2022 and a Look Forward to 2023

Rising interest and insurance rates, a hurricane and more: three local realtors share what stood out about 2022.

By Kim Doleatto | Sarasota Magazine

Soaring interest and homeowners’ insurance rates, inflation, Hurricane Ian, pandemic effects still interrupting supply chains and labor, a flood of new neighbors, an affordable housing crisis and a war in Ukraine. To put it mildly, this year has been a roller coaster—and the local real estate market had a front seat.

Sarasota saw a downtown condo boom, and new construction in the east and south of the county. It also saw interest from out-of-state investors making their first foray into the Sarasota market, where rents remain high. 

We spoke with three longtime local real estate experts to talk about 2022 and share their thoughts about what the next year may look like. Here’s what Tony Veldkamp, commercial real estate agent with SVN and 2022 president of the Realtor Association of Sarasota and Manatee, and veteran agents Roger Pettingell of Coldwell Banker and Judie Berger of Premier Sotheby’s had to say.

 What stood out most about 2022?

“When the year started, we had anticipated things starting to settle down from the frenetic pace of 2020 and 2021, because that just wasn’t sustainable,” says Veldkamp. “We were short on residential inventory at the start of 2022, and for the entire year, that didn’t change. It’s improved somewhat, but we’re still behind, and it’s still a great time to sell your house. What 2022 will be known for is the pending inflation pressure and the interest rates that went up substantially, from 3 to 6 percent and more. 

“On the commercial end, there’s been so much new local development that we have a need for support services, but we have a shortage of office and retail space,” he continues.

“Toward the end of 2022, I’m seeing a back-to-normal market. We have time to do our jobs now, show homes, entertain offers and do inspections at a normal pace, rather than out of fear of missing out on a purchase,” says Berger.

“Properties sold in 2020, were resold in 2021 for more, and sold again in 2022 for higher,” she adds. “Those were the jumps we saw. That’s why it got unaffordable to live here. If investors are paying more, they’re charging more rent, too. On one hand, it’s good, because our sellers who bought and overpaid for their home in 2005 were able to finally break even.”

How did rising interest rates affect the market?

 “With multifamily projects, the rent is staying the same, but interest rates shot up so prices had to come down to get them sold. It has affected land sales, too,” says Veldkamp. “Due to the concern of a [possible] recession on the horizon, some builders are backing out of transactions. Some have a negative view of what the future holds but we still think there will be a strong market.”

“Due to the rates, some sellers are holding back until they come down so they can list. Still, it may take longer to sell but we still have strong demand,” he says.

“The Russia-Ukraine war impacted the stock market, and that matters to the real estate market. It was crazy up until March, but I think the war caused the shift in the market,” Pettingell says. “Inflation wouldn’t go away and led to rising mortgage rates. Even if you didn’t depend on a mortgage, there is something [nerve-wracking] about a 200 percent increase in rates. If you’re looking to borrow, that would give you a big pause. The good news is that rates have come down a little bit, and lenders are getting creative with new products that can lower rates for home buyers.”

“The Covid-19 pandemic migration really shifted our market, because of no state tax and great weather, and none of that has really changed,” he says. “Plus, buyers know they’ll be able to refinance as rates drop.” 

“Inflation will affect those who can’t afford to be affected—buyers who need mortgages, and that’s sad,” Berger says. “The average working family can get more for their home, so they can sell, but it’s a lateral move since home prices are high. In the early ’80s, interest rates were 18 percent. We’ve been spoiled in the last couple of years when it was 3 percent. In 2005, my personal interest rate was 8 percent. However, housing prices are up and the interest rates are up so if you’re a young family and looking at your first house, those lower interest rates may be all you know. That means 6 percent looks really high.”

Veldkamp agrees. “People have a short memory, but 5,6 and 7 percent interest rates are normal—3 percent isn’t.”

How did Hurricane Ian affect the local market?

 “It caused some home sales delays in September, but we made up for that in October,” Veldkamp says. “Ian highlighted the need for more houses. Some of the folks who had their homes destroyed needed a new place to live overnight, and it added pressure on pricing and rentals.”

