The real estate market is constantly evolving, and 2023 is shaping up to be an exciting year for buyers and sellers alike. The real estate market in 2023 looks to be driven by a combination of demographic shifts, tech innovations, and economic conditions. Keep reading to learn the 8 top real estate trends to watch in 2023!
Table of contents
- Millennials as homebuyers
- Covid and the rise of homeownership
- Home prices continue to rise
- Falling mortgage rates
- Second tier cities are in!
- The rise of technology in real estate
- Luxury home listings are soaring
- Amenities, amenities, amenities!
- Conclusion
Millennials are buying homes
Millennials are now the largest group of homebuyers in the market. According to the National Association of Realtors, 43% of all buyers are part of this generation. This is a significant shift from a few years ago, when older generations such as baby boomers were the dominant group of homebuyers.
Coming of age in a better economy
There are several reasons for this trend. One reason is that millennials are reaching an age where they are ready to settle down and start families. This often leads to the desire to buy a home. Another reason is that the economy has improved significantly in recent years. This has led to an increase in employment opportunities and wages for millennials. This has made it easier for them to save up for a down payment and qualify for a mortgage.
In addition, the high cost of renting in many markets has also pushed millennials towards homeownership. With rental prices continuing to rise, many millennials have decided that it makes more financial sense to buy a home… even if it means taking on a mortgage.
Mortgage lenders
Another factor that has contributed to the increase in millennial homebuyers is the rise of online mortgage lenders, which have made it easier for millennials to shop for and compare mortgage rates and terms. These online lenders have also made the mortgage application process more convenient and streamlined. This has made it easier for millennials to get approved for a mortgage.
The trend of millennials being major homebuyers is expected to continue in the coming years, as this generation continues to reach key life milestones and the economy remains strong. This trend is also likely to have a significant impact on the housing market. The preferences and needs of millennials will shape the types of homes that are in demand.
Covid and the rise of homeownership
The COVID-19 pandemic has had a profound impact on many aspects of our lives, including the housing market. One trend that has emerged as a result of the pandemic is a rise in homeownership. There are several reasons why homeownership has increased during the pandemic.
Working from home
One reason is that with so many people working from home, there has been a greater demand for homes with more space, such as single-family homes or homes with a home office. Many people have realized that they do not need to live in a densely populated city in order to work, and have therefore decided to move to more suburban or rural areas where housing is often more affordable.
Low interest rates
Another reason for the increase in homeownership is that low interest rates have made it more affordable for people to buy a home. The Federal Reserve has lowered interest rates in response to the economic downturn caused by the pandemic, which has made it cheaper for people to borrow money to buy a home.
Fewer homes on the market
Additionally, the pandemic has led to a decrease in the number of homes for sale, as some people have decided to delay selling their homes due to the uncertainty caused by the pandemic. This decrease in the supply of homes has contributed to an increase in home prices, making it more attractive for homeowners to stay put and less attractive for potential buyers to enter the market.
The COVID-19 pandemic has significantly impacted the housing market, leading to a rise in homeownership. While the pandemic has presented many challenges, it has also presented opportunities for those who have been able to take advantage of low-interest rates and the shift to remote work. It remains to be seen how these trends will continue to evolve in the coming months and years.
Home prices continue to rise
The steep rise in home prices over the past several years has been a hot topic of discussion and a source of concern for many people. The increase in home prices has been driven by a variety of factors. These include low mortgage rates, limited inventory, and strong demand from buyers.
Low mortgage rates
One of the main drivers of the steep rise in home prices is the historically low mortgage rates that have been available in recent years. With interest rates at all-time lows, more people have been able to afford to buy homes. This has led to increased competition for properties and higher prices.
Limited home inventory
Another factor that has contributed to the steep rise in home prices is the limited inventory of homes for sale. In many areas, there are simply not enough homes on the market to meet the demand from buyers. This has led to bidding wars and higher prices for the available properties.
Strong demand from buyers
Strong demand from buyers has also played a role in the steep rise in home prices. In recent years, there has been a significant influx of people moving to urban areas and seeking to buy homes. This has put additional pressure on the housing market and has contributed to the increase in home prices.
The steep rise in home prices has had a number of consequences, both positive and negative. On the positive side, homeowners who have seen their home values increase have seen their net worth increase as well. This has been especially beneficial for people who bought their homes many years ago and have seen the value of their homes increase significantly over time. However, the steep rise in home prices has also had negative consequences for many people. For those who are looking to buy a home, the high prices can make it difficult or even impossible to enter the housing market. This has led to concerns about affordability and the potential for a housing bubble.
