2026 Market Outlook: Housing, Energy, AI, and What Investors Should Watch

Justin Obey
3 days ago
4 min read

From housing policy proposals to major AI announcements, 2026 is shaping up to be another eventful year for investors. Here's what we're watching and where we see opportunities ahead.

Housing: Is the American Dream Making a Comeback?

One of the biggest stories to kick off 2026 involves the housing market. The Trump administration has proposed banning large institutional investors like BlackRock from purchasing single-family homes, a move aimed at making homeownership more accessible for everyday buyers.

The frustration is understandable. Large investors have been known to swoop in with cash offers, outbidding families trying to purchase their first home. While institutional investors own an estimated 5-7% of the total housing market, their presence in competitive bidding situations has made an already difficult market feel impossible for many buyers.

There's also encouraging news on rates. Mortgage rates dropped to 6.25% this week, the lowest since September 2024. Combined with the administration's proposal to purchase $200 billion in mortgage bonds, there's a clear push to improve affordability.

But here's the reality check: the core problem remains supply. We simply don't have enough homes. Building costs remain elevated due to years of inflation, and developers focus on larger homes with higher margins rather than starter homes. Until we address the supply issue—through initiatives like Massachusetts' new ADU rules or increased construction—rate cuts alone won't solve affordability. Lower rates often just push prices higher as more buyers enter the market.

Energy: The AI Wild Card

Energy remains one of the most interesting sectors to watch in 2026. The administration's strategy appears focused on increasing supply across the board, from the Venezuela situation opening up oil resources to continued investment in nuclear infrastructure.

The logic is straightforward: cheaper energy helps fight inflation. But there's a massive wild card in play, artificial intelligence.

AI data centers consume extraordinary amounts of power. Everything we've read suggests we don't have close to enough energy capacity for what these companies want to build. China is aggressively building power plants using every fuel source available. Meanwhile, American utility customers have seen 60% rate hikes in recent years, and there's concern that AI expansion could push those costs even higher.

This creates an interesting dynamic. Lower fuel costs should help utilities' margins, but the strain from AI demand could offset those gains for consumers. We're watching this closely.

AI: Beyond the Chatbot

Speaking of AI, the CES conference delivered some remarkable announcements. NVIDIA's Jensen Huang unveiled next-generation GPUs already in production: chips that double the performance of the Blackwell architecture and can be water-cooled, eliminating the need for expensive data center chillers.

He also announced the Drive Hyperion platform, a ready-to-use foundation for self-driving cars and robotaxis. This represents NVIDIA expanding beyond chips into complete solutions for autonomous vehicles.

For investors, the question is always whether growth is already priced in. Our view: NVIDIA continues demonstrating they're expanding into new markets we don't even fully understand yet. When a company keeps revealing new revenue streams, it becomes very difficult to say the stock is "overvalued" based only on what's publicly known.

And if you haven't seen the latest Boston Dynamics robot trained with AI, it's doing cartwheels and moving in ways that feel straight out of science fiction. We're clearly beyond "just a chatbot" territory.

Healthcare and the GLP-1 Revolution

Eli Lilly jumped 4% this week on news of their VentX Biosciences acquisition, continuing their expansion beyond GLP-1 drugs into autoimmune diseases.

The GLP-1 trend keeps gaining momentum. What started with celebrities on Ozempic has become mainstream adoption. We're seeing the effects ripple through the market—alcohol stocks have gradually declined from their 2021 highs, and snack companies haven't performed well either. Is that changing health preferences, GLP-1 effects on appetite, or both? Probably a bit of each.

Healthcare and biotech have underperformed relative to tech, which makes valuations more attractive. There could be general rotation into these sectors as investors look beyond the Magnificent Seven.

Our 2026 Predictions

We'll keep this straightforward:

S&P 500 Performance: We're projecting 10-15% growth for the year. That's roughly in line with historical averages, not a bold prediction, but a realistic one based on current conditions.

Jobs: We expect weakness to continue in the first quarter, possibly into Q2, as companies digest new policies and AI tools. But we anticipate improvement in the second half as clarity emerges and businesses resume hiring.

Fed Policy: Weak jobs data gives the Fed room to continue cutting rates. We expect further cuts this year, which should support equity markets.

Market Breadth: One theme we're watching is broader market participation. The past few years have been dominated by mega-cap tech. If we see genuine economic recovery, the benefits should spread to the rest of the market, not just the Magnificent Seven and their AI infrastructure partners.

The Bottom Line

2026 brings plenty of uncertainty, but also opportunity. Housing policy changes, energy dynamics, AI expansion, and healthcare innovation all present potential for growth. The key, as always, is staying invested and diversified rather than trying to time every development.

We'll continue monitoring these trends and sharing our insights. If you have questions about how these developments might affect your portfolio, we're here to help.

This content is for educational and entertainment purposes only and should not be considered investment advice. Past performance does not guarantee future results. Consult with a qualified financial advisor before making investment decisions.

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