MARKET & TRENDS
2023
Three New Real Estate Trends to Look for in 2023 THIS YEAR IS SHAPING UP TO BE A REMARKABLE YEAR FOR REAL ESTATE OWNERS AND INVESTORS.
by Ryan Zomorodi
he real estate market changes constantly on several fronts:
schooling options, and flexibility to run around unattended, something not attainable with most homes in large cities. SIGNIFICANT INCREASE IN HOME PRICES The residential real estate market exploded during the pandemic. Interest rates were at all-time lows and, as mentioned, there was a mass exodus out of cities. However, in 2022 that trend reversed dramatically. As a result of higher-than-expected inflation, the Federal Reserve aggressively raised interest rates. By raising interest rates, the Feds hoped to reduce access to cheap capital and, in turn, reduce inflation. That is exactly what happened. Over the past year, prices have crashed across the board. Home prices are down 20%-30%, and companies have reported a massive reduction in demand for their goods and services. But, there is one small caveat. The U.S. has a housing shortage. Because of the aging population and large number of young families, there is greater demand for housing than there is a supply. So, once the Federal Reserve stops raising interest rates, expect housing prices to climb considerably. There simply is too
much demand for housing. Buckle up for higher prices in 2023.
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profitability, the individuals and companies that own property, and regional trends and trajectories. The last few years, for example, have been marked by the pandemic, supply and labor shortages, inflation, and rising interest rates. This year may be shaping up to be even more eventful. Let’s take a look at new trends in real estate to look for in 2023.
MILLENNIALS BECOMING HOMEBUYERS With the increase in remote work, the number of profit opportunities within social media, and a decade of abundance, millennials, relatively speaking, are very wealthy. Individuals in their 50s, 60s, and older were not nearly as wealthy in their 20s as millennials are today. As a result, look for millennials to step in and become first-time homebuyers in 2023.
INCREASE IN PROPERTY OWNERSHIP
Residential housing demand has exploded. Historically, cities have been widely populated by in-person workers, young professionals, and empty-nesters looking for access to the amenities a particular city offers. Times are definitely shifting. Although some companies have reinstituted in-person work requirements, many are opting to maintain a hybrid or fully remote work environment. That trend is likely to persist into 2023. As a result, expect more families with small children to move out of cities to buy homes. Two parents working from home with small children running around is a recipe for disaster. Families want their children to have access to a backyard, more playdates, better
SECOND- VS. FIRST- TIER CITIES
At the turn of the 21st century, big cities were all the rage. New York City, Miami, Chicago, Boston, and Los Angeles have all seen a massive influx of capital from homebuyers and inves- tors alike. However, during the past five years, that has started to change. In 2023 and beyond, second-tier cities will continue to be the next big thing. You can expect first-tier city occupants to move out of their current communi- ties and into second-tier cities such as Austin, Raleigh, and Tampa. This trend exists for a few reasons. First, tier-one cities have become exorbitantly expensive. The majority
40 | think realty magazine :: january – february 2023
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