Historic Housing Boom Winds Down

After two heated years of rising home prices and demand combined with record low inventory, the housing market may be headed for a cooldown. As the Federal Reserve went into inflation-fighting mode this year, mortgage rates have risen faster than they have in a decade.¹ Some affluent buyers –despite being more insulated from economic downturns than the average buyer – have taken notice, either adjusting their buying strategies or putting the brakes on their homebuying plans as they take a watch-and-wait approach.

This notable shift began to take shape in June 2022 as inventory levels for luxury homes notched up for the first time in two years. With more properties to choose from and less competition, affluent buyers are finally feeling the pressure ease. Fewer properties are also selling for over asking, although prices remain high.

There are other signs that the property market has started to loosen for buyers.

Home sales have started to decline comparatively year-over-year and the rate of price increases has slowed. According to Freddie Mac, home value increases are expected to slow down from 17.8% in 2021 to 10.4% by the end of 2022.²

This improving set of market conditions has begun to open the door for buyers this year.