Overall, the steep rise in home prices has been a complex issue with both positive and negative consequences. While it has benefited some homeowners, it has also created challenges for those looking to buy a home.
Falling mortgage rates
Mortgage rates have been at near-historic lows since the pandemic began. This has made it more affordable for many people to buy a home, as lower mortgage rates typically translate to lower monthly mortgage payments. The low rates have also encouraged some homeowners to refinance their mortgages to take advantage of the lower rates.
Low mortgage rates = surge in homebuying
The low mortgage rates have contributed to a surge in home buying activity, as many people have taken advantage of the opportunity to buy a home at a more affordable price. This has led to increased competition for homes, which has driven up prices in some areas.
It’s worth noting that mortgage rates are not guaranteed to stay low indefinitely. They are influenced by a variety of factors, including the overall state of the economy and the Federal Reserve’s monetary policy. If these factors change, mortgage rates could potentially increase in the future.
Low mortgage rates have had a positive impact on the housing market, making it more affordable for many people to buy a home.
Second tier cities are in!
In recent years, there has been a shift in homebuying towards second tier cities. Second tier cities are smaller urban areas that are not as well known or developed as first tier cities, such as New York, London, and Sydney.
First tier cities are too expensive
One of the main reasons for this shift is the high cost of living in first tier cities. Home prices in these areas have been on the rise for decades, making it difficult for many people to afford to buy a home. In contrast, second tier cities often have a lower cost of living, which makes it easier for people to afford to buy a home, setting the trend for buying in smaller cities.
The shift to remote work
Another reason for the shift to second tier cities is the increasing availability of remote work. The COVID-19 pandemic has led to a widespread shift to remote work, which has made it possible for people to live and work in any location with an internet connection. This has made it possible for people to live in smaller, more affordable cities while still being able to work for companies located in larger, more expensive cities.
The trend of living in second tier cities has also been fueled by the desire for a more affordable and liveable lifestyle. Many people are drawn to these cities because they offer a lower cost of living, as well as a more laid-back and community-oriented way of life. In contrast, first tier cities can be stressful and fast-paced, with high levels of traffic and crowds.
Development and construction
The shift to second tier cities has also been driven by the availability of new development and construction. Many second tier cities are undergoing rapid growth and development, which has made it possible for people to buy new homes at a lower cost. In addition, these cities often have a more diverse range of housing options, including single-family homes, apartments, and townhomes.
The move to second tier cities is being driven by a combination of factors, including the high cost of living in first tier cities, the increasing availability of remote work, the desire for a more affordable and livable lifestyle, and the availability of new development and construction. As a result, more and more people are choosing to buy homes in second tier cities, rather than in larger, more expensive cities.
The rise of technology in real estate
The use of technology in the real estate sector (proptech) has been on the rise in recent years, and it shows no signs of slowing down. There are a number of ways in which technology is being used to make the process of buying and selling real estate more efficient and convenient for all parties involved.
Online platforms
One way that technology is being used in the real estate sector is through the use of online platforms for buying and selling properties. These platforms allow buyers and sellers to connect with each other and facilitate the transaction process entirely online, without the need for in-person meetings or visits to properties. This can be especially useful for buyers who are located far from the properties they are interested in, as they can still get a good sense of what the property looks like and what it has to offer through virtual tours and other online resources.
VR and AR
Another way that technology is being used in the real estate sector is through the use of virtual reality (VR) and augmented reality (AR). These technologies allow buyers to virtually “walk through” a property and get a feel for its layout and features, even if they are unable to visit the property in person. This is especially useful for buyers who are trying to make a decision about a property that is located in a different city or country. These trends are growing at a rapid pace and show no signs of slowing down.
Real estate apps and CRM
In addition to these technologies, there are also a number of tools and apps that are being developed to help real estate professionals manage their businesses more efficiently. For example, there are apps that can help real estate agents keep track of listings. Some apps can help to schedule showings, and communicate with clients. There are also tools that can help real estate professionals analyze market trends and predict future changes in the market. CRM systems are constantly evolving and revolutionizing how agents operate and manage their businesses.
