Will the Ft Walton Beach and Destin Housing market collapse in 2022?

So, you're wondering, is the housing market going to collapse? We saw so many different crazy things happen in 2020 and 2021. I mean, we saw appreciations go up way, way high. So, you're looking about going into the Emerald Coast here, and you're looking Fort Walton, Destin and the surrounding areas. Is this area going to collapse in the housing market? Well, stick around for the answer.

Alright. So, let's get into it. Let's talk about, will the Fort Walton Beach, Destin housing market collapse in 2022? So, let's talk about where Destin, Fort Walton Beach is. If you don't know, it's actually up here in Northwest part of Florida. It's kind of in between where you see Pensacola and Panama City beach, (boom) right there in the center. Population between the two areas is about 35,785 according to our last census. So, not that big of a place but not that small either. So, what sort of properties are in the Destin Fort Walton Beach area since we're talking about the whole housing class, right? Or possible to collapse. Well, primarily, we have condos, we've got single family homes and we've got town homes. Not a whole lot of multifamily that are here in our area unlike other markets. That's primarily what we're looking at as far as residential housing.

So, let's talk about the last year's statistics in 2021. Our single family homes, our median price is around $365,000. Now, that was high all the way up to $6 mil and a low down to $65,000. Now, let's look at the condos, median for condos was $415,000 high up to $2.8 million and a low of about $35,000. And, we'll look at townhomes or we'll just consider them attached homes. The median price for that was around $239,950 that's a high all the way up to $3.6 mil and a low $82,440. It's pretty specific huh.

Okay. So, what did we see in 2021? Alright. Well, let's get into and recap what the havoc was for 2021. Alright. Low interest rates is what we saw. Typically seeing the low low interest rates that we had seen over the past few years, keeping them low, artificially low from our government and still keeping the buyers and the ability for buyers to purchase super, super high. Alright? But because of that, we had such a high demand, we have very low inventory. It's a third of what I remember seeing two three years ago when I look into our multiple listing service or MLS. You're not familiar with what that is. That's everything and anything listed by real estate agent that's going to be in the multiple listing service. So, what we saw was typically pretty low inventory. So what happened? Man this in the market, right? We were seeing multiple offers. Contracts under seven days on average in the market, on average. And those are the ones that put them super, super high, right? Our statistics were showing for single family homes at the average. The average that people were getting from the prices they put on there even though it was super high to the price that they actually got was a hundred percent. 100%? I don't think the statistics actually went up that high, I think it just capped out. Because, what did we see? Here's a good example. So, I'd have a buyer that really wanted a house that was preapproved up to, we'll say, $380,000. If you find a house, and it's $380,000. Okay? And, they go ahead and put it in an offer. Multiple bids come in and they have it as is, no contingencies other than financing, and boom, lose every single time. Same sort of buyer comes in, find something for 350 that meets our criteria and now we're in multiple offers. Here's what was typically winning is that we had to go 20, sometimes 30 thousand dollars within escalation clause. If you're not familiar with what an escalation clause is, it says, hey, I'll pay a thousand dollars more or whatever. More than the competing offer not to exceed 20, 30 thousand dollars over with the original list price was, okay? And everybody started doing this, right? And they were doing as is, you know, only contingencies upon the loan. So, whether that was FHA or VA or something like that. In our market, we have a lot of VA buyers. So, that's not really a big detraction from actually winning these offers. So, we would put that in and even those were still losing. So, what we had to do was actually take it down to say, hey, because we as listing agents, most of us are going to go through and give a seller comparative market analysis to let you know what the market will support for the purchase of your price. So, say this house was going to be worth 360 based on your estimates. An appraiser is probably going to agree with you most of the time and say, yeah, it's only worth 360. But now we went to an escalation clause, now we're 10, 20, sometimes30 thousand dollars over what the original list price was. Is that really going to appraise? Probably not. Probably not at all. So, the seller's agents or listing agents were figuring out, hey, well, I mean, this is no better than the other one if it's going to be contingent upon financing. So, obviously, cash offers were the ones that we're winning and what they ended up doing is having to put in an appraisal guide. So, saying that, hey, we're agreeing to pay x amount. But if it only appraises to this, we'll pay 3 thousand 5 thousand 7 thousand dollars over whatever the appraised value was. And that my friends, is what was actually winning. Insanity, right? Unbelievable. But anyway, that was our market.

