Explaining My Predictions for the 2022 Market
Here are a few of my predictions for the 2022 market.
What’s going to happen to the market this year? Are prices going to go up or down? Many people have been asking me questions like these, so today I’ll take some time to address my market predictions for 2022.
Given our extremely low inventory, I think it’s going to be difficult for inventory to get any lower. Here in Martin County, we have 0.8 months of available inventory, while St. Lucie County has about one month, and Palm Beach County has 0.9 months of supply. From this perspective, it looks like we can only go up from here, and I think we will.
"I think rising rates will simply slow the escalation of prices and cool the market some."
There’s been a lot of discussion about the Federal Reserve’s plans for increasing interest rates this year. Several major banks predict between four and seven rate hikes this year. The reason for these hikes is that it’s meant to help stave off the incredible inflation that we’ve been seeing in so many different sectors. Ultimately, I expect them to raise rates somewhere between 0.25% and 0.50%. That will likely trigger some deflation, since as you raise interest rates, it takes money out of the economy, which will slow the rising prices we’ve seen.
Rising rates will probably push some buyers out of the market, and that will in turn allow inventory to eke up a little bit. For the present, many homes are still getting double-digit multiple offers. We recently put a house on the market in St. Lucie, and in just three days we had around 15 offers on it. Still, competition isn’t as fierce as it was a year and a half ago when homes would get 25 to 30 offers apiece.
Since rising rates push buyers out of the market, which raises inventory and suppresses home prices, many are concerned about a housing crash. I don’t think a crash is in our future, however, I think it will simply slow the escalation of prices and cool the market some. The aggregate increase in median home prices for the tri-county area was 23% in the last year!
If you have any questions about our market or real estate in general, call or email me. I would love to help you.