A Return to 'Normal'? The State of Real Estate in 2022

After two years of a frenzied real estate market driven by pandemic trends, many buyers and sellers are wondering: are things getting back to normal? The short answer…

After two years of a frenzied real estate market driven by pandemic trends, many buyers and sellers are wondering: are things getting back to normal? The short answer is: sort of.

Here’s a look at where the market stands as we head into 2022 — and what it means for you.

Inventory Is Still Low — But Growing

The number of homes for sale remains near historic lows. But there are signs of improvement. More sellers are listing their homes, and the pace of new construction has picked up. While it won’t happen overnight, expect more balance between supply and demand in the coming year.

Prices Have Peaked — But Won’t Crash

Home prices surged dramatically in 2020 and 2021. The good news: experts don’t expect a crash. The consensus is that price growth will slow — not reverse. In some overheated markets, modest price corrections are possible, but a broad nationwide collapse is unlikely.

Interest Rates Are Rising

The Federal Reserve has signaled multiple rate hikes in 2022 to tame inflation. Mortgage rates, which spent most of 2020–2021 at historic lows, are expected to climb. Higher rates reduce purchasing power, which could cool demand and take some pressure off prices.

Buyers: Expect a Bit More Breathing Room

The days of 20-offer bidding wars may be fading — at least in some markets. You may have more time to make decisions and face less competition. That said, desirable homes in good locations will still move fast.

Sellers: Price Realistically

Sellers who price their homes based on peak 2021 conditions may be disappointed. The market is normalizing. A well-priced home will still sell quickly and for a strong price — but overpriced listings will sit.

The Bottom Line

2022 looks like a transitional year — moving away from the extreme seller’s market of recent years toward something more balanced. Whether you’re buying, selling, or staying put, the key is to stay informed and work with a knowledgeable local agent who can help you navigate changing conditions.