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7 Real Estate Investing Trends To Watch In 2023
Real estate investing is an ever-changing industry, with trends and developments constantly emerging. As we move into the latter part of 2023, there are several key trends that real estate investors should be aware of in order to stay ahead of the game.
For real estate investors and homeowners, it is estimated that real estate appreciates 3% – 5% every year with proper maintenance.
Due to the COVID-19 pandemic, the real estate industry has experienced some shifts due to emerging trends. Here are 7 that you should watch out for.
As a new or seasoned investor, you may wonder if investing in the real estate market is a worthwhile venture. Explore some of the most important real estate investing trends to watch in 2023.
Key Points
- Real estate investing is an ever-changing industry, with trends and developments constantly emerging
- It is estimated that real estate appreciates 3% – 5% every year with proper maintenance
- Some of the real estate investing trends to watch out for include: Digital house hunting, relocation from cities to the suburbs, increased popularity of the Sun Belt, shortage of single-family housing, and rising home prices
Disclaimer
The contents of this article are for educational purposes only. They are not intended to be a source of professional financial advice. You will find experts on financial planning and financial management here. More on disclaimers here.
7 Real Estate Investing Trends
These will shape real estate investing in 2023:
1. Digital House Hunting
The pandemic brought with it a lot of negatives but one of the positive outcomes was increased digitization in a lot of sectors. From e-commerce, to remote working to online shopping, a lot of industries switched things up in order to be able to provide digital services to their clients.
The real estate market was not left behind. Thanks to property technology, many home buyers and those looking for rental properties in 2020 purchased their homes without having to physically see or go inside the home.
Thanks to virtual tours, buyers and those looking to rent property could be taken on 3D tours or view drone videos of homes that they were interested in.
Some companies like Zillow provided clients with 3D home tour options as well as allowed sellers of homes to browse listings, connect with real estate agents and research mortgage options during the pandemic.
Online mortgage lending also became a popular searched for service, as home buyers tried to get the best mortgages for their desired homes.
Many millennials who rely on social media for different things, have also leveraged technology to connect more with their neighbors as well as learn more about their neighborhoods.
If you're looking to work with a qualified real estate agent to buy or sell property, get in touch with Ila here
2. Relocation From Cities To The Suburbs
The pandemic caused a lot of people to migrate from major cities to the suburbs. This was caused by a number of factors which include:
- The high cost of living in the cities which resulted in people moving to the suburbs in search of more affordable housing options. Suburbs can be a great choice as home prices and rent are cheaper. The taxes charged are also lower.
- There is also another demographic of wealthy people who did not necessarily relocate because of the high cost of living, but rather by choice. Some did this in search of a new experience.
Among the key things that people put into consideration when moving away from big cities to suburbs include: efficient public transport, functional shopping centers, restaurants and multifunctional housing options.
The bigger cities like New York, Washington DC and San Francisco will most likely fully recover as people continue to learn of better ways to cope in the pandemic.
Industry experts predict that the shift from major cities to suburbs will remain constant till 2025.
3. Increased Popularity of The Sun Belt
As more people in the U.S. move away from major cities and into the suburbs, one destination continues to grow in popularity. That's the Sun Belt.
The Sun Belt is that part in the U.S. that comprises of 15 states in the South and Southwest region, stretching from California to South Carolina. These areas are characterized by warm, sunny weather. These areas are being regarded as areas where there's rapid population and economic growth.
It is approximated that 75% of the country's population growth over the last 10 years has majorly been concentrated in the Sun Belt states.
Millennials and younger professionals are attracted to the Sun Belt because of affordable housing prices, cheaper rent prices and lower taxes. More often than not, you'll get more space living in such areas as opposed to the top metro areas in the U.S. like New York.
As a result of this movement, the real estate markets in these areas have also boomed. Growth has been experienced in single-family, multifamily and commercial real estate.
According to Zillow, these are the areas in which homes are most likely to appreciate in value faster than other areas in the U.S. in 2022.
- Tampa
- Jacksonville
- Raleigh
- San Antonio
- Charlotte
- Nashville
- Atlanta
- Phoenix
- Orlando
- Austin
4. Shortage of Single-Family Housing
With the migration from cities to the suburbs, the demand for single-family homes has gone up.
According to a report from Arbor, 43% of the Gen Z generation are interested in renting a single-family home after graduating from university.
According to PwC, the demand for single-family homes has gone up because of a couple of factors:
- They attract lower interest rates
- Millennials are getting into the home ownership phase of their lives and some are planning to start their own families
- As a result of measures like social distancing and quarantine during the pandemic, more people spent time at home
With the rising demand, it is projected that the market will eventually stabilize as the rate of construction of new homes will catch up with the growing demand. The housing market is projected to eventually stabilize.
5. Home Prices Continue To Rise
The price of homes will most likely continue to rise due to the increase in demand for single family homes. In 2020 and 2021, the prices of single-family homes shot up and it's expected that the prices will keep increasing.
