January 2022 Market Update
Posted by Marcus Larrea on Monday, January 10, 2022 at 8:54 AM By Marcus Larrea / January 10, 2022 Comment
Will we continue to see a seller's market through 2022 as interest rates increase?
Hi it's Marcus Larrea and another year is in the books! 2021 was a historical year for the real estate market across Southwest Florida.
Low interest rates, low inventory, and increasing home prices dominated the news in 2021. While things are starting to cool nationally, in 2022, Florida will remain a hot spot for real estate especially across Southwest Florida. Inventory is down over 35% in Lee County and down just over 50% in Collier County from this time last year.
We expect for inventory to increase heading into the 1st quarter of 2022 but so will the competition as we enter Southwest Florida's seasonal months from January to April, a time when vacationers and seasonal residents come from up north to escape the cold.
With the increased competition during season, we expect home prices across Southwest Florida to continue to rise at a rate well above the national average. From December to January we saw the median sale price for single family homes in Lee County rise about 7.4% and in Collier County we saw the median sale price for single family homes increase by 8%... in one month!
We will continue to see a seller's market through 2022. As discussed in last month's market update, many of the metro areas in Florida will remain as the top destinations for home buyers in the US.
In December, the Fed announced earlier and faster interest rate hikes to help combat inflation. Last month, I mentioned many experts believe rates will rise to about 4% by the end of 2022. This could happen sooner than expected with this news from the Fed.
To be clear, even with this news, we do expect prices to increase throughout 2022 as cash purchases remain dominant in our market, along with low inventory and supply chain problems that will continue to create supply and demand issues.
So what does this all mean for buyers? I would be aware of what rates are doing. I would be looking to buy something sooner rather than later before interest rates increase so your payment is lower.
If you are a seller, more specifically if your moving and plan on financing, I would be more focused on finding the home you want to purchase. Understand that affordability will go down with rates going up.
In selling your home, you will want to work with an experienced team with the marketing resources to get you top dollar for your home in this seller's market. You may see increased competition on the market when you list your home with more inventory in the first quarter but that increased competition should be offset by the increased competition on the buyer side.
If you are trying to decide if now is a good time to buy or sell or if you have any questions about market conditions, please reach out to one of our experienced team members at PalmParadiseRealEstate.com or give us a call at 239-349-2487.