For more than 15 years, George Ratiu has been studying the housing market. He’s the senior economist and manager of economic research at Realtor.com, where he focuses on trends in global economies and real estate markets. He’s also a former manager of research programs at the National Association of Realtors, where he specialized in housing statistics, international and commercial real estate market performance and more. (Realtor.com is owned by the same parent company as MarketWatch.)

So we asked Ratiu: What do buyers need to know about the real estate market now?

1. Mortgage rates will likely continue to rise

“The surge in rates pushed the monthly mortgage payment for a median-priced home $550 higher than a year ago, a significant increase considering that most households are also feeling the squeeze of higher prices for food, gasoline, cars and clothing. Just as importantly, rates are expected to continue rising as the Federal Reserve tightens credit flow,” says Ratiu, who predicts that if the pace of increases continues, we could soon see a 6% rate on 30-year loans.

2. There aren’t enough homes for sale—which makes your choices more limited

One thing to keep in mind is that inventory remains limited as the number of homes for sale is still below last year when buyers were competing intensely. “The main reason for this shortage is the fact that builders have not matched the pace of construction to population and household growth over the past decade,” says Ratiu. In fact, there’s a shortfall of nearly 6 million homes, according to research from Realtor.com, and that makes it difficult to find enough homes for all the buyers looking for a property.

3. Home prices will likely keep going up in many markets, but not nearly as fast

Ratiu predicts that prices will also continue to increase due to the fact that there are still more buyers than homes for sale. “In many markets across the country, buyers are finding that they may still be outbid by someone with a cash offer or a higher down payment,” says Ratiu.

But due to sharp increases in interest rates and inflation, he says we’re nearing the top of the price growth curve. “In some markets, sellers are finding that buyers are beginning to spend more time looking and are less willing to waive contingencies, insisting on home inspections and asking homeowners to fix a property’s shortcomings,” says Ratiu. What’s more, he says in about a dozen cities across the country prices have declined over the past few months, an indication that the market is beginning to return toward more balance.

“We can expect prices to continue rising in the months ahead. For consumers, the bottom line is that higher expenses are leaving less money in their pocket at the end of each month, just as rents and home prices continue rising at double-digit rates,” says Ratiu.

4. Sellers will still have an advantage, but it won’t be quite so extreme

Sellers are likely to retain the upper hand in most markets across the country. However, their advantage is starting to wane given the combination of high prices and higher interest rates—which are pricing millions of buyers out of the market. Ratiu says the slowdown in demand is noticeable as sales of both new and existing homes have been declining over the last couple months. “Twenty percent of homeowners indicated that they plan to move forward with pandemic-delayed plans this year and list their properties for sale. The increase in supply will lead to more competition among sellers, shifting the market more towards buyers,” says Ratiu.

5. Don’t let FOMO land you in a house you don’t love

The main takeaway for buyers this year is that housing markets are already in a noticeable transition from the frenzied pace of 2021. With financial and economic pressures mounting, Ratiu says it’s important not to let the fear of missing out lead you into rushing what’s the largest purchase of most people’s lives. “The pace of new construction is picking up, more homeowners will be ready to list their houses and with rising interest rates, prices are already adjusting to the slowdown in demand. Patience is generally viewed as a virtue and may also be a key ingredient in this year’s search for a home,” says Ratiu.