In 2020, the median list price for a single-family home reached $350,000. This was an increase of approximately 11% from 2019.
Despite the high home prices, home buyers are still willing to secure their purchases. This is because, with the high demand that's in the housing market, home equity (the overall value of the home minus the amount owed on it) also goes up.
6. Rise in Mixed-use Properties
In both cities and suburbs, the growth of mixed-use properties is on the rise. Concepts like co-working spaces have become very popular due to the convenience, flexibility and affordability that they offer.
Nowadays, it is very common to see an office block that includes other amenities like a gym, restaurant, shopping center and retail shops. Such properties tend to attract more clients as they have a couple of essential amenities in close proximity. This makes it more convenient for some clients who may need to access similar services conveniently.
It has also become very common to find residential blocks that also have facilities like storage, restaurants, retail shops and a gym all in one property. Such real estate is more likely to attract a large number of consumers, especially if the services being offered are affordable.
7. Unique Vacation Rentals
With more flexibility in work places and remote working arrangements, more people are able to travel and explore new places. Some are doing this due to more free space on their hands while others are trying to make up for lost time.
As more people go on vacations or opt to work from different environments, vacation rentals that are unique and interesting are sparking more interest in consumers.
From tree houses and properties in the desert to buses that have been converted to cozy living spaces, homes with unique and extraordinary features are gaining more traction as compared to normal houses.
If you're looking for the perfect vacation rentals to invest in or stay at during your next holiday, here are great options that are worth checking out.
Resthaven
Resthaven Properties is a collection of Black-owned luxury vacation properties. Resthaven Properties focuses on acquiring vacation property across the world's best travel destinations for predictable income and appreciation. So far, the luxury properties under the Resthaven Properties portfolio include Resthaven Los Angeles, Resthaven Tahoe, and Resthaven Zihuatanejo.
Resthaven Properties operate under membership options that disrupt traditional lodging and timeshare accommodations by implementing a pay once and use for a lifetime strategy. The team acquires properties in the 5-7M range based on the high potential for appreciation and a prime location for leisure travel and intentionally supports diverse vendors in each property.
With the first home being located in Venice, California, it is the perfect home for people looking to experience luxury travel, on company retreats, on their honeymoon or simply looking for a new adventure.
Resthaven is a luxurious, safe and private vacation rental where you can just relax and unwind.
This home sits on 3,400 sq. ft., has 4 beds and 4.5 baths. Its close proximity to popular tourist attractions such as Muscle Beach, Ocean Front Walk and the Venice Fishing Pier makes it the perfect home for those looking to explore the city.
The second property is Resthaven Tahoe, an exquisite Black-owned boutique hotel located in California, South Lake Tahoe near Stateline & Edgewood, 4145 Manzanita Ave; a prime tourist destination.
This prime property offers 20 contemporary rooms equipped with smart keys and virtual check-ins. With guest amenities like newly renovated rooms, fire pit and outdoor space, this private escape offers the perfect mix of luxury, comfort and proximity to recreational activities.
Guests staying at the property can enjoy activities like kayaking, jet skiing, water sports among others at the warm and shallow beach. Other fun activities to engage in include hiking, cycling, golf, swimming, concerts, among others.
For more information on the properties, contact us today.
Summary
As the real estate sector continues to stabilize due to the effects caused by the pandemic, it would be interesting to see which real estate trends were only as a result of the pandemic and which ones stick long-term.
Investing in real estate can prove to be a very profitable venture. However, before you do so, do your due diligence and consult a qualified real estate practitioner. Don't be too quick to invest in a vacation home or real estate investment trusts (REITs) without understanding how these concepts work.
If you're looking to get into real estate investing and you'd like to partner with us, then get in touch with us here!
Bay Street Capital Holdings
Bay Street Capital Holdings is an independent investment advisory, wealth management, and financial planning firm headquartered in Palo Alto, CA. They manage portfolios with the goal of maintaining and increasing total assets and income with a high priority on managing total risk and volatility. Although many advisors may focus on maximizing returns, they place a higher priority on managing total risk and volatility.
In Scottsdale Arizona, Ekenna Anya-Gafu CFP, AAMS is recognized among the Best Financial Advisors for his responsiveness, friendliness, helpfulness, and detail.
Bay Street was founded to advocate for diverse and emerging fund managers and entrepreneurs. In 2021, the firm was selected as a finalist out of over 900 firms across the US in the category of Asset Manager for Corporate Social Responsibility (CSR).
Sources
https://explodingtopics.com/blog/real-estate-trends
https://www.fool.com/real-estate/2022/04/08/3-high-growth-real-estate-trends-you-should-invest/
https://learn.roofstock.com/blog/real-estate-market-trends
https://www.zillow.com/resources/stay-informed/hottest-housing-markets-2022/
