What does the real estate market look like for Q4 of 2022?
Home sales typically slow down this time of year and 2022 looks to be no different. In general, experts indicate that the market will level out a bit, trending away from the seller’s market of the last year or so in the direction of a buyer’s market. However, while this is typical end-of-year real-estate-market behavior, it may be amplified a bit by soaring mortgage rates, high inflation, and plummeting consumer confidence.
Here’s a brief look at some of the key real estate trends to anticipate as we head into the last few months of the year.
Rising interest rates. Interest rates are averaging 6 percent now, up from an average of 2.5 percent earlier this year. And they don’t show signs of slowing down anytime soon. In fact, industry experts predict that mortgage interest rates will continue to climb, which will keep some homebuyers out of the market and deter current homeowners from listing their properties.
Decelerating price growth. There is some discrepancy in home prices depending on the real estate market. Home prices will likely continue to rise in some markets. However, they are not doing so at as fast a pace as they did in 2021 and early 2022. In other markets, prices are starting to decline and experts indicate prices could go down by as much as 20 percent in some areas. Mortgage interest rates will also play a key role in home prices as the higher rates go, the lower the demand, which leads prices to drop.
Increasing inventory. With low interest rates and high demand over the last few years, competition for buyers has been really high. As a result, housing inventory in most markets has been really low. As mortgage rates climb and demand decreases, inventory in real estate markets will increase. This is good news for buyers who may see lower home prices and have more time to shop around as competition goes down.
There has been a lot of talk about an impending housing market crash as economic recession fears loom. The general consensus among industry experts, however, is that there is little risk of that happening anytime soon. In fact, some consider the current status of the real estate market to be a course correction after the last two years of extremely high prices and high demand. This slow deceleration of home prices and rise in inventory that accompanies the higher interest rates will allow the market to balance without crashing.