What real estate agents need to know in 2023
The Emerging Trends in Real Estate report, produced by PWC and the Urban Land Institute (ULI), has been the dominant voice in communicating the future of the industry for over 40 years.
Given the market upheavals in the years following the COVID-19 pandemic, it is more important than ever to anticipate and analyze trends. We’ve combed through the report to bring you the highlights and can’t-miss insights that will impact your business in 2023.
The pace slows down
In 2021 and part of the past year, real estate was moving at record speed. Homes were selling within hours, above demand and for cash. In 2023, however, expect the market pace to continue the slowdown seen in late 2022.
The number of days a house is on the market will continue to increase, there could be more price negotiations – although average house prices are expected to remain high, at 30% more expensive than in 2019 and before – and rising interest rates will continue to make some buyers wary.
Remote work affects many facets of the industry
The continuation of remote work has impacts on the commercial real estate industry as well as residential real estate. For commerce, businesses that continue to work remotely may abandon empty office spaces or downsize, leaving large swathes of commercial buildings empty to be repurposed.
On the residential side, working from home means employees can change geographic locations and seek larger homes with dedicated office space. They may also prioritize eco-friendly homes, with the goal of reducing electricity or internet bills despite spending more time at home. The report estimates that less than half of the workforce visits an office for the entire working week.
Climate change is impacting buyer behavior
Extreme weather and climate events are commonplace, and while it’s not immediately obvious how climate change is affecting real estate, there really is no greater influence than climate.
Extreme weather conditions include floods, fires, hurricanes, tornadoes and other natural disasters. Increasingly, homebuyers are avoiding areas of the country that put them at high risk of encountering one of these disasters.
Not only do people not want to live in a high-risk area, but they also don’t want to pay high-risk insurance or energy costs. Homeowners in Florida or other low-lying areas must pay for flood insurance to protect against hurricanes. And, homeowners in Arizona, or other desert climates, pay astronomical electric bills to stay cool in the summer. In 2023 and beyond, temperate and low-risk areas will see an increase in out-of-state homebuyers looking for a more balanced environment.
Markets to watch:
This year’s report also included a list of top markets to watch for real estate growth. These cities are:
- Nashville, Tennessee.
- Dallas-Fort Worth
- Austin, TX
- Tampa, Florida.
- Raliegh, North Carolina
- Phoenix, Arizona.
- Charlotte, North Carolina
Among the many notable features of these popular cities are their location; almost all of the cities on this list are in the Sun Belt. None of these cities include the typical heavyweights: New York, Chicago, and Los Angeles, proving that the trend toward midsize, more affordable cities will continue into 2023.
However, the influx of residential and commercial activity into these areas can disrupt the market patterns these cities are used to. Rising prices, changing demographics and new infrastructure await them.
2023 will be a tough year for all professionals in the housing industry, but with an eye for emerging trends, a flexible attitude and a willingness to adapt, real estate agents will weather this storm and come out on top.
For an even deeper dive into these topics, you can read the full report, here. Do you have any predictions or concerns for 2023? Comments below.