In 2022, the real estate market experienced a volatile year due to rising inflation and interest rates. The new year will likely bring more challenges for sellers and buyers. 

 

According to a new study conducted by Opendoor, many homeowners are willing to move to cheaper areas to get by due to rising mortgage rates and an uncertain economy.

 

According to Jennifer Patchen, a broker at Opendoor, the rising cost of living is driving people to look for new places to live. The survey revealed that almost half of the respondents in the U.S. said they would like to relocate to a more affordable area. Here’s a look at the various trends affecting the real estate market.

 

Purchasing Before Construction

According to Alex Capozzolo, the