2023 Real Estate Market Predictions
The past several years have brought big changes to the real estate market, and predicting the future feels particularly challenging. However, there are some trends on the horizon and a few safe bets about what 2023 will bring for the housing market. Whether you’re planning to buy, sell, or simply stay on top of trends, these are the opportunities to keep a watchful eye on.
Home sharing
For individuals who can work remotely full time, settling down in one place may not be as attractive as it once was. Home-sharing options are becoming more popular, with Pacaso—a company that helps folks purchase shares in second homes and vacation homes—leading the way. The idea of shared homeownership has been around for a while among digital nomads and renters, and it allows people to move from place to place without giving up the comforts of home or the advantages of homeownership.
Rent to own
Property technology (or Proptech) is adding a more modern twist to the concept of renting to own. For example, investment companies like Divvy are making some of their inventory available as rent-to-own properties and then helping renters purchase those homes by setting aside part of their rent payments as down payment funds.
With record-high home prices and affordability struggles in every major market, innovative solutions can help buyers put together a financial strategy that works for them. If you’re not quite ready to dive headfirst into homeownership but want to dip your toes in, renting to own could be a good option for you.
House-hacking growth
Investing in real estate can be exciting, but not everyone has the financial means to balance a portfolio of homes. House hacking is a popular shortcut to real estate investment designed for those who are willing to put a little more personal time and effort into achieving their investment goals.
There are several ways to house hack, from purchasing a home to rent to buying a duplex, triplex, or quad and living in one unit while renting out the others. Some house hackers buy a home with an accessory dwelling unit (ADU), such as a garage apartment or pool house, and rent out the extra space. Or you could opt to live in the smaller space—you could rent out the larger space and live in the smaller one; As the owner, the choice is yours. Essentially, house hacking involves using OPM (Other People’s Money) to pay down the mortgage and then using the equity to buy another house (or houses) after that. You can continue to do this year after year until you’ve built up the portfolio you want to manage long term.
Downsizing
Although home price growth is expected to slow slightly in 2023, average home prices will still be high. Some older homeowners may be unable to resist the lure of selling their big family home at a premium and then buying a smaller home or a condo that’s easier to maintain. Downsizing could be especially tempting for people in preretirement whose careers were disrupted by the pandemic or for those who find themselves with insufficient income in retirement.
Multigenerational living
Multigenerational living has become increasingly popular over the last decade. Some extended families have decided to blend their households, helping them deal with the challenge of affordability and allowing older family members to retire in place.
You might need to make alterations to your home’s interior to improve accessibility by adding additional space on the main level, splitting up an open-concept home into discrete spaces, or adding a dedicated exterior entrance. Discuss the pros and cons of this setup together to ensure the changes you make are agreeable for everyone.
Fixer-uppers and additions
During the buyers’ market of the late 2000s and early 2010s, buyers came to expect that they would be able to demand turnkey homes in their neighborhoods of choice. They expected to get everything on their wish lists, including laundry lists of repairs following the home inspections. In most cases, those days are over, so buyers may now need to put in some work to maximize their options and create their dream homes in a low-inventory market.
If you’re thinking about buying a fixer-upper, talk to your trusted real estate professional to find a reliable contractor or reach out for a highly rated and well-reviewed gig worker on platforms like TaskRabbit. Whether you’re planning for your next move or are curious about the real estate year ahead, a real estate agent can help guide you through any market changes 2023 may bring.