From coastal corrections to hybrid appraisals, here's how one valuation expert is reading the 2026 environment
The US housing market has proved more durable than many predicted heading into 2026, but regional fault lines are widening – and mortgage professionals need to understand how appraisers are reading the terrain, according to Velox Valuations president Chad Barker (pictured top).
Barker, whose firm operates across the country, told Mortgage Professional America he viewed the market’s overall performance this year as decent considering that mortgage rates have moved in the opposite direction – upwards – to the trajectory expected at the beginning of the year.
“Coming into the year, there was a lot of prognostication around mortgage rates coming down more considerably than they have,” he said. “The fact that the overall housing market has remained pretty resilient, I think, is at least a positive.”
But that resilience is uneven, as illustrated by the regional divide shown in monthly home sales figures, and the split between coastal and non-coastal markets appears to be widening.
Non-coastal markets, particularly across the Midwest, have held their value most effectively through the year, retaining much of the appreciation that built up during the years immediately following the COVID-19 pandemic.
Coastal real estate, by contrast, has seen a much more pronounced correction, although in some ways that’s par for the course.
“Real estate along the coast is always the most volatile either way,” Barker said. “It experienced some significant appreciation during that 2022 to 2024 period. And I think a lot of those markets have seen the largest correction.”
For appraisers, the leading indicators of a shifting market are inventory levels, days on market, and seller concessions – all of which begin moving before price changes appear in the transaction data.
“When you start to see more seller concessions as the market moves from a seller’s market to a buyer’s market, then you start to see property values come down,” Barker said.
That’s a dynamic that appraisers call markets in transition, creating friction for mortgage transactions. When accepted purchase prices outpace recent comparable sales, loan-to-value ratios are affected and buyers may need to renegotiate, bring additional funds to the table, or reconsider whether the transaction stacks up at the agreed price.
The rise of pre-listing appraisals
One notable trend Barker has observed is a surge in pre-listing appraisal assignments. In markets in transition, realtors are increasingly commissioning appraisals before properties hit the market, using them to help sellers price more accurately from the outset – and to avoid the problems that come from a misaligned listing.
“A realtor will come to us and they find value in bringing an appraisal to the table with the seller they represent and saying, ‘Let’s get this priced based on what’s going on in the marketplace right now,’” Barker said.
Investors are also following suit. Even cash buyers in declining markets are seeking independent appraisals to better understand trend lines before committing.
That’s where hybrid appraisals – desktop assessments conducted using digitally submitted property information and photographs – are gaining traction as a cost-effective option. Barker said Velox Valuations now handles a roughly 50-50 split between hybrid and full physical inspections.
What mortgage brokers should keep in mind
For mortgage brokers working in markets showing signs of transition, Barker’s advice is straightforward: be upfront with clients and make sure the appraisers you work with have genuine experience in shifting market conditions.
“Appraising is very much an experience-based profession,” he said. “If you have experience being able to develop credible opinions of value in markets that are in transition, that’s very valuable to a mortgage professional because that can trickle through to the consumer.”
On the refinancing side, for those borrowers who may find their appraisal affected by downward trend lines, Barker said it’s especially important for brokers to raise those issues proactively with their clients rather than letting them surface as a surprise after a transaction is underway.
And on the purchase side, the emphasis is on eliminating avoidable delays. “If buyers and sellers are informed as best they can, whether that’s going into the purchase negotiation or understanding how the mortgage process potentially could impact it, that leads back to making sure you’re dealing with appraisers that can handle the market conditions in which the property is located,” Barker said.
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