This media narrative that the housing market is “slowing” is soooo incredibly misleading.

These two things can both be true at the same time:

1. Production in the market is slowing off what was an all-time high in 2020 and then a new all-time high in 2021. Why? Buyer demand has definitely crested because of an increase in interest rates and maybe some economic concerns, and supply contraints have loosened a little as more sellers are worried the party is over and want to sell before the market goes down.

2. Production in the market is still well above the levels of 2019, which was a pretty good year by all accounts. Sales are higher than 2019, and overall volume is much higher than 2019 because prices are up about 25%.

So, yes, the housing market is cooling a bit, but in the same way that a pie fresh out of the oven is cooling — “cooling” is not the same as “cold.” We used to have 5 buyers for every seller. Now, we have 3 buyers for every seller. We still don’t have enough listings, and those buyers are simply getting 7-year adjustables instead of 30-year fixed-rates to get their mortgages.

So what’s going to happen this year? Sales will be down from last year, but prices are going to continue to go — not by double-digits like the last two years, but they’re going to go up. Low inventory + strong demand = prices go up.

Put it this way, the housing market in 2022 will experience its worst year since the beginning of the pandemic two years ago, and will only be stronger than the following years:

2019

2018

2017

2016

2015

2014

2013

2012

2011

2010

2009

2008

2007

1776

….

The Birth of Christ

….

the Big Bang

So remember that when you read about the market “cooling” or “slowing.” That doesn’t mean the market is “cool” or “slow.