We’ve turned the page on another year and 2022 has left many real estate investors wondering what 2023 will hold. One thing is for sure, after two years of enjoying a booming seller’s market in the United States, the tables seem to be turning—depending on where you’re located.
With mortgage rates steadily climbing, home and property sales—and in many places, prices—are pumping the brakes, leaving current homeowners, potential buyers, and sellers with a looming feeling of uncertainty about the 2023 real estate market.
If you’re a real estate investor who’s wondering where and what the most lucrative markets will be in the U.S. this year, you’re in the right place. Below we discuss everything you need to know about real estate investing in 2023.
Buyer’s Market vs. Seller’s Market
A buyer’s market is defined by stagnant home sales, falling property prices, and ample availability. Vice versa, a seller’s market is defined by accelerated home sales, property shortages, and increased prices.
Real estate is very much a local business. Sure, you can make some inferences about the state of the entire market, but when it comes to determining if it’s a sellers, buyers, or balanced market, that depends predominantly on the supply and demand of a particular area.
Whether you’re new to the real estate game or not, make sure you’re doing your due diligence by thoroughly examining the local market trends of the location where you’re wanting to invest.
2023 Real Estate Market Predictions
Depending on who you ask, predictions are mixed this year. Many real estate experts anticipate reduced property prices, declines in buyer demand, and even higher mortgage rates. This means that many people who were looking to buy a home may be putting their search on pause—and for a good reason. With current borrowing rates lingering at around 7%, buyers can’t justify the cost of interest.
Others predict that the housing market will continue to outpace pre-pandemic activities. Contingent on where you live in the U.S., some homeowners will likely continue to see rising property valuations.
Five Housing Markets Where Prices Will Increase in 2023
While some home and property owners won’t see much of a jump in the market value of their homes this year, according to Moody’s predictions, others will.
Casper, Wyoming, Augusta, Georgia, Hartford, Connecticut, Albany, Georgia, and New Bern, North Carolina are all expected to see increases between 3.3% and 4.1% in home prices this year. If you own property in any of these places, it looks like you’re in luck!
Five Housing Markets Where Prices Will Decrease in 2023
On the other hand, Moody’s has also predicted that there will be some areas of the U.S. that see stagnant or decreased home values this year.
Spokane, Washington, Reno, Nevada, Honolulu, Hawaii, The Villages, Florida, and Punta Gorda, Florida are expected to see decreases between 5.5% and 6.9%. This is good news for real estate investors or property developers—homeowners on the other hand, maybe not so much.
2023 Real Estate Investing Trends
If real estate investors are doing their homework, they’ll have lots of opportunities to make money in 2023. If you’re an aspiring entrepreneur who’s ready to roll their sleeves up, here are five of the hottest trends for real estate investing this year.
1: A Rebound in the Short-Term Rental Business
With COVID-19 delivering excruciating blows to the vacation rental business, it’s been making a tremendous comeback. Short-term rentals will start to once again be more profitable than long-term ones.
The main indicator for this trend is the increased rates of U.S. travel in 2022. As more consumers return to life as it was and plan vacations, the demand for Vrbo and Airbnb-like properties will rise. This gives rental property investors the ability to charge higher daily prices and boost their ROI.
If you’re interested in investing in rental properties, you should single out areas with robust demand for short-term rentals. According to Mashvisor, cities with higher-than-average Airbnb bookings in 2022 were: San Francisco, California, Portland, Oregon, Seattle, Washington, and Tucson, Arizona.
2: Increased Demand in Smaller, Rural Markets
Also known as secondary and tertiary markets, rentals in smaller, rural communities can expect a continued increase. The shift to remote work and working from home has reshaped real estate in many ways, giving buyers more options for where they want to live while remaining in their same job. Because many families like the peace and comfort of living away or on the outskirts of larger, primary market cities, smaller cities will ultimately see an up-turn in demand.
If you’re debating investing in longer-term rentals, looking at smaller, secondary, and tertiary markets will offer higher demands and more lucrative returns. Most importantly, these locations typically also come with smaller price tags, making it possible for even the greenest of real estate investors.
3: More Investments in Fractional Rental Properties
Fractional real estate investing is a trend that has been on the uptick in recent years. Platforms like Fundrise, Happy Nest, Arrived Homes, Lofty.ai, Crowdstreet, and HoneyBricks have made it possible for real estate entrepreneurs to get a piece of residential, industrial, and commercial properties by allowing them to invest together.
If you’re thinking about this particular real estate investment strategy, the most enticing benefits are its affordability and the generation of a stable, passive income. As technology continues to evolve, this market will only grow more in future years.
4: More Consumer Interest in Long-Term Rental Properties
As the U.S. has begun its decent back to normalcy, there has been more interest in long and short-term rental property investments. As traveling educators, doctors, and nurses find themselves in need of a temporary place to live, there has been a substantial demand for furnished rental homes and apartments.
If you’re investigating this avenue of real estate investing, you’ll note that it allows for higher returns and more stability in terms of bookings and occupancy than traditional vacation rental properties.
5: Advancements in Technology
Last but not least, in 2023 technology will have a monumental impact on rental property investments. Between finding worthwhile short and long-term investments, to buying them, renting them out, and managing them, there is nothing technology can’t do. And, to the excitement of investors, it will only continue to get better.
Ready To Start Your Real Estate Investing Career?
I think it’s pretty evident that even with the obvious insecurities people have in the current U.S. market, real estate in 2023 will prove fruitful for investors who do their research, and make financial decisions based on reliable data and market trends.
If you’re ready to break into the real estate industry and dip your toe in the pond of entrepreneurship and investing, Annetta Powell has tools and resources that can help you be successful. You’re only a click away from beginning the career of your dreams.
Don’t forget to secure your spot for my FREE online training, ‘Teach Me The Real Estate Game‘ and learn how to get started in real estate investing the right way.