Netflix has once again openly stated that they have not made a decision, I.E. the same stance they took with the leaks that said Sweet Home 2 was renewed and planning on filming in December that broke back in July of 2021. Netflix has again reiterated this same stance for this new story by jtbc.
I do think casting is the main reason there hasn't been an officially announced renewal of this series. Song Kang is going into his 28th year, and has yet to serve in the Korean Military, meaning 2022 is the year he will be called. Song Kang is also currently filming another series, in fact, MOST (Not All) of the cast, have been fully booked for 2021 and can't really do this until next year.
If they cannot get the stars to align in 2022 to film this before Song Kang enters the military, then it would be on hold for another year and half as they wait for his duty to finish. This is also something they have to consider if they were planning beyond season 2, again, the down time while he is doing is compulsory service between a season 2 and 3, unless they kill him off or move on from his character, or recast him now...... Because that would be at least a 2 year hiatus if not longer between those seasons.
Not to mention Lee do Hyun has been filming Melancholia, and is in current talks for The Glory, but has apparently declined the Netflix Bloodhound offer, though I can't find an article stating as such just commenters on that shows MDL page saying as much. But his schedule is easier to solve than the Song Kang issue because of the ending of season 1 and what they can easily decide about his character.
Ultimately, if they do move forward with the series they may be forced to recast, but I get the feeling Netflix doesn't want to and has been holding off renewing the project because of this. It might be better to let it die on the vine as they move on to other Korean dramas considering the casting issues, cost of original production, and 8 month original shooting schedule. Yes it was popular and until Squid Game, had been the only Korean title to enter in the US top 10 viewing list....but....it was expensive with a long production schedule. Now when adding the problems with casting...and other Korean shows being just as successful and some even more successful, Sweet Home may just become a really liked 1-off series that fans can re-watch at will.
But if we make it to the end of 2021 with no official announcement, then it has been an entire year without a renewal, which starts to make its chances of a renewal pretty slim. If nothing is stated by, at the latest, the end of 2022 1st quarter (March), then I am sure Sweet Home Season 2 is just not happening.
However, rumors do end-up many times coming true. So possibly Netflix has been leaking information to sources to see how the fandom and public react to a complete recasting, or taking the series in a new direction and focusing on secondary characters from the 1st season, and of course throwing what is left of the webtoon out the window. Who knows.
One can hope for a complete reboot in a five years or so if the show just ends up canceled or forever in undecided limbo.
