January 2022 Housing Market Update

Mary Bartos:

Hi, it’s Mary Bartos with the Bartos Group of Premier Plus Realty. And I love this show and episode. You know why? Because we’re looking back what happened in 20… this year, 2021. And we get to look forward into next year of 2022, with the amazing two professionals and the people that I think are most amazing in each of their own industries. And that is Howard Jordan with High Net Worth Group as… Advisory Group. Sorry, forgive me. And Cheryl Stokes with North American Funding.

Now, last year we did this show in December. We’re in January because of our schedules, but we want to remind you of what we said last year. So Howard, you said, let me turn over my piece of paper, that there was going to be a tax situation because we were coming into a new power in government. Volatility in the market, people needed to understand what they own. And don’t get to excited, have cash on the side, and we would see increased volatility. Did that happen?

Howard Jordan:

So Mary, we’re coming off a couple years with just tremendous gains in the stock market. So did that happen last year? It did. We had volatility, we certainly have a lot of, what I would call, confusion, on both sides of the aisle. So right now, we’re looking at a political situation that makes us a little bit nervous. We started to see that last year, most at the end of 2021. So we did see volatility. A lot of the volatility was to the upside, and we would expect similar types of markets this year. So, I know that a lot of times, my recommendations and my thoughts, they aren’t exciting, but we think we’re coming into, what we would say, a pretty calm, but boring period in the markets.

Mary Bartos:

Calm and boring is not bad. But hold that thought because we’ll talk about 2022. Cheryl, last year… I feel like I’m on Password, for those of you that know that game. Last year you said we were going to see high demand, historical low interest rates, and a stable housing market.

Cheryl Stokes:

That did come true. We had really high demand, we had real low rates, and the market was, for the most part, stable but stable in an increasing way.

Mary Bartos:

Awesome. So my prognostications were very similar to Cheryl’s because what we thought would happen, is that at the market would go up. And with low interest rates and low supply high demand, the prices would go up. Now what actually happened for us, looking back, was we had no idea what was going to really happen in the market. And that was that the prices in some of our markets were going up 40 to 60% here in Southwest Florida. If we recall, we were talking, I think, Howard, it was you that said last year, “People could move about and live from wherever they wanted.” Well, that’s just what we saw. So, that’s looking backwards. Let’s talk about what we see going forward into 2022. Howard, what are you seeing?

Howard Jordan:

First of all, we are using a couple different themes this year, and the first is, patience. So I think it’s hard for anyone out there to argue, and I’m interested to see what you have to say, Mary, but it’s hard for anyone to argue that there’s value, extreme value anywhere, whether it’s real estate, whether it’s the stock market, whether it’s the bond market. So we’re really urging our clients to just have a lot of patience this year and be very selective.

Howard Jordan:

And when I’m talking about being selective, there are some really great opportunities. There always are, whether we’re talking about real estate or whether we’re talking about the equity market. But we think 2022, you really need to take a step back and just wait for those opportunities. Like I said, there’s a lot of asset classes that seem to be very expensive. That doesn’t necessarily mean that they get less expensive, they could get more expensive before we start to see a break. But our clients, again, take a deep breath, relax, and have patience in 2022. Let some of these deals find you instead of chasing, like we’ve seen some people do in certain asset classes.

Mary Bartos:

Awesome. I love that. Cheryl?

Cheryl Stokes:

Well, I think that the market is going to be somewhat similar to last year, in that there’s still going to be high demand in our market. That is not going to go away. And as you and I have discussed, it’s actually not going to go away for quite some time, just based on the buyer pool that coming up, which are the millennials and the vast number of millennials. So, that high demand is going to remain.

Cheryl Stokes:

The question really is, are the prices going to continue to rise or have we met a stabilization period? And I’m sure you’re seeing this as well, but I’ve noticed that things are staying on the market a little bit longer, so maybe we’ve met that plateau. And while we will still have demand, we won’t have the crazy increases that we saw last year.

Cheryl Stokes:

As far as historical low rates, we are still going to have low rates. They can’t be historically low because they are going to be higher than they were in the past. But even with the increases that we’re seeing for both second homes and just general increases, they’re still going to be low. We all remember when rates were 7%, we remember when they were 13%. We’re looking at the fours. That’s still affordable, people will still be able to buy, it will not inhibit the market, I don’t think, in any way.

Mary Bartos:

Yeah, I have to agree, Cheryl, what we’re seeing is just amazing. I think what will throttle the market is, inventory. Our inventory is down significantly, and I was just pulling it up. Fort Myers in the last year, 72.1%, Bonita, 81.4%, Marco Island, 69.1%, and Naples, 74.5%. We’re at a 10th of inventory that we would normally have. So going into 2022, the theme is inventory. People need to sell, but if they kind of take patients and a breath at it and decide not to do anything, then we are going to have some struggles because new homes, who would’ve known we would’ve had all these supply shortages. Right?

Mary Bartos:

We had toilet paper at the beginning of the health crisis and now we have concrete. Now we have windows, now we have garage doors. So the new home builders are so far behind they’re not even pricing things until they get to a certain stage in the build. And they are not letting… Many of them are not letting the consumers choose what they want to put in this new home because they can’t get those materials. And then they just sit there and languish.

Mary Bartos:

So, what do I say? I say, there’s still huge demand, we need some inventory, and if we can get inventory, then the market will fuel. Will we see the 40, 50, 60% increases that we saw? Marco Island was 61.2% increase in price in this last year. I don’t know. I know that what we came off of, Cheryl, and you hit it, is the fact that if interest rates go up, we’re down. People are paying cash only 51% of the time. It’s normally 60 we’ve seen in different kinds of markets. Right? Cash mortgages are cheap. So, we don’t know if that’ll change.

Mary Bartos:

And then the other side of it is, honestly, because there’s so little inventory, we have to get into bidding wars and thus that ratches up the price of the homes. So guys, I wish… that is my crystal ball that I have is, if we get inventory, we’ll still continue. Maybe not at 61%, but the market’s still going because there’s still demand. Real estate market is still demand.

Mary Bartos:

So next year, this time, between December and now, will you come back and tell us how we did prognosticating for 2022 and what we see for 2023? Yep. I think so.

Mary Bartos:

So today, we thank you for tuning in. I’m Mary Bartos, the Bartos Group of Premier Plus. We have Howard Jordan with High Net Worth advisory Group and Cheryl Stokes with North American Funding. And we bid you a wonderful and healthy 2022. And we look forward to seeing you here, if not before next year, seeing what we’re predicting. Ciao.