Real Estate Trends for 2023
Real Estate Trends and the Emerging Trends
No one can predict the future with certainty, but when it comes to the real estate market and real estate market trends, the Emerging Trends report does about as well as anybody can. Researchers at Pricewatercoopers and the Urban Land Institute conducted face-to-face interviews with 750 industry professionals and surveyed another, 1450 to generate their findings. So let’s look at what they have to say about the housing market trends we can expect in 2023.
The Top Ten Real Estate Markets Will Stay the Same
According to the report, the action will be in large- to mid-sized metros in the East and West Coast and the Sun Belt. That is to say, cities with swelling populations and growth driven by the tech fields. The top ten are Austin, Raleigh/Durham, Nashville, Charlotte, Boston, Dallas/Ft. Worth, Orlando, Atlanta, Los Angeles, and Seattle. There are some smaller metros among the next ten on the list. These are Charleston, Portland, Indianapolis, Orange County, and Northern Virginia.
Affordability Is Declining
Both rents and housing prices keep going up, and the income of the average household has not kept pace. This holds true even in real estate markets that once boasted of inexpensive housing. Currently, there’s not a county in all the US where a worker putting in a 40-hour week at minimum wage can afford a two-bedroom apartment. Over the short term, this is likely to get worse. The regulations and investments needed to address the problem aren’t materializing, although some candidates for political office are at least talking about it.
Community-Oriented Development Is Doing Well
Young people who believe in sustainability and value social interaction continue to prize urban green markets, food halls, and foodie-centric urban spaces. They like products, services, and experiences packaged together for “collaborative consumption.” This has important implications for an economy in which traditional retail is in decline.
Hipsters Invade the Suburbs
As real estate prices in urban areas climb, and more millennials become parents, many of those millennials are relocating to the suburbs. That’s produced something of a transformation. The suburbs are becoming more walkable, more diverse, and home to new apartments, restaurants, and other businesses.
Senior Housing Is Booming
The baby boomers have started to enter their retirement years. In the next 20 years, the number of Americans over 80 will jump from 6 to 12 million. In 2035, one out of three US households will be headed by a person age 65 or older. This means an ongoing heavy demand for senior housing, including upscale urban apartments. These are conducive to the active lifestyle many retired boomers prefer.
Investing to Do Well and Good
Many younger investors hope to put their money in ventures that serve the common good by promoting positive changes either environmentally, governmentally, or socially. This likely means that such investment vehicles will gain in popularity. Possibilities include projects focused on sustainable water management, energy efficiency, and the development of eco-friendly technology.
New technology is gradually changing the real estate market. There are new ways to find and analyze data and new digitized ways to buy homes and other property. Buyers increasingly desire smart homes with digital assistants and security cams. The multifamily sector is seeing new approaches to management and operations and new amenities for residents such as package delivery and digital concierges.
Infrastructure at the State and Local Level
Despite its promises, the Federal government hasn’t really moved to repair and replace failing infrastructure. Cities like Seattle and Denver, however, have. They’ve levied taxes to pay for building or improving transit systems. Over time, areas that invest in sustaining and improving their infrastructure may well present more attractive investment alternatives than those that don’t.
A Slow Down, Not a Recession
Many people have worried a recession was on its way and that it would affect the real estate market. There were certainly warning signs, including a softening of housing starts, fewer residential permits, and slow car sales. There has indeed been a slowdown. This, however, has fallen well short of the decline one would expect in a recession. Generally speaking, confidence remains high that while home sales may plateau, they won’t plummet.
That widespread worry about recession has persuaded many people to seek extremely safe investments. That’s led to demand exceeding supply, and investors, particularly institutional investors, sitting on money. That makes for liquidity in the market but may ultimately give rise to the temptation to invest in something, somewhere just to get that money into the place. Such bad bets would produce further uncertainty.
Real Estate Trends: The Bottom Line
The current state of the real estate market is not favorable for investors or property owners. With the market in decline, property values are likely to decrease, making it difficult to sell properties at a profit or generate income from rental properties. So, it is important for individuals involved in the real estate market to closely monitor market trends and adjust their strategies accordingly in order to minimize their financial risks.