With interest rates increasing and expected to increase three more times by the end of the year, it’s hard to see that the real estate market won’t be impacted.

Although the real estate market has held up so far this year, the stock market is a leading indicator (down 10%+ in one month), the economy is the current market indicator, and the real estate market is a lagging indicator by 6-12 months.

Because of this lag, it is my expectation that the market will show signs of a slowdown (not a crash) in August 2022. We are already seeing reports of new hot listings receiving only one or two offers — instead of the 20-30 offers that we saw this time last year. The market is getting a little funky.

Looking back on the cycle, I believe that we will see the “peak” of the housing market be in January/February 2022.

Residential sales in April 2022 are down 16.3% year-over-year and pending sales are down 14.5%, indicating that sales will slow down even more moving forward.

One of the most important indicators to note is the Home Affordability Index which was decreased by 27% year-over-year. This means that median incomes are not keeping up with the median home price.

For the last few years we saw home prices go above trend, and over time, we will see it go below trend. This change will occur until median incomes catch up with home prices.

It is also unlikely that the level of demand we just experienced from relocations will continue to occur long-term. Of course, there is a limited number of people with a desire to relocate to Florida. The COVID-19 situation simply sped up that decision for many within the last two year time period. It’s not surprising that sales would naturally slow down over the next two-to-three years (and not just from limited supply, but from affordability and a slowdown in relocations, too).

As the cost of capital increases, we expect that many investors will not be able or willing to pay the current prices and create a healthy cash flow versus other asset classes. The rotation of capital in the system will undoubtedly slow down and it will impact the housing market.

Overall, we are confident in the direction of housing prices (assuming no additional black swan event) over the next few years, but we don’t yet know the magnitude of this direction.

The shifting market is a great opportunity for Momentum’s agents because they are part of a forward looking organization who is preparing for the future. Our agents are focused profitability, sustainability, and investing, all on a low-fee platform.

Momentum is a platform for top producers to plug into alongside other top producers who work collaboratively to build wealth and service the marketplace at the highest level.

Here's the key stats for April 2022 vs 2021:

- New Listings: -10.9%

- Pending Sales: -14.5%

- Closed Sales: -16.3%

- Median Sales Price: +22.9%

- Inventory: -24.3%

- Month's Supply 1.2 months

- Days on Market: 13 days

- % of Homes Selling Above List Price: 41.3%

Statistic's Source: Northeast Florida Association of Realtors