“The good thing is, hurricanes typically hit when lots of our clients aren’t here,” says Pettingell. “Come January and February, with five feet of snow in the north, the reason to come to Florida is the same. In the aftermath of the hurricane, all the workers had to be housed too. Now activity is back to normal,” he says.

With the exception of South Sarasota County, “once things were cleaned up and electricity restored, we were back in business. On the whole, in a couple of weeks we were up and running. Our prices remained solid,” Berger says. “Our neighbors to the south were not so lucky. It hasn’t led to desperate fire sales.”

She also sees a potential benefit. “Those who were considering Naples may now take a look more north, at us. Once people start receiving insurance settlements, they may move here.”

How did soaring homeowners’ insurance rates affect buyer behavior?

“I’m sure it affected some buyers, but we’re hoping that future legislative changes will improve things as they try to pass some form of insurance reform. We need some help there,” says Veldkamp.

“It’s a disappointment that we’ve been able to deal with so far,” says Pettingell. “For houses with roofs older than 20 years, [the rates] have been a shock. Homeowners are either buying very expensive insurance or getting turned down by carriers altogether. We urge sellers to replace their roofs before selling.”

But, says Berger, “people still want waterfront homes, and we’re still relatively inexpensive for that type of product than other markets, so it’s something buyers are willing to deal with.”

What trends did you see surface? What did buyers crave in 2022?

“There’s still strong demand for multifamily homes, as far as commercial real estate goes. Rents are starting to soften a bit, but they’re still high,” says Veldkamp.

“Younger first-time buyers are wanting to buy in the suburbs. Before they wanted to get downtown,” he continues. “We do anticipate office space to improve as we’re getting out of Covid. Some people want to get back into the office. I see that continuing.”

“New construction and renovated homes are top of mind all the time,” Pettingell says. “I liken it to people who are more interested in time than money. This happens after jarring events like 9/11 and the pandemic—people don’t want to spend a year renovating.”

Berger sees the same trend. “Buyers want new—or a property that looks like it. I call it ‘the HGTV effect.’ They want it to look like those homes, with popular finishes.

“People will overpay for a home where they have to do nothing,” she continues. “Coastal contemporary, modern and midcentury styles are all super popular. Waterfront and water views are always in style—so is a great canal view.”

“There will always be those looking at fixer-uppers, but those buyers want them for very little, because of the time and money they’ll have to put into them. And condos will always be popular, but the complex has to be solid with reserves and assessments,” she says. “Also, buyers want furniture included now because of supply chain issues—especially condos since many of them are vacation homes.”

What do you expect to see in 2023? Are we headed for a crash?

“We don’t see a crash on the horizon,” Veldkamp says. “We have too many people who want to move here, plus a strong job market. The ingredients for a crash just aren’t there. We see a bit of a flattening, and I think we’ll see increases in value still, but nothing like the last few years. We think interest rates will come back down to around 5 percent.”

“The cost of construction should be leveling out, too, and not increasing like it was,” he says. “We see a very good market for 2023 once we get through the holidays and talks of recession and inflation start to go away. Florida is still a great place to do business. Plus, people want to get back into stores in person. We see bright spots in retail coming up through the next year.”

“Typically, we go in recession last and come out first,” Pettingell says. “What everyone wants—new construction—will continue to be in short supply. I don’t think it’s going to be a 2021 type of crazy year. That anomaly won’t happen again. People are making better decisions as they buy, and I don’t see a crash coming.” 

“I think people are tired from last year, and this year created a lot of stress for buyers, sellers and realtors,” he adds. “Even if we see a slowdown, it’s just a return to normalcy.” 

“This is not 2008, when the bottom fell out,” Berger says. “We’re coming into a different type of market. Our prices have stabilized and plateaued. We’re the feeder market for the whole country. There’s still lots of people moving in and keeping demand high. And there are still fewer homes on the market than in 2019. Small resort cities around the country are doing well. I expect this to be a very good season—not like the peak, but good.”

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If you’re considering a move and would like to discuss detailed information about market trends in your neighborhood with an experienced professional, please contact me for a confidential consultation; I look forward to discussing your real estate goals with you. 

For a full report on Siesta Key and the Sarasota-Manatee area that is sent regularly to my private client list, please contact me at 941.928.3424 or [email protected].

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