The National Association of Realtors economist, Lawrence Yun, says that 2022 will be better than 2019 but not as good as 2021. Is that the same message for Southwest Florida? Working here in Real Estate every day, I have a good feel for the ebbs and flows of sales. I’m going to take a shot at what I think will be the appreciation rate. I will give you three factors that will influence my decision, and then write down my number. Please note: I am not an investment consultant, merely a trained eye predicting a final score for the 2022 game.
Real Estate is a Hedge Against Inflation.
An investment considered a hedge against inflation is deemed to protect against a lowering of purchasing power that results in the loss of value due to rising prices. So, is there an asset that is supposed to maintain or increase in value over a set period? You guessed it, Real Estate. Investment coaches suggest at least 20% of a portfolio be in Real Estate. Investment purchases, here we go!
No Inventory.
Look at the chart below. Properties don’t sell this fast unless the demand exceeds the supply. The normal marketing time today is a week or less. To change the market, buyers need to say no and let inventory settle and grow; then, sellers will fight it out by pricing down adjustments. We are not anywhere near a change like that in the market. In fact, in the past two weeks, demand for Real Estate has picked up even more—making the sellers’ market stronger.
We Are in the First Innings of People Working from Home.
Winter is here. Look for more goodbyes soon. When you can work from anywhere, you can live anywhere. That fact opens the playing board for Florida. High-tax states and states with other issues are losing to Florida, which means we receive new residents daily. NYC has lost half a million people since the pandemic started.
There are headwinds of higher interest rates and uncertain economic conditions. However, I’ll leave you with my prediction: I say the market stays strong in SW Florida. We will scramble to get inventory and may not beat 2021, but the buyers will exceed the sellers driving up prices 20% this year!
You heard it here.
What is your prediction?
By Jay Richter, Licensed Real Estate Instructor & Managing Broker
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