). That is not “still strong, just cooling.” It’s now a different operating speed.

From a technical-analysis standpoint…once you’re in a low-growth channel, you tend to stay there until something forces a reset.

Will more easing force a reset? Eventually, yes, it probably will. But only if the current low-growth channel is primarily a rate/credit-demand problem.

If it’s a “structure” problem (i.e. an increasingly K-shaped economy where growth is concentrated, incremental spending goes to capex over headcount, and uncertainty keeps firms cautious), you can have plenty of easing and still not get the labor reset you’re looking for.

Part 2: The housing market update

Supply is rising… but the market found a “low-liquidity equilibrium”

Inventory (active listings) has been growing—but the pace has cooled meaningfully.

And then something unusual happened: active listings basically flattened for a long stretch in the back half of 2025.

That “flatline” is a clue. It’s the market adapting.

Not by blowing inventory out… but by shifting into what I call:

A low-liquidity equilibrium

A low-liquidity equilibrium is when the market looks balanced on paper, but only because both sides are constrained—and nobody feels any urgency to blink.

• Optional sellersthrottle supply because they don’t want to give up their mortgage rate (and then overpay for the next house at today’s payment).
• Buyersration demand because the payment is punitive. They either can’t afford it, or they refuse to.

So sales happen at the margins:

• concessions
• price reductions
• negotiation
• and time…

…rather than through high transaction volume.

So yes, inventory is up. But remember, the market is rebuilding supply from a historically starved baseline.

So two things can be true at once:

1. We can still be below pre-COVID inventory norms (as we are nationally, and in all the brownish states above)
2. But the market doesn’t feellike a seller’s market (low inventory and high demand). It feels more like a buyer’s market: low-intent, low-demand, and sluggish.

Demand is sending mixed signals: the funnel is leaking

The housing demand “funnel” is not one number. It consists of three core stages, each with its own metrics.

Financing intent (mortgage applications) typically improve when rates improve. And that’s played out for most of 2026: applications have been mostly above the 2025 pace for most of the year.

But “on-the-ground” shopping can stay weak because people run the payment math and bail. And that’s what we’ve been seeing: Redfin’s Homebuyer Demand Index—built off requests for tours and other homebuyer services—is down -21% YoY, which is as low as it’s been at any point since COVID.

To be clear, these are people raising their hands, not just poking around online. And as of mid-March, there are 21% fewer of them than there were when interest rates were ~100 bps higher.

Signed contracts (pending sales) are the final piece of the demand funnel.

In a word, they’re looking anemic—near record lows as of Q2’26. And the reason is pretty simple: sellers are anchored to yesterday’s price, and buyers are more conditional.

So you end up with a market where:

• more people re-enter at the top of the funnel,
• fewer people make it through the bottom.

That’s not a booming market. That’s a low-liquidity market.

Why flippers matter: they’re the “edge indicator”

Fix-and-flippers represent a minority of total sales, but they matter because they’re the definitional “marginal” participant:

They operate on:

• thin time windows
• tight spreads
• and hard constraints

They’re forced to react faster than owner-occupants.

So when you want to know where price discovery is heading, flippers are often the canary in the coal mine.

And the data tells an interesting story:

• Flip volume has cooled from the peak but stabilized above pre-2020 baselines

• Gross ROIs have trended toward historic highs.

Which sounds counterintuitive: how can flippers be profiting more in this tighter market? Well, you have to remember what flipping really is: it’s a spread business.

When rates rise and the market gets choosy, a lot of amateur, “light-rehab” operators step back. That can reduce bidding pressure on the “ugly” inventory…where many of the true pros live.

• And sentiment among flippers improved toward the end of 2025, with many expecting to do more throughout 2026.

At an index score of 62, flippers are saying they’re more optimistic about the market than they’ve been at any point in the last 6 quarters (since 3Q’24).

In fact, this uptick is the largest quarter-over-quarter jump in 3 years.

As a private lender, that’s music to my ears, because it signals something simple:

Active operators still need capital—and they’ll pay for velocity and certainty.

The real conclusion: what do you do with this?

Let’s cut through the noise.

As an investor, there’s one thing we can all agree on:

It is incumbent upon you to make the best risk-adjusted decisions you can at every point in the market cycle.

So ask yourself the question we ask ourselves:

What ONE passive investment strategy do you truly believe in right now?
What asset class do you have real conviction will generate passive, recurring income with controlled risk in an overpriced, overheated, uncertain environment?

If you don’t have that answer, that’s not a character flaw.

That’s just information.

So let’s talk about the options objectively:

• Stocks? Uncertain—and increasingly concentrated.
• “Alternative” assets you don’t understand? If you don’t control the outcome and you don’t know who’s pulling strings, you’re effectively gambling.
• Commercial/multifamily? There may be distress—but most people don’t know what they’re doing there, and the distress cycle isn’t necessarily finished.
• Single-family rentals near a market peak? The effort-to-return equation is worse than most people admit, and the old “rules” don’t pencil the way they used to.

But there is one strategy that benefits from an environment where:

• money isn’t cheap
• underwriting is tighter
• and borrowers still need speed and certainty.

That strategy is private (hard money) lending

Here’s the principle:

Smart real estate investors pivot throughout a market cycle to optimize risk-adjusted returns.

When the market is at or near peak conditions, we shift away from owning more long-term exposure… and toward controlling real estate short-term.

Because when you control real estate rather than own it:

• you reduce exposure to downside price risk
• you can still generate double-digit, passive, recurring income (often interest)
• and you keep your capital liquid—ready to redeploy when a better opportunity presents itself.

And yes—there are always deals in every market.

But in a market like this, great deals are needles buried in haystacks of risk.

So here’s the better question:

Wouldn’t it be better to find a haystack… where the needles come to you?

That’s what being the bank is.

So what should you do next? (3 moves)

1) Make the economy your economy: win The Money Game

Your goal isn’t to predict the next headline.

Your goal is to build a personal system that does what our Family Office system does:

Generate cash (aka income)
Accumulate wealth (in the form of assets that both throw of cash AND go up in value)
Keep more of both (legally and intelligently, through vehicles like Self-Directed IRAs)
And steadily improve your effort-to-return ratio.

2) Go get the free library (and the advanced ebooks)

Go to justbethebank.com/vault for our Family Office’s library of free resources, including three advanced ebooks I’ve written on private lending—over 100 pages of the most valuable, most ready-to-implement material I’ve ever put on paper. Yours, FREE.

3) Get on the Market & Investment Alerts list

If you want ongoing research, updates, and investor-grade market insights—get yourself added to the alerts list so you’re not relying on the news cycle (or your broker’s hot takes) to make decisions.