Happy New Year and I hope everyone had a wonderful Holiday Season.
The number one question I am asked is “What will happen to the housing market in 2022?”. Numerous articles have been written and expert opinions given regarding the 2022 housing market. Although predictions vary, most agree home prices will continue to rise during 2022. Despite the agreement on increases, there are different schools of thought concerning the rate of appreciation. For instance, Realtor.com projects South Florida home prices will increase by 6% during 2022. In contrast, Zillow predicts home prices could rise by 15%. The Florida Realtors Association believes the below factors will have the greatest effect on home value appreciation in South Florida during 2022.
- Increase in Inventory
- Increase in mortgage interest rates
- New developments hitting the market
During normal times an increase in the inventory of homes cools prices. However, Parkland’s inventory is critically low and it will take time to rebuild an inventory large enough to slow price increases. At the time of writing this article, there are many communities in Parkland with zero homes for sale. Although many experts are predicting homeowners will flood the market with houses, as they try to capitalize on this strong seller’s market, I do not feel enough of them will this year. There are many reasons why homeowners are not selling. Thus, I believe the lack of inventory will remain one of the biggest issues homebuyers will face this year and it will fuel continued jumps in home values.
Traditionally, rising interest rates negatively affect home prices. An increase in rates reduces the amount buyers can afford thereby causing home prices to decline. The majority of Bill Sohl Luxury Homes Team’s transactions in 2021 were cash purchases without financing. The same is true for many real estate transactions in our area. Simply put, our current real estate market is cash-supported and not predominantly dependent on borrowed money. Most individuals moving here are coming from states where home prices are substantially higher allowing them to purchase a home with cash. Since this is a cash-driven market, it is not unreasonable to suggest rising interest rates might not influence our home values in 2022 as much as predicted.
Although there are new construction projects offering single-family homes in other parts of South Florida, The new construction communities in Parkland are almost sold out. Most individuals moving here are looking for space, yards for the children to play, private pools, and privacy. Therefore, the new
multi-story/multi-family projects are not going to satisfy the demand for single-family homes. The lack of inventory in Parkland is not going to be solved by new construction in 2022.
In closing, home prices are going to see strong appreciation for most of the year. For this reason, it really is a great time to sell. As always, please feel free to contact Bill Sohl’s Luxury Homes Team at any time with your questions and requests for more information.