The real estate industry hasn’t enjoyed its best days since the COVID-19 pandemic and the current market upheavals show that the pace is slowing. In 2021 and the first quarter of this year, real estate was moving at a massive speed. Homes were selling in hours and for cash. But 2023 might be a little different. We expect the rate of the market to slow down as seen currently.
A home will remain on the market for longer and there will be a lot more negotiations over the price. However, the average home prices will continue to stay high and the rising interest rates will make buyers wary. Let’s take a look at the real estate trends for 2023 in detail.
Remote work will continue to play a role
Remote work will continue across industries in 2023 and it will have an impact on the real estate industry. In the case of the commercial industry, companies might give up the empty office spaces or plan to downsize and leave the large spaces of buildings empty for repurposing. However, on the residential side, remote work means employees will be free to change their geographic location and might look for larger homes that have dedicated office spaces. This will lead to a rise in the demand for homes. They might also prioritize environmentally friendly homes to reduce internet and electric bills.
Impact of climate change
Climate-based events and extreme weather can be a common occurrence and it might not be obvious how it will affect real estate but in reality, there is no bigger influence than the climate. Due to events like fires, flooding, tornadoes, or hurricanes, more and more homebuyers are avoiding areas that put them at risk of encountering one of the disasters. People want to avoid living in high-risk areas and also cut down on high-risk insurance and energy costs. Throughout 2023 and beyond, we will see a rise in out-of-state homebuyers who are looking for an even-keel space to reside in.
More demand for luxury homes
There is an inventory of high-end homes in the market and it is expected to continue to grow. The professionals at www.ButlerRealEstate.com, experts in luxury homes near Woodinville Washington, and other neighborhoods believe that there will be a higher availability of luxury homes this year as a result of the incentives that sellers get from the high prices. Luxury homes saw a 60% rise in the three months ending November 2020 and there was also a rise in new listings in the same period. The luxury housing market will see a bump in prices this year. There is always the law of demand and supply ruling the market and with a high inventory of luxury homes, the prices will see a drop. This makes it a good time to invest if you have been waiting for the right luxury property to own.
Markets to watch out for
There are a few markets that will remain hot in 2023 and if you are planning to invest in a property, you need to keep an eye on them. These include Nashville, Atlanta, Dallas-Fort Worth, Tampa, Miami, Austin, Boston, Raleigh, Charlotte, and Phoenix. The main characteristic of these popular cities is their location. They lie in the Sun Belt and offer more mid-sized and affordable living. This trend will continue throughout 2023.
Mortgage rates will rise
The mortgage rates are rising and it is no secret that they will continue to rise in 2023. This means there could be even higher mortgage rates. Right now, the mortgage rate is around 7% but we could see something as high as 9% if the FED keeps raising the rates. However, it should not stop you from looking for a property or making a purchase because the value of your property is only going to rise in the future.
Impact of technology on the market
The real estate sector has started adopting technology and it is expected to continue to do so in the coming years. There are applications that make it easier to find the right homes and we have seen a surge in the number of startups that service the sector and pay attention to making the transaction faster. Artificial intelligence is expected to play a strong role in the market with design, organization, and management as the main areas of application. Even office space construction has benefitted from the use of AI. Consumers are going digital as well and most prefer to look online for properties for sale before they visit the location.
The influx of commercial activity and residential activity in these areas could also disrupt the market patterns that these cities are used to. 2023 will continue to remain a challenging year for the entire real estate industry but with an eye on emerging trends, it is possible to weather the storm and come out of it as a winner.
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