The Naples Housing Market Review: What To Expect In 2022
Housing markets throughout the nation have remained hot since 2020, mainly due to the effects of the Coronavirus pandemic. Demand essentially exceeded supply, resulting in a hyper-competitive housing market in Naples with more than half of properties selling above list price.
How fast homes sold and price appreciated staggered a bit, as significant savings and low mortgage rates supercharged basic housing market fundamentals through the pandemic period. So, does this mean that the Naples housing market will crash in 2022?
According to RedFin, competition on offers seemed to start slowing down in August. Although this helped reduce pressure, it was not enough to immediately cool down the record-high home prices. Here is our analysis of the likelihood of the Naples housing market crashing next year, coupled with crucial market trends expected to go into 2022.
The Naples Housing Market is Likely to Maintain Status Quo
While it is hard to say for sure, no conclusive signs are pointing to a possible housing market crash in Naples next year. With people still moving to South Florida, extensive shortages of new constructions, and a somewhat stable economy, are some of the main factors keeping the current local real estate market from crashing.
According to Fannie Mae, the number of homes (both new and existing) projected to be sold before New Year’s Eve is 6.8 million properties across the country.Fannie Mae further predicts that close to 5.6 million existing homes will be sold in the coming year throughout the U.S. Projections for new home sales is about 893,000, suggesting growth of at least 13%.
With a RedFinCompete Score of 45, this projection suggests that white-hot housing markets like the one in Naples will probably record more of the same price and demand increases in 2022. In other words, this means that the 2022 Naples housing market will closely resemble the one we have had this year as it will likely be led again by more robust demand than supply.
What to Expect Going Into 2022
1. A Slightly Balanced Market
Inventories are expected to eventually boost supply and offer buyers more options, which will significantly help reduce competition. While the Naples housing market is projected to remain a seller’s for most parts of 2022, it is also expected to be a bit more balanced than this year because most home financing rates will favour buyers.
2. More Buying Options
According to Zillow’s monthly reportreleased in August, inventories are recovering from the record-breaking low values. This is further echoed by the recent boom in new constructions rocking throughout Southwest Florida, with 1,000 new housing units being approved for construction in October.Similar trends are expected to happen hereafter with a precise aim of meeting the growing demand for housing, so expect to see a market with more choices next year.
3. Prices to Remain High
If you plan to buy a property in Naples, you are likely to still pay top dollar for it next year. As predicted by CoreLogic, home prices in the nation are expected to rise by at least 3.2% by mid-2022. It is at this time that real estate experts argue that home prices will reach their peak and start to taper off slowly to normal levels. Ideally, this will take a while, but it will be good to finally see prices stabilizing from scorching levels by the end of 2022.
4. Mortgage Rates to Increase
Historically low mortgage rates have been part and parcel of the 2020 – 2021 housing market frenzy, which tempted many to buy mortgages while the deal was still good. While these rates will not skyrocket from the record low levels, experts indicate that they will gradually tick back up by considerable margins in the coming year. The current 30-year fixed mortgage rate in Naples is 3.3%, but Freddie Mac predicts this might surpass 4% in 2022. This rate is an essential consideration for those who want to get a new mortgage as it can quickly translate to higher monthly charges.
5. Suburbs to Remain Hot
Suburbs will most likely remain the hottest housing market segment in 2022 because they are relatively affordable and less populated than most city centres.Other factors at play include the fact that more people are still moving to Southwest Florida, a cumulative addition of at least 4.8 millennials ageing into their home-buying years in the next two years, and the vast preference for working from home.
The main takeaway for those eying to buy properties in Naples next year is that the tides will be in your favour as the market stabilizes. Although home prices will remain high for most of 2022, supplies will eventually meet demand by the end of 2022. If you are ready to invest or have questions about the Naples real estate market, feel free to contact us, and we will be happy to help you with any of your property management needs.« « Previous Article| Next Article » »
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