5 Real Estate Trends in 2023 and Why You Need to Keep Up!
If there’s one thing certain about the real estate market, it’s that it’s uncertain at its very best. History tells us that it has and will be on a constant stream of evolvement and adoption of new trends, technologies, and market dynamics. Then how can the year 2023 be any immune to these changes?
But how do you talk about the future without knocking on the doors of the past? So let’s rewind for a moment.
When the COVID-19 pandemic hit the world, every industry was shaken and suffering. Naturally, it negatively impacted the global growth of the real estate market too. Fortunately, the numbers began to rebound in the later months of 2021 and 2022. They returned almost close to pre-pandemic levels. Now in 2023, the real estate market seems to be strong. In fact, it is expected to see substantial growth with a compound annual growth rate (CAGR) of 5.2% from 2022 to 2030.
But watch out real estate professionals, as the market is not forecasted to be all rosy. There will be hiccups and challenges, but as a broker or an agent, or a buyer or seller, you must stay ahead of the curve and stay informed of the latest real estate trends and developments.
In this blog, let’s take a closer look at the top 5 real estate trends that will make an impact in 2023. Here’s what you will learn in this blog –
- High Mortgage Interest Rate and Its Impact on Buyers
- High Mortgage Interest Rate and Its Impact on Sellers
- Third-Party Buyers
- Virtual Assistant Real Estate Agents
- Online Closings
A Guidebook to 2023 Real Estate Trends & Its Impact on You
1. Top Trend #1: Inventory Increase is at a Slow Climb
Real estate inventory: you must know about this term as a real estate professional, but real estate buyers and sellers might not be aware of it. It is the number of unsold units of property in the real estate market.
The real estate market has been struggling with low inventory levels. It means there is an increase in demand for houses but no supply, as there aren’t many houses to sell. Matters only became worse with the pandemic. As a result, the real estate industry has been facing a shortage of homes for sale compared to buyer demand.
Fortunately, this low real estate inventory trend appears to be changing in 2023. As per reports, it has been on the rise since May 2022. There was even a significant increase in November 2022 by a whopping 46% compared to the same time in 2021.
However, the number of active home listings in November 2022 was still 38% lower than the pre-2020 levels.
Low Inventory Levels & Its Impact on Buyers
Buyers – in a market with lower-than-normal inventory, you need to be ready to act quickly when it comes to house hunting.
Well, homes were typically on the real estate market for 56 days in November 2022. It’s 18 days less than pre-2020 levels. In such a situation, it’s crucial to have an expert real estate agent by your side so your chances of finding your dream home go up.
Moreover, consider sacrificing some wants for your must-have home. You can start by expanding your search to less popular neighborhoods and getting preapproved for a mortgage as soon as possible. Doing so will ensure you don’t miss out on your dream home in a highly competitive market.
Low Inventory Levels & Its Impact on Sellers
Coming to sellers, selling a home in a market with low inventory can be advantageous for you. It’s because it means less competition for you. The icing on the cake is if your home is in a desirable location or has sought-after features, you can expect to receive multiple offers.
The obvious downside to it is if your selling house is not appealing, you may receive fewer offers. However, there are ways to deal with it with the help of a real estate agent.
If you’re a real estate professional and are experiencing difficulty finding lead generation in the current market dynamics of low inventory levels, try ZipperAgent’s lead generation software for real estate.
2. Top Trend #2: Average Home Prices Continue to Climb
As per June 2022 Monthly Housing Market Trends Report, the national median home price for active listings increased by 11% to $416,000 in November 2022 compared to November 2021. This statistic reflects the yearly home price growth trend.
However, this growth rate has slowed down compared to the average of 16% seen in June and July. It suggests there will be a slower growth year in 2023.
But since there is strong buyer demand and a shortage of homes for sale, home prices are unlikely to decrease significantly. Real estate experts believe they may fluctuate slightly every month.
Nevertheless, you can leverage real estate marketing software to market your listings and expand your business.
High Housing Prices and Their Impact on Buyers
First thing first, if you’re planning to buy a home in today’s high-priced market, it’s vital you decide your budget and stick to it. It’s easy and even intriguing to give in to the peer pressure to buy just to keep up with competitors. However, you will make your dreamy home a financial burden on your and your family’s lives.
