2023 brings a new year and a fresh start, but while we come off the coattails of 2022, the market trends of the recent past will continue to affect the future of real estate. To better understand these effects and what it means for our market’s future, let’s look at a few real estate market trends to be aware of in 2023.
Mortgage Rates Will Slowly Stabilize
For the first half of 2023, mortgage rates will continue to rise and won’t cap off until the middle of the year. However, it is possible for these rates to drop during the summer, but this almost entirely depends on what happens with inflation. Current inflation seems to be on the very cusp of easing up, and the sooner we see an end to this, the sooner mortgage rates can begin to stabilize. But with this continued increase, it is highly possible there will be a flood in demand in the rental market, but it is still too early to tell what this means for supply.
Renters May Rent for Longer
One of the most important real estate market trends to be aware of in 2023, at least for landlords and property managers, is the increase in lease renewals. With the uncertain time frame regarding mortgage decline, current renters will likely continue to rent for longer, but this doesn’t necessarily mean they’ll be staying in one place. There has been a steady and increasing rate of renters moving to the Sun Belt, where rental rates are much cheaper. During the first half of 2023, it may be wise for landlords and property managers to start buying property in places such as Florida, Georgia, Tennessee, and Texas.
Cities Will Slow
Because of the Sun Belt’s current popularity, combined with the after-effects of the COVID-19 pandemic, more and more homeowners and renters are moving out of the city and farther into the suburbs. Even large cities within the Sun Belt may see a small exodus, but not as much as northern cities. In truth, it seems to be that regardless of location, there is a trickling trend of long-term city dwellers moving to greener pastures.
Starter Homes Are Still in a Shortage
With all the above factors combined, it’s easy to see why starter homes will continue to be in short supply. And with Millennials and Gen Z beginning to enter the homeownership phase, the housing market will continue to slow, and first-time buyers are becoming more competitive. Home builders will start to cut back on building new homes, but as the selling and pricing of existing homes continue to fall, it may be a matter of time before buyers begin gobbling up existing properties.
If you’re unsure how to navigate the field or need help finding the right time to buy, Excalibur Homes is here to help clarify and answer any of your burning questions. We are a team of real estate managers specializing in leasing and property management services. And with our knowledge and experience, we know that any one of our qualified employees can help you navigate current marketing trends and point you in the right direction.