The rising use of technology in the real estate sector is making it easier and more convenient for buyers and sellers to connect with each other and facilitate transactions. It is also helping real estate professionals to streamline their businesses and make more informed decisions about the properties they are selling or purchasing.
Luxury home listings are soaring!
There has been a significant increase in the number of luxury homes being listed on the market in recent years. Luxury homes are generally defined as those that are priced in the top 10% of the market. They tend to be larger and more opulent than the average home.
The overall strength of the housing market
There are several factors that have contributed to the increase in luxury home listings. One is the overall strength of the housing market. In many areas, home prices have been steadily rising. This has made it possible for homeowners to sell their luxury properties for top dollar. Additionally, low interest rates have made it easier for buyers to afford high-end homes, further driving demand.
The top 1%
Another factor contributing to the increase in luxury home listings is the growing wealth of the top 1% of earners. As more people become wealthy, there is a greater demand for high-end properties, which in turn leads to more listings.
The desire to upgrade
Another factor is the trend of people wanting to upgrade their homes. As people’s wealth increases, they often look to upgrade their living situations, and this can include purchasing a luxury home. This desire to upgrade has contributed to the increase in luxury home listings.
In addition to these factors, there has also been an increase in the number of luxury home developments being built. Developers have recognized the demand for these types of homes and are constructing them in order to meet this demand. This has also contributed to the increase in luxury home listings.
The increase in luxury home listings can be attributed to a combination of factors, including a strong housing market, low interest rates, a growing number of wealthy individuals, and the growing trend in real estate to upgrade homes. As long as these factors remain in place, it is likely that the number of luxury homes listed on the market will continue to rise.
Amenities, amenities, amenities!
Developers and builders are constantly looking for ways to make their properties more attractive to potential homebuyers. One way that they have been doing this is by increasing the amenities that are offered with the homes.
Amenities can be defined as any additional feature or service that adds value to a property. These can range from small, simple things like an updated kitchen or a finished basement, to more elaborate features like swimming pools, outdoor kitchens, and even sports courts. They give potential buyers the opportunity to envision themselves living in a home that has everything they need and want. This is especially true for those who are looking to upgrade to a more luxurious lifestyle. The inclusion of amenities can be a major selling point for a property and is a growing trend in real estate.
Amenities and lifestyle
One trend in real estate that has been popular in recent years is the inclusion of amenities that cater to an active lifestyle. This can include things like fitness centers, walking trails, and bike paths. These types of amenities provide a convenient way for residents to stay active. They also add value to the property.
Amenities and remote work
Another real estate trend that has been gaining popularity is the inclusion of amenities that cater to those who work from home. This can include things like dedicated home offices, high-speed internet, and even co-working spaces. With more and more people working from home due to the COVID-19 pandemic, the demand for these types of amenities has increased significantly.
Smart home features
Smart home features are becoming increasingly popular among homebuyers. These features can include things like smart thermostats, smart locks, smart appliances, and smart lighting systems. They allow homeowners to control various aspects of their home remotely, often through the use of a smartphone app.
One of the biggest draws of smart home features is the convenience they offer. With the ability to control and monitor their home from anywhere, homeowners can feel more secure and in control of their living environment. This is especially appealing to homeowners who frequently travel or who have irregular schedules.
In addition to these more common amenities, some developers are also offering more unique features to set their properties apart from the competition. This can include things like rooftop decks, pet spas, and even concierge services. These types of amenities can add a level of exclusivity and luxury to a property, making it more appealing to potential buyers.
The increase in amenities has been a major trend in recent years, and it shows no signs of slowing down. Developers and builders are constantly looking for new and innovative ways to make their properties more attractive to potential buyers, and the inclusion of amenities is one way that they are doing this.
Conclusion
The impact of the pandemic on the market has also caused an increase in home prices. Low mortgage rates and remote work have led to a surge in demand for housing in second tier cities. Increasing prices and limited availability in major metropolitan areas drive the search for more affordable options.
Additionally, the pandemic has accelerated the trend towards digitalization in the real estate industry. More buyers are turning to online resources for their home search and virtual tours are becoming the norm.
One key trend to watch is the increasing influence of millennial buyers. As this generation enters its prime homebuying years, they are bringing new priorities and preferences to the market.
Luxury houses are also expected to be in high demand, as low mortgage rates make it easier for buyers to afford high-end properties. And finally, the increase in amenities in the housing market has been a major trend in recent years.
