Looking Ahead as the Market Shifts
Even if you're not searching for or considering the sale of a home, you've probably noticed a lot of headlines about real estate and whether or not the shifting tempo of the housing market signals a crash. Inflation is high, interest rates rose markedly over their historic lows, and economic uncertainty both domestic and global has affected consumer confidence.
So where is the market headed for the remainder of 2022?
Though nobody can predict the future, we can make an educated projection based on our knowledge of the immediate past and the market dynamics driving the Sarasota market. When I say “immediate past” I mean the past 60 days. The market shifted in mid-April 2022, around the Easter holiday. We are no longer in a frenzied boom market nationally or locally, but Florida - and more specifically Sarasota - are better positioned to weather the shift than much of the country.
Check out the high level takeaways below and click here to download a report from Craig Cerreta that details the outlook for 2022's third quarter.
THE BAD (or Not so Good)
• Inflation will be with us for the upcoming future.
• Consumer Spending is stagnating as inflation erases gains.
• Supply chain issues will continue, resulting in continued building cost increases.
• Interest Rates along with higher home prices have reduced home buying power by 60+%.
• Demand for Vacation Homes has returned to Pre-pandemic levels.
• The stock market declined significantly back to January 2021 levels, impacting consumer confidence.
• Rental rates are still increasing due to a massive national shortage of rental inventory.
• Economists predict a slowing economy and possibly a moderate recession through 2023.
GOOD FOR REAL ESTATE
• Inflation should grow at a slower pace going forward. The worst should be over.
• Housing prices historically increase during inflationary times (just not as fast as inflation).
• People invest in hard assets like real estate during difficult or volatile times.
• Investors looking to expand their rental portfolios will do so due to the huge demand for rentals and the belief that overall values should hold steady (market dependent).
• Housing inventory is still at historically low levels, keeping price pressure up.
• Baby Boomers are still retiring at unprecedented rates and still want to move to their dream home.
• Many Gen-x and Millennials are investing in Real Estate to secure their future.
