Due to the federal reserve's monetary response to the COVID-19 pandemic, supply chain disruptions, oil prices, etc., we are now in what I am referring to as - an Affordability Crisis.

With the combination of inflation and the rising cost of borrowing, consumers are now feeling more bearish on the market than they were in March 2020. See the Consumer Confidence Index image below.

Demand can only remain high as long as people can afford to pay for the good or service.

What we've observed in housing is that:

• Closings are down 14.8% year-over-year.

• Housing inventory has nearly doubled over the last 8 weeks from 2,000 active listings to more than 4,000 listings in Northeast Florida.

• Price drops, expired listings, and "back on market" properties are becoming more common. A shift indeed.

Ultimately, this data shows that the market is beginning to normalize to pre-pandemic levels as the fed begins to pull liquidity out of the financial system.

Sellers see the market is changing and are rushing to get their home sold so they can capture the equity gains they've experienced over the last few years.

I predict that :

- Residential housing inventory will continue to increase as sellers look to cash out.

- Home appreciation will slow to a normalized range (3-4% appreciation) between now and the end of the year due to increased competition among sellers.

- Demand will continue to fall due to the rising cost of capital and fear of economy turbulence.

For those who are well prepared (we've been sharing this outlook with our team and customers since December 2021), there will be many opportunities in the market that lie ahead. For real estate agents, it's simply time to adjust your business plan for the new market (we can help - movewithmomentum.com). For buyers and sellers, it's more important than ever to work with a professional who is up to date on what is going on as the market is changing quickly.

The majority of wealth building opportunities arise during economic turbulence.

It's game time.