How Is the Real Estate Market Right Now?

By Shawn Hermosillo

Shawn Hermosillo, founder of Hermosillo Real Estate Group (HRE), is a Sonoma County native with deep roots in the community and a passion for real estate.

Are you feeling confused about the Northern California housing market this year? Maybe you’re wondering whether it’s the right time to buy, sell, refinance, or just stay put.

I recently met a couple from the East Bay facing that exact dilemma. They had been watching the news, but every article seemed to say something different.

So, before you make any big decisions, here are the four important things I’ve noticed across Northern California that could affect your choices in 2026.

1. Interest rates are easing. Rates are trending down slowly, but enough to improve affordability. Realtor.com forecasts mortgage rates averaging around 6.3% in 2026, which is slightly better than last year’s numbers.

With the Fed’s rate drop back in December, we’re expecting to see:

• More buyers are re-entering the market.
• Homeowners are finally considering refinancing.
• A little more breathing room compared to the peak rate years

We’re not going back to 3% rates, but the pressure is easing.

2. Inventory is growing. Realtor.com projects a nearly 9% increase in housing inventory nationwide in 2026, but Northern California tells a more nuanced story. While markets like Sacramento and parts of the Central Valley are seeing more new listings, many Bay Area ZIP codes remain tight with limited supply.

This is the year when local ZIP codes matter more than national trends. Whether you are in San Jose, Marin, or Modesto, the best opportunities will depend on your neighborhood’s dynamics, not on what the national headlines say. Buyers and sellers who understand their specific market will have a clear advantage in 2026.

3. Move-in-ready homes are the most competitive. Across Northern California, one thing is clear. Buyers want turnkey homes.

With fewer updated properties hitting the market, many homeowners are choosing to remodel and stay rather than sell. As a result, homes that are clean, modern, and move-in ready are selling quickly and often receiving multiple offers.

If your home needs updates, strategic improvements can make a meaningful difference in how fast it sells and at what price. If your home is already in great shape, you are in a strong position in today’s market.

4. AI is changing real estate. AI tools are everywhere in 2026. They help agents analyze trends, set strategic pricing, and match buyers with homes more efficiently.

In Northern California, AI helps identify neighborhood trends, refine pricing, and uncover opportunities faster. But technology cannot replace local knowledge. AI does not understand micro location details, negotiate deals, or build tailored strategies.

After years of uncertainty, 2026 is looking more stable, but the key is staying local and informed. Rates are improving, inventory is shifting, and buyers and sellers are adapting to a smarter, more data-driven market.

Feel free to call us at (707) 280-5040 or email shawn@hermosillogroup.com. I’ll look at your numbers, your timing, and your local market so you feel confident about the road ahead.