How did prices increase so rapidly?
First, let’s explore briefly what caused the sharp increase in property values. Mortgage rates were at historic lows and due to the pandemic, millions of people were working from home. While working at home, people discovered either the flaws in their current homes or the attraction of moving to a new location and working remotely. With high demand and a low supply, the market became hyper competitive and according to Redfin more than half of homes in the USA sold above list price.
Where’s the market going?
The perfect combination of low mortgage rates, big savings rates gave staggering home sales and appreciation. Competition for homes has slowed down a bit nationwide but in Naples, we are coming into “high season” when traditionally most of our sales take place. So for us in Southwest Florida, we aren’t anticipating a pull back in market pricing or sales through at least the first half of 2022. There may be fewer multiple offer situations or a few more days on market but prices aren’t going to be coming down soon according to the experts.
The housing market probably won’t crash in 2022.
Obviously no one has a crystal ball but there aren’t signs pointing to a housing market crash. When population demographics plus a shortage of new construction homes plus the state of the US economy are all added together, the future looks bright for real estate. The conditions that cause a crash aren’t present and there are millions of Millennials who are now joining the home search and creating more demand in the market.
Fannie Mae projects that 6.8 million homes, resale and new construction, should sell by the end of 2021. It’s anticipated that next year should have the same type of demand and subsequent price increases.
How strong is the market?
In an nutshell… pretty strong. The majority of homeowners have positive equity in their homes and the majority of homes that are sold in Naples are cash sales. For those who are financing, banks have tightened up their lending and underwriting guidelines. Currently homeowners have more equity in their homes than at any time in the last 30 years which is an excellent environment to deter defaults and the foreclosure storm of 2005-2011.
What’s the inventory status?
Very little. There’s a lack of inventory in the Naples and Southwest Florida market. There aren’t enough homes available to meet the demand and though there may be more homes that come on the market during season (as it traditionally has been) there probably won’t be enough homes to meet the demand that we are seeing in the local market especially from buyers from the upper East coast.
If mortgage rates increase, that could slow the rate of demand and sales down as the number of potential buyers will likely decrease. This could lead to some price stabilization and fewer multiple bid offers.
It’s a great time to sell your Naples real estate. If you’d like our help in selling your home, we’ve sold over 450 homes in Southwest Florida with a concentration in Naples. We bring experience, negotiation skills and a legal background to the table that put us ahead of the rest. Call us at 239.293.0246 to discover the difference.
