Real Estate 2025: A Market on Pause, Searching for Stability

By : J. David Chapman/January 2, 2026

As we close the book on 2025 and begin to usher in 2026, I find myself saying something I don’t often say about real estate markets: we should probably feel blessed. Not because 2025 was strong - it wasn’t - but because it could have been worse.

If I had to summarize the year in one phrase, it would be this: 2025 felt like a year on pause.

I spend most of my time working with real estate professionals: residential and commercial Realtors, developers, builders, investors, planners, and city leaders. Across nearly every discipline, the sentiment was consistent. Activity didn’t disappear, but urgency did. Deals slowed, pipelines thinned, and conversations often ended the same way: “Let’s wait and see.”

Many investors stayed on the fence. Others moved forward, but cautiously, with smaller allocations, tighter underwriting, and fewer speculative bets. Builders pulled back. Developers re-evaluated land positions. Even experienced operators who normally thrive in uncertainty spent much of the year studying the horizon rather than racing toward it.

In many ways, 2025 was a collective timeout. That pause wasn’t accidental. Markets, especially real estate markets, crave three things above all else: consistency, stability, and predictability. When those conditions exist, capital flows. When they don’t, capital hesitates.

At a national level, those traits were in short supply. Election-year noise, shifting policy signals, and a political climate that often-rewarded disruption over steadiness created an environment where long-term forecasting became difficult. Markets don’t respond well to chaos. Investors don’t underwrite volatility well. And real estate, by its very nature, requires a clear view of the future.

Interest rates stabilized but remained high enough to challenge the math. Construction costs and insurance expenses stayed stubborn. Residential affordability constrained movement on both sides of the transaction. In commercial markets, capital was available, but only for the strongest projects with the most compelling stories and experienced sponsors.

And that distinction mattered. The slowdown forced discipline back into the system. Deals had to make sense again. Pro formas were stress-tested. Location, density, walkability, and long-term demand reasserted their importance. Easy money was no longer lifting all boats, and while painful in the short term, that shift is healthy for the industry in the long run.

As we move into 2026, I don’t expect a dramatic rebound. Real estate rarely turns on a dime. What I do sense is a quiet shift toward intentionality. Projects that survived 2025’s scrutiny are stronger. Investors who stayed engaged are sharper. Professionals who adapted rather than waited are better positioned.

If 2025 was a year on pause, 2026 feels like a year of purpose, measured risk, thoughtful development, and a renewed focus on fundamentals.

Happy New Year. You’ve made it through another year, and I am honored to have spent it with you through this column. Thank you for your dedication to our community, your commitment to continuous improvement, and—most of all—for reading, engaging, and sharing your feedback and comments.

Dr. J. David Chapman is the Chair of Finance and Professor of Real Estate at The University of Central Oklahoma (jchapman7@uco.edu)