Real Estate Markets PropertyIQ Is Cooling On Heading Into 2026 and 2027

Score declines in the PropertyIQ model are not noise. They are the model's response to real shifts in the underlying data: employment signals softening, rent growth decelerating, days on market expanding, or valuation stretching past the point where income can support further appreciation. When a market's score moves down over multiple consecutive months, the model is telling you that the conditions that drove previous gains are weakening. In 2026, there are markets where that signal is clear, including some that were widely considered high-conviction opportunities as recently as 18 months ago.

What a Declining Score Actually Signals

A downgrade is not a prediction of collapse. The PropertyIQ Score does not call crashes, and it would be irresponsible to use any single data tool as a crash predictor in a market as locally heterogeneous as U.S. residential real estate. What a declining score does signal is a deterioration in the balance of risk and opportunity in a given market. Specifically, it means that one or more of the following is happening: home values have appreciated faster than local income can sustain, supply has increased relative to demand in a way that is shifting pricing power from sellers to buyers, employment signals have weakened relative to the metro's historical trend, or rent absorption is slowing in a way that typically precedes purchase price pressure.

Any one of these in isolation produces a modest score decline. Multiple occurring simultaneously produce a sharp one. The markets below are seeing broad-based weakness across the model's signal inputs. All scores below are as of February 28, 2026.

The Markets Our Model Has Downgraded This Quarter

Texas Energy Metros. Pearsall (1), Odessa (1), Midland (1), and Lamesa (1) represent the sharpest downgrades in the country. These are not recent declines in isolation; they reflect a model that has been consistently pulling back on single-sector energy-economy markets as commodity price uncertainty has increased. For buyers who were attracted to these markets during the Permian Basin boom, the signal is a clear risk flag. The employment concentration that drove prices up in the cycle's upcycle is the same concentration that removes the demand floor in the down phase.

Florida Coastal and Near-Coastal Markets. Florida's score distribution has shifted significantly. Tampa (47), Orlando (44), and Jacksonville are all scoring in ranges that represent meaningful model downgrades from their recent peaks. The factors driving these declines are layered. Insurance cost increases have materially changed the carrying economics of Florida homeownership in ways that were not visible in the data 18 to 24 months ago. New supply delivery, particularly in Orlando and Tampa, has been substantial and is competing with existing inventory. And the migration tailwind that sustained demand through 2022 and into 2023 has decelerated as affordability in Florida has converged toward national norms.

Wauchula, FL. PropertyIQ Score: 2 (F). A stark example of a market where the Florida correction story has hit hardest. Wauchula never had the demand diversification of the coastal metros, and its score reflects a market without the economic buffers to absorb the insurance, supply, and demand headwinds simultaneously.

Rate Sensitivity: The Hidden Risk in High-Score Markets That Slipped

One of the more subtle stories in the model's current downgrades involves markets that were strong performers in the 2019 to 2021 low-rate environment and have seen their scores cool not because their fundamentals are structurally weak, but because they were priced for a rate environment that no longer exists.

A market that made economic sense to buy into with a 3 percent mortgage may not make the same sense at 6.5 to 7 percent, even if employment is stable and inventory is tight. The PropertyIQ model captures this through its income-adjusted valuation metrics: when mortgage payments as a percentage of median household income cross historical warning thresholds, the score registers it as a risk signal, even if the market does not feel distressed in the conventional sense.

This is the hidden category of market cooling that is easy to miss. These are not markets with bad fundamentals. They are markets with good fundamentals that were priced in at assumptions that the current rate environment has undermined. The model is more cautious here, and appropriately so.

Is Cooling the Same as Crashing

No. The distinction matters enormously for how you interpret a score decline. A market that drops from 75 to 55 over six months is cooling. The model sees weakening signals. It is not a market in collapse. At 55, it is still near the midpoint of the scale. What it means is that the tailwinds that drove the 75 have partially reversed, and the risk-adjusted case for buying has become less compelling relative to markets that are scoring in the 90s.

A market that drops from 75 to 15 over the same period is a different situation. That is the model registering broad-based signal failure, and that warrants a much more serious reassessment of any positions or plans in that market. The energy markets in Texas are the clearest examples of this category in the current data cycle.

Most of the markets that are cooling, rather than crashing, are still viable markets for buyers and investors with appropriate risk calibration. They just require more precise underwriting than they did 18 months ago, and they offer a narrower margin for error.

How to Factor a Declining Score Into Your Decision

If a market you are actively considering has seen a meaningful score decline in recent months, the first thing to do is understand which signal is driving it. Log in to the market's detail page and look at the underlying metrics. Is the decline primarily valuation-driven, meaning prices have run ahead of income? Is it employment-driven, meaning the job base is softening? Is it supply-driven, meaning new inventory is creating competition for existing homes?

The answer changes your response. A valuation-driven decline might resolve over 12 to 18 months if income growth catches up or prices flatten. An employment-driven decline is more concerning and warrants a harder look at the metro's economic structure. A supply-driven decline is typically temporary if the employment base is intact, because supply cycles have a natural ceiling as development economics eventually cap new construction.

In all cases, a declining score is an instruction to do more work before committing, not necessarily an instruction to walk away. The most important thing it tells you is that the market is not working as strongly in your favor as it was, and the due diligence bar should rise accordingly.