If you want to bring your A-game to the housing market in 2023, you should definitely know more about these three real estate market trends.
Staying one step ahead in any industry—especially in the real estate business—requires you to be flexible, have a keen observer’s eye, and keep track of trends.
Table of Contents
- What Was the Real Estate Market Like in 2022?
- 3 Real Estate Market Trends to Expect in 2023
- How to Succeed in Real Estate Investing in 2023
What real estate market trends can I expect in 2023?
We’ve got it all covered. So, make yourself comfortable—and keep scrolling to find out more about the three leading real estate market trends in the US in 2023.
What Was the Real Estate Market Like in 2022?
Even though 2022 is officially over, and we’ve all turned the calendar to 2023, it does not mean that we shouldn’t take a moment or two to reflect on the previous year and see how it treated the real estate market as a whole.
And with that said, here are a couple of major trends that defined the US real estate market in 2022—and how the said trends affected the wider audience.
Buyer’s or Seller’s Market?
When you look at the US real estate market trends from a broader perspective, you probably can’t help but ask, “Is it a buyer’s or a seller’s market at the moment?”
Each day, real estate agents and professionals wake up to different forecasts, news, and statistics coming from various sources—and it is easy to become overwhelmed.
At a glance, you might be surprised by the increase in the supply of homes for sale this year. But unfortunately, that luck is short-lived:
There’s still a lack of properties in the US real estate market.
And even though we’ve seen some major shifts in the US real estate market—and the trends associated with it—the situation was continuously leaning in favor of sellers.
As it turns out, current real estate market circumstances continue to favor the sellers. On the other hand, home buyers in the US are barely holding it together due to the constantly rising prices, shocking mortgage rates—and, of course, inflation.
Related: Should You Invest In a Seller’s Market or Buyer’s Market?
Moving on with this 2022 review, the seller’s market brings more good news for homeowners in the US who are planning on selling their property.
Potential sellers in 2022 were enjoying record levels of home appreciation.
And even with home prices coming down toward the end of the year, about 50% of mortgage holders could still be considered equity-rich.
In other words, their estimated loan balance was less than 50% of their property’s estimated real estate market value.
While we’re on the subject, here are some real estate markets that have shown considerable home appreciation growth:
Fear of Entering the Housing Bubble
We saw some good news throughout 2022. However, as you might be aware, it was not all “rainbows and sunshine” in the US real estate market.
In the year behind us, the word spread that the real estate market is in danger of a “housing bubble.”
The news that sparked this jump scare indicated that house prices were rising out of control. More importantly, mortgage rates were the one factor responsible for spreading the panic among investors—reaching a shocking 7.24% (30-year fixed mortgage) in November 2022.
The housing bubble seemed genuinely scary. If the bubble popped, homebuyers would’ve found themselves in the hustle of prices and mortgage rates that were way out of their budget.
There’s no denying it—the US real estate market was in for a bumpy ride in 2022. But luckily, it was far from the feared 2005 scenario—and we genuinely hope that things stay that way in the year ahead, too.
Read Also: How to Find Rental Rates by Zip Code
3 Real Estate Market Trends to Expect in 2023
So far, we’ve been able to do a quick recap on what the US real estate market looked like in 2022. And now, it is time to take one step further and look at some real estate market trends for 2023:
1. The Digitalization of House Hunting
The COVID-19 pandemic generally brought about negative consequences that could be felt and seen in the US housing market as a whole. But if we look a bit closer, the pandemic also pushed many technological advances, as well.
One of them is digitization.
In the real estate business, it meant a step forward in terms of house hunting. It is already becoming a common thing. Following the pandemic’s onset in 2020, a majority of buyers would purchase their property without even stepping foot in it.
Thanks to the said digitization trends, prospective investors are now able to view an investment real estate property without physically being on the spot.
Of course, it serves as a relief for investors interested in properties located across the country. However, we should add that it doesn’t quite compare to being able to see every corner of the property yourself.
The fact remains that in 2023, we’ll be sure to witness the growing popularity of virtual house tours—and we’re hoping that the 360° tours will speed up the buying process, too.
The online presentations are definitely something that the US real estate market is looking forward to. However, we believe that it won’t replace the hands-on approach and the process of inspecting the property yourself before saying the final “Yes.”
