January 10, 2022
For most of 2021, people constantly asked us if the super-hot residential real estate market was ever going to cool off. And if so, when?
It looks like the answer is yes – and the “when” may be just around the corner.
As 2022 gets underway, we’re looking at several factors that are going to greatly impact the market in the months ahead – and effectively turn down the heat:
- First, affordability will decrease due to rising interest rates (predicted to hit 3.7% later this year) and rising inflation. This will prevent many first-time buyers from entering the market.
- Secondly, move-up buyers who are unable to sell their starter homes won’t be able to buy their next homes either. We call this the Domino Effect.
- Most importantly, we expect to see an increase in inventory. A jump in the number of homes coming on the market will alter the supply/demand balance.
Smart sellers are getting ahead of this slowing curve and are coming on the market now. As you can see from the infographic, research shows that many people have delayed their moves due to the pandemic. And they will be making them this winter in an effort to avoid the economic factors impacting their sales price.
Ultimately, this will further slow the market. But it also means that, unlike in winters past, the cold weather months are going to bring with them a hot local housing market.
At the risk of repeating ourselves, the handwriting is on the wall: for buyers and sellers, the time to act is NOW!