High Housing Prices and Their Impact on Sellers
Real estate sellers, you may rejoin and relax! High housing prices only mean one thing for you – a good profit on your sale. Don’t be in a hurry to make the sale. Take your time, assess all the buyers and consider all the bids, and negotiate to the best of your ability. Buyers will try to get a low offer from you. But working with a real estate professional can save you from all the misery of dealing with the nitty-gritty of a highly-profitable sale.
3. Top Trend #3: A Spike in Mortgage Interest Rate
The average mortgage interest rate is an influential factor in the real estate market. When the economy grows, the interest rate grows along with it. However, mortgage loan costs will also increase with it.
The average mortgage interest rate was at a low point in 2021. But the dynamics changed in 2022. The Federal Reserve increased interest rates and the average rate for a 15-year fixed-rate mortgage, and it rose to 6.36% in October 2022. It is the highest it has been in over 15 years. It also impacted the average rate for a 30-year fixed-rate mortgage, which got to 7.08%.
High Mortgage Interest Rate and Its Impact on Buyers
If you’re a buyer, the high-interest rates are bound to affect your financial power of purchasing a house. Therefore, decide between buying a home with a real estate counselor. You shouldn’t buy a house you can’t afford, or it will be a financial burden later on. But you should also be open to exploring all your financing options.
High Mortgage Interest Rate and Its Impact on Sellers
If buyers are going to be mindful about whether to make a house investment or not, it’s going to impact the sellers directly. So if you have put a house on sale, it might take longer to go off the market than you expected.
4. Top Trend #4: Dramatic Increase of Online Real Estate Services
Real estate has been an offline empire for the longest time. Even when almost every industry was getting cordial with the Internet and the technology it brought, real estate took its own sweet time.
In 2021, 97% of buyers used the internet to explore their options. But in 2023, online real estate services are expected to boom with services like –
● Third-Party Buyers
Selling a house directly to a buyer is a hassle. You have to ensure your house is in perfect condition and impress buyers. It also comes along with the task of house inspections, repairs, and home showings.
Thus comes the new iBuying trend. All you have to do is sell your house to a third-party buyer. They will look after the home processing stuff and resell the home at a higher price.
How Does it Impacts Buyers?
Third-party companies add their profit share and service charges to the selling price. So the acquisition price of a home for the buyers will be higher than if they’ve bought it from sellers directly.
How Does It Impacts Sellers?
As a seller, you’ll experience stress-free house sales but be prepared for the less share in profits.
● Virtual Assistant Real Estate Agents
A real estate transaction includes several processes, including manual processes and dealing with paperwork. A virtual real estate agent can take care of it all so that you get to focus on your primary goal: a profitable deal.
● Online Closings
The documentation process is probably the most dreadful part of a real estate transaction. But now, you can handle all your documents virtually. The tools available will also provide you with features like electronic signature and remote online notarization to streamline the process.
If we talk about how this overall trend of increase in online real estate services will affect buyers and sellers, our advice is to not jump on every ship. Make decisions according to your budget and priorities to get the best deal.
If you’re a real estate agent, there are a few online real estate tools that can help you with real estate transaction management, like ZipperAgent.
5. Top Trend #5: A Rise in Extreme and Risky Buying Alternatives
2023 is witnessing a spike in risky real estate buying options like –
A rent-to-own agreement is when you don’t have the finances to buy a property outright, you agree to rent it for a while before becoming the owner. The time duration depends on the seller’s company and can last anywhere from a few months to years.
● Down Payment Loans
A lot of buyers take a personal loan to afford a home. But lately, some buyers are falling into the risky real estate trend of taking out a personal loan to fund a down payment. So you’re purchasing a house with no down payment by borrowing the entire cost from two different lenders at two different interest rates.
Both of these trends are risky. The bottom line is if you can’t afford a house, don’t buy it through other trendy options that can cost you a financial burden.
In conclusion, the year 2023 is a bumpy ride for real estate. While home values are rising, the overall growth is expected to be slow in comparison to the past years. Nonetheless, investing in real estate is always valuable. So if you’re comprehending your next step, take the help of a real estate professional.
We hope this blog provided you with the needed insights for the real estate market in 2023. Stay tuned to ZipperAgent for a detailed analysis of all these real estate 2023 trends.