Dear Friends and Clients,

As we draw closer to the end of 2021, it’s time to start looking forward to what the market may be like next year. While the market has been slowing these past few months, experts predict that we could see another year of massive home price appreciation. Home prices have already risen 20% from 2020, but the underlying cause of this increase, the housing shortage, and its far from over.

The boom in the housing market this last year was caused by low interest rates, low housing inventory, and increased demand from both millennials and investors wanting to hedge against inflation. Jan Hatzius, the head economist at Goldman Sachs, writes, “The supply-demand picture that has been the basis for our call for a multi-year boom in home prices remains intact.”

This has caused the team to predict that 2022 will see similar home price appreciation. “Our model now projects that home prices will grow a further 16% by the end of 2022,” Hatzius continued.

The supply of homes has increased since last spring, but it is still well below pre-pandemic levels. Numerous issues are preventing new homes from coming onto the market and easing the low supply. Hatzius’ team points to the supply chain disruptions, lumber shortages, lack of available plots, and labor shortages facing the construction industry.

Locally we have seen the inventory over the last four months stay consistent at less than 1 months supply. (Meaning if all the homes listed right now sold, and 0 new homes were listed, we would run out of inventory in less than 30 days)

We have seen pricing seem to level off in the recent months, which should be further supported by the new construction market beginning to catch up and build some additional inventory homes. With all of this in mind, it seems like there is no end in sight for the housing shortage.

But what does this mean as a seller? It may be a good time to capitalize on the market and cash out the equity in your home, but there are other factors you should consider as well. There are costs associated with selling your home, and the same market that makes it a good time to sell may be frustrating when you go to buy a new home.

Cynthia Meyer, financial planner and founder of Real Life Planning, recommends you tally the costs of your new home purchase, the costs of selling your existing home, and the potential profit from that sale. Don’t forget to include items like the down payment, moving fees, closing costs, furnishing for the new home, and taxes. If the costs outweigh the profit, it may not be the best time for you to sell.

However, since experts expect high home price appreciation for next year, you may be able to recoup any costs quickly. Even without that, home prices tend to appreciate every year. This means that if you plan to stay in the new home for a while, the benefits may outweigh the costs.

To help you out with this calculation, you can instantly calculate what your house should sell for in today’s market based on recent Sarasota/Lakewood Ranch sales:

Enter your address here to receive a free property report

At the end of the day, it’s a good idea to talk with a Realtor if you’re considering buying or selling. Give me a call at 941-726-8750 or email me at matt@housematchfl.com. I can help you run the numbers and work through your specific situation. Of course, if you just want to ask some questions, I’d be more than happy to answer them.

I look forward to hearing from you,

Matt Bohanon