2. More People Moving to the Suburbs
Next, we could see migrations toward the suburbs—yet another important trend influenced by the COVID-19 pandemic and inflation. Let’s explain it in a bit more detail so that real estate investors can actually grasp the idea behind the transition.
Due to the all-encompassing effects of COVID-19 on the US, many people lost their jobs. Moreover, a large percentage of employees were required to work from home.
It took some time for companies to adjust to this new way of working. However, they realized that it was more profitable than bringing employees in, and the work-from-home environment was born.
The pandemic is not the only reason for migration, though. Inflation—which started as the Ukrainian-Russian war progressed—plays a vital role in it, as well.
It is becoming increasingly expensive and demanding to live in the city—and migration from the city to the suburbs is, in that sense, mostly driven by necessity and choice. People who can’t afford to live in major cities—New York, Los Angeles, and Washington, DC, for example—are forced to move to the suburbs; for the wealthy, it is a matter of choice.
3. A Growing Demand for Single Family Homes
Real estate trends are connected and built on each other. With that said, it shouldn’t surprise you that the third trend we expect in 2023 is the rise in demand for single family homes.
It is not just the year 2022 that initiated such a demand, though. Single family homes have been labeled as the best-performing real estate properties since 2019.
Besides, millennials are starting to grow their families; apartments no longer cut it—space or money-wise. They need more space for their children—and furnished single-family homes in the suburbs appear to be “just right” for their needs.
As we mentioned earlier, our platform’s primary goal is to keep real estate investors informed and help them make the right choices.
How to Succeed in Real Estate Investing in 2023
If you hope to step into the real estate market in 2023 confidently, brushing up on real estate market trends is 50% of the job.
The other 50% is your dedication and commitment.
Studying a graph or chart showing the latest real estate market trends will give you a good head start—but what you really need here are suggestions that you can rely on.
That’s why we’ve decided to throw in a few tried-and-true tips:
Diversification Is Key
The first tip that will help you succeed in the real estate market in 2023 is diversification. The reason for this is simple:
A diversified portfolio will help manage risks and potentially improve long-term returns.
What is implied by a diversified portfolio?
In essence, a “diversified portfolio” refers to investing in multiple asset classes. Investors are generally encouraged to switch up their usual investment route.
For instance, you may go from investing only in apartments to adding single family homes to your portfolio in order to “diversify” it.
Alternatively, it can also include shifting from stocks and bonds to real estate investments. Generally speaking, when stocks and bonds go down in value, real estate goes up, and vice versa—which is another great reason to diversify your portfolio.
Explore Different Markets
The next tip for real estate investors exploring the real estate market in 2023 is to explore as much as possible. With the US real estate market expanding significantly over time, investors are now presented with more opportunities for generating profit.
Change can be scary—and leaving your “comfort zone” is not something you’d do on a daily basis. However, we encourage investors—newbies and seasoned experts alike—to conduct an in-depth analysis of housing markets that show definite signs of potential.
The next tip for “upgrading” your current investment strategy and, hopefully, becoming even more successful in 2023 is carefully managing your risks.
Perhaps the year behind us made you feel like you’ve checked all the boxes for a successful succession year—but not all real estate investors will get the luck they anticipate. That’s why it is extremely important that they learn how to manage their risks and come out as winners in 2023.
Here are some simple ways to do it:
- Take the time to uncover less-known real estate markets and explore their current trends and history.
- Narrow down your next project based on functional attributes.
- Understand your financial capabilities.
We’ve successfully concluded the topic of three expected real estate market trends in 2023. We’ve mentioned quite a lot, so let’s just briefly go through the main points and wrap up this guide.
It is impossible to step into 2023 with confidence without stopping for a second to look back at what the market was like last year. We’ve seen interest rates rising, inflation, signs of a housing bubble, and a rocky seller’s market.
We’ve also seen surprising home appreciation rates—which, as you can imagine, wasn’t the most favorable scenario for buyers in 2022.
In 2023, however, real estate investors will be looking at slightly different market trends. The three most notable trends for 2023 are the high demand for single-family homes, migration to the suburbs, and the digitization of house hunting.
Regardless of the said trends, real estate investors must continue working on their strategies in 2023. And since the real estate business can be unpredictable at times, you’ll need to take certain measures to ensure success.
Real estate professionals should explore the US real estate market, diversify their portfolios, and, most importantly, manage risks.
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