What did we see for appreciation? Appreciation nationwide was about 12%. You're like, that's just a statistic Tim. What does that even mean? Well, 12% typically, our market here in the United States goes from about 3 to 4% per year in appreciation over time. Just look at the statistics since they started tracking these things and that's been the average appreciation. 12%? What? Here in the state of Florida, it was 28% appreciation. One year, 28%, that's insanity. Alright. Now, our area wasn't quite that crazy. We saw anywhere between 9 to 14% in appreciation depending on the area and what type of home that you were looking at. But still, 9% comparatively to 3 to 4 is quite insane. So, we as the smart listing agents started to go ahead and price those properties based on those appreciations, and here we go. Now we saw that the housing values are going up. The great part about this is that we've listed and we'll say we're going to use those numbers from before. We've listed360, we go through, we get something, maybe it fell through because of financing, and 30 days later, there's two other comps that pumped up. And now you saw that one of 360's then worth 380. So, we've been putting those up there and people are going, why do they go up that much? Because these comps are coming in and it's just been ridiculous.

Okay. So, what are we expecting to see for 2022? Alright. So, here we go. Based off of our research and what the experts have told us the interest rates are going to be on the rise. They're on the rise right now. And as the day of this video is in February of 2020, we're seeing interest rates starting to go up. We started seeing them go up towards the end of 2021. However, we're looking at Q3, quarter three that we're going to see at least a point going up. That's what the experts are saying as far as what the interest rates are gonna be doing. However, we're down the street, is that July is when we're goning to start seeing that. So, it could be as early as July or Q3. It's right around that same time. We're going to start see inventory increase. And that just makes sense as interest rates continue to climb the value and the ability for buyers to actually go out there will decrease. It typically does. So, that being said, there's not as many buyers. We're going to see it slowing down. We'll probably see the average days on market increase to thirty days or more. Now we did start seeing that as we got towards the November December of 2021, and as soon as January hit off, kind of went crazy again and then it's starting to settle down. But we are getting into the spring and we know that, that's usually the hot season across the board across the United States. As the spring season sell some homes and wants to purchase some homes. But we're going to see days on market go up. Appreciation according to our research of real trends. We're going to see appreciation slow from our 12% or 9% at least in the Destin market. They're expecting nationwide that it's going to go down to about 5.82% in 2022. Now this is going to continually stabilize as appreciation, set down to 3.94 in 2023, 3.56% in 2024 and 3.55% in 2025. So, these are the statistics, you can look these up. We got these from realtrends.com and you can see their justification on that as well.

Alright. Next is we're going to start to see more and more people move to Florida, mainly just due to politics in COVID. Sorry guys, but that's just a reality. People are tired of some of the ridiculousness going on all throughout the Continental United States. Alright? So people have been moving back this way and Florida just seems to be their version of a beacon of freedom. Well, we love living here, we'd love have you guys come in, please come and enjoy it. But, for you anticipating, yes, we're going to start to see more people coming here, of course, driving those prices up and driving the demand up.

Now, you're also going to see restriction on and we already are seeing restriction on loan requirements just get more stringent. Meaning, it's going to be harder to get financing if you don't have that ideal credit or debt to income ratio. So, it's a little bit harder for them to go ahead and give those loans out. So if you're worried, like in the 2005 and that big drop in 2007, was because the banks were giving out some prime loans. And if you don't know what that is, the easiest way to explain it, is that somebody that didn't deserve to get a loan, you got a loan. Okay? And then when they called them in, they couldn't afford it. Right? And that just allowed the whole thing to collapse. Alright? If you haven't seen that movie the big short, I totally suggest that you watch a very entertaining movie, but it does kind of describe the whole thing while the whole thing collapsed in the housing market back in 2007.

So, anyway, with that being said, what are we expecting? Alright. Overall, we are going to expect a deflation, not a collapse. What I mean by that is, yeah, we did get quite the inflation of the market. Nobody's denying that. It's going to deflate, but it's not going to collapse in on itself. So, if you're sitting around waiting for the market to go back down to get better prices, this is the wrong strategy. Values are going continue to climb. They're just not going to climb at the same rate that they were before. Other thing to consider is inflation, is at 7% currently. And interest rates are still relatively low, and real estate is appreciated. So, my suggestion to you is to go ahead and make sure that your money is in real estate now. Alright? As the value of your money is depreciating, put it in while your value of your money is still good. And, as long as you have it in real estate, you have an appreciating asset regardless of what the inflation does, it's going to put you in a good spot.

That's all I have for you for, will the Fort Walton Beach and Destin housing market collapse in 2022? And, we figured out, it probably won't. You have any questions about anything that I had mentioned here, feel free to call/text us at 850.320.7757 or email us at Admin@WhittemoreGroupRE.com