The graph below says everything about the real estate market right now.

Mortgages just got a lot more expensive, which means monthly payments just got a lot more expensive. Costlier mortgages shrink the buyer pool - it’s that simple. That, of course, should mean that home prices should stop rising and may even decrease from the historic highs reached over the past two years.

But it’s not quite that simple. While we expect demand to abate in the coming weeks, supply is still low compared to historical averages, and cash buyers are still a significant force in the market. This makes it difficult to forecast where the market is headed. But this is certain: the market is cooling, becoming more balanced, and saner.