At the start of 2022, Montgomery County’s housing market was as tight as I’d seen it in three decades of selling real estate here. 2021 closed out with 15,672 home sales countywide, up almost 17% from 2020’s 13,495. The average sale price jumped nearly 10% year over year to $646,986, and homes were routinely selling for 101.6% of list price — about $10,500 over asking on average. But the number that told the real story was inventory: heading into January 2022, there were only 590 homes on the market against 1,250 sales the previous month. That’s an absorption rate of roughly two weeks. I want to walk through what those numbers meant at the time, why I framed it as a historic imbalance, and how I saw the rest of 2022 playing out.

What did the 2021 sales numbers show?

The 2021 numbers showed a market accelerating on every front — more homes sold, higher prices, and buyers routinely paying above asking. Montgomery County closed 2021 with 15,672 transactions, up from 13,495 in 2020, an increase of almost 17% in units sold. The average home price climbed from $589,405 in 2020 to $646,986 in 2021, just under a 10% jump in a single year. And the average sale price came in at 101.6% of list price, meaning the typical seller wasn’t just getting their asking price — they were getting thousands more. In a 30-year career, I’d call that combination of volume, appreciation, and over-list pricing rare. It doesn’t happen in a normal market; it happens when demand is badly outpacing supply.

How do you actually measure a hot market?

You measure it with the absorption rate, not gut feeling. The absorption rate is simple: take the number of homes currently for sale and divide by the prior month’s number of sales. That tells you, mathematically, how long it would take to sell out the entire current inventory at the current pace of sales. As a rule of thumb, three homes on the market for every buyer signals a seller’s market, four is balanced, and five or more tips toward a buyer’s market. It’s not a perfect crystal ball, but it’s the cleanest way to strip out opinion and look at what supply and demand are actually doing in real time.

What was the absorption rate in Montgomery County at the start of 2022?

The absorption rate at the start of 2022 was about two weeks — the tightest I had ever measured. In December 2021, Montgomery County saw 1,250 sales. As of January 1, 2022, there were only 590 homes listed for sale. Divide 590 by 1,250 and you get an absorption period of roughly two weeks. Flip that math around and it means for every single home listed, there were at least two buyers competing for it. I called it the greatest imbalance of my career, and I meant it. Inventory was at a paltry level, and demand — fueled by record-low interest rates — was about as strong as I’d ever witnessed.

How does 2022 compare to the last real estate downturn?

It’s close to the exact opposite of what we saw in December 2007. Fifteen years earlier, Montgomery County had 4,730 homes for sale against only 592 sales that month. Divide those numbers and you get an absorption rate of about eight months of inventory — call it eight, roughly 32 times longer than the two-week supply we had heading into 2022. That comparison isn’t just a nostalgia trip to the Blackberry-and-Hummer era. It’s the clearest illustration of why home values had been climbing so aggressively: when inventory sits at a two-week supply instead of an eight-month supply, prices don’t have anywhere to go but up. For more context on how local absorption trends compare nationally, NAR’s research and statistics hub is a solid resource, and you can track our own local numbers on the market stats page.

What did rising interest rates mean for buyers and sellers in 2022?

Rising rates meant urgency for both sides, just for different reasons. The Federal Reserve had already signaled it planned to raise interest rates three to four times in 2022. In the short term, the threat of higher rates can actually push buyer demand up, because people rush to lock in a rate before it climbs further. But the longer-term effect is straightforward: as rates rise, monthly payments rise, homes become less affordable, and the market slows. My read at the time was that we’d see a strong market through the first two quarters of 2022, with the back half of the year shaped heavily by how aggressively rates moved. For sellers, that meant home values in Montgomery County had likely never been higher — but a plateau, or even a pullback, was a real possibility once rates worked their way through the market. For buyers, it meant the cost of waiting was rising every month rates ticked up.

FAQ

Was Montgomery County a seller’s market at the start of 2022?

Yes. With roughly a two-week supply of inventory against strong buyer demand, it was one of the most seller-favorable markets I’d seen in 30 years of selling real estate here.

What is an absorption rate in real estate?

It’s the number of homes currently for sale divided by the previous month’s sales volume. It tells you how long, at the current pace, it would take to sell through existing inventory — the lower the number, the tighter the market.

Why did home prices rise so much in Montgomery County in 2021?

A combination of low inventory, record-low interest rates, and strong buyer demand pushed the average sale price up almost 10% year over year, with homes routinely selling above list price.

Did rising interest rates in 2022 mean home prices would drop?

Not immediately. Rate increases tend to slow a market over time by making homes less affordable, but they don’t reverse prices overnight — especially starting from a two-week supply of inventory.

How can I find out what my Montgomery County home is worth today?

The fastest way is to talk it through directly. Check current local numbers on market stats, or reach out through contact Kevin to get a specific read on your property and neighborhood.

That’s how I saw it in January 2022 — a market running hotter than anything I’d measured in three decades, with rising rates about to test just how far it could stretch. If you’re weighing a move in Montgomery County, whether you’re buying, selling, or just want a straight read on where things stand, let’s talk specifics for your situation.

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Sources and next steps

Verified local sources:Maryland REALTORS housing statistics;GCAAR housing market reports;FRED 30-year mortgage rate series;Maryland SDAT real property search.

Related Kevin guides:market stats;relocation guide;book a call.

Watch the YouTube videoorbook a 30-minute strategy call with Kevin.

Expanded local research sources:GCAAR housing market reports;Maryland REALTORS housing statistics;Realtor.com Montgomery County market data;FRED 30-year mortgage rates;Maryland SDAT real property search;Zillow Montgomery County home values;Montgomery Planning development;Montgomery Planning development review;MCATLAS zoning map;Montgomery Planning data catalog;Montgomery County permits;Visit Montgomery travel guide;Visit Montgomery restaurant directory;Tripadvisor Montgomery County things to do.

Contextual links for this video

Kevin site links:home selling guide;home buying guide;market stats;DMV Housing Market 2026: Is a Crash Coming or Are the Numbers Telling a Different Story?;Zillow Just Banned Private Listings — Here’s What Home Buyers and Sellers Actually Need to Know.

Outside research links for this video:GCAAR housing market reports;Maryland REALTORS housing stats;Realtor.com Montgomery County market data;Reddit discussion search for this topic;Google context search for this video.

Kevin process link: why Kevin’s local process matters.