Will South Florida home prices increase in 2022?
Our home price is gonna decline in South Florida in 2022. At the end of every year, we make a video giving our predictions for what's gonna happen in the housing market here in South Florida. In this video, I wanted give you my six predictions on what's gonna happen in the housing market in 2022 and show you what our predictions were in 2021, where they were right and where they were wrong. Before we start our predictions. If you haven't had a chance, make sure you like us on Facebook. Follow us on Instagram @MandelTeamRemax, and like comment and subscribe to our YouTube page that's youtube.com/andyMandelRemax, and make sure you tap that bell icon so you get notified every time we do a new video. So let's get into our predictions predictions.
Prediction number one, is that we think home prices are going to continue to increase in 2022. So, we think they're gonna go up by about 15% in 2022 in 2021, at the beginning of the year, we predicted that home prices were gonna go up only 7% in 2021. And we were obviously wildly wrong about that. The housing market has obviously been on a tear unless you've been living under a rock I'm sure you've noticed that. All the experts were predicting about 5% for what home prices are going to appreciate in 2022. But that's a national average. It's not really local here in South Florida. That's including places where people are moving out of and where the demand is less robust. In South Florida, we are still seeing a ton of people moving here. There's still a lot of demand to be moving to South Florida. So we think home prices are going to continue to increase, but not at the same pace as they were in 2021. The example we're using is a four bedroom single family home in the areas that we normally sell. So Parkland, Coral Springs and Boca Raton that four bedroom home has increased by 23% in 2021 compared to 2020. So the 15% increase that we're predicting is in about half the pace of what it increased last year, but that's still a little more than 1% per month.
Prediction number two, supply is going to continue to be less than demand. So we've seen about one to one and a quarter months worth of inventory basically throughout the entire year here in 2021. And we see that trend continuing unfortunately in 2022, that's part of what is causing this rapid increase in prices. We do think there's going to be a slight increase. We're hoping it gets closer to about two months of inventory, but we're not seeing anything that's showing signs of there being 5, 6, 7 months of inventory, which would bring it much closer to a buyer's market that would really put it into a buyer's market. We don't see any signs of that. So we think it's going to still be a very strong sellers market in 2022.
Prediction number three, we think rental prices are going to continue to increase as well. In 2021 to use the same example we were using for the sales prices, the average four bedroom home for rent in these areas has gone up 27% compared to 2020. So rental prices had actually increased faster than the price of homes for sale. There's a lot of people who are moving here from out of state. A lot of times people wanna rent it before they buy to get used to the area, figure out really where they wanna be. So we don't really see that stopping anytime soon. We think rental prices are going to continue to go up in 2022.
Prediction number four, we think interest rates are gonna continue to rise as well. So in 2020 and 2021, a lot of buyers were able to take advantage of historically super low interest rates, almost free interest rates when it comes to mortgages was somewhere between 2.5 to 3%. That is historically unbelievably cheap. As the economy continues to improve and get out of this COVID slump that it was in their federal reserve is stopping its quantitative easing. And they've said that they want to raise interest rates in 2022 to try to tamp down some of this inflation that everyone's seeing in the economy. So we think by the end of the year, interest rates are gonna be closer to 4% compared to the 3% roughly that they are right now. That's obviously gonna drive up buyers monthly payments because prices are gonna continue to go up and interest rates. So the total housing cost is gonna end up getting a little bit more expensive in 2022, but 4%, even if it gets all the way up there that is still historically extremely cheap. That's still less than what interest rates were at pre COVID. So that's still a very, very good interest rate. Don't let that scare you. We think there's gonna be a rush of buyers at the beginning of the year, who are looking to lock in a super low interest rate before they start to go up.So, unfortunately that's probably gonna make it a little bit more hectic in the first quarter of the year. It's gonna drive up the prices a little bit faster in the first half of the year, I think than in the second half. But that's really what we're predicting is that people are gonna try to lock in the lower interest rate now before they rise too rapidly.
Prediction number five, supply chain issues are still gonna be a problem with the housing market. So with new construction, it's hard to get lumber, it's hard to get labor. It's all driving up the cost of new construction properties in addition to land in South Florida is very scarce and very expensive. So builders are really only building high-end properties. So with these labor issues that are going on in the economy, I think that's only gonna continue to increase with the infrastructure deal that was just passed this year. We think a lot of the laborers who were doing a lot of residential properties, they're gonna be drag, drawn closer to some of these big commercial and infrastructure projects that are gonna be happening across the country. So it's gonna make a shortage of labor we think for the residential housing market, it's only gonna make it harder and a little bit slower and more expensive when you're doing these upgrades to your house, but that's just the world that we're living in. And we think that's gonna continue for the next couple of years as these infrastructure projects really get going. Side note, if you're watching this and you're younger, or you're looking for a new career or job getting trained in one of these skilled fields, electricians, plumbers, welders, things like that. There's gonna be a really big demand in the country for that. Those are jobs that you don't really need to go to college for it and they pay very, very well. So if you're looking for a new career or something like that, I'd be looking at kind of, to those kinds of fields.
Prediction number six, our last one, we think that older renovated homes are gonna sell for a premium compared to some of the homes that need a little bit more work in this market in 2021, just that everything was selling if it was priced correctly, but buyers are getting a lot pickier with what they're willing to pay for with the prices the way they are. They're really looking for a turnkey move in ready product. Those properties are selling for a premium. That's really where you're seeing these bidding wars the prices being bid up. We see that continuing in 2022 people don't really wanna do the renovation. They don't wanna live through that and the frustration of that can cause if your home is fully renovated and updated, we think it's gonna sell for a premium and that's gonna continue in 2022.
Those are our housing market predictions for 2022. If you have any questions about the housing market here in South Florida, if you're thinking about buying a home down here, we'd love to be your realtor of choice and be a resource for you. Feel free to give us a call, shoot us a text or send us an email. You can even send a smoke signal or carry your vision. However you want to communicate. We got your back when moving to South Florida, thanks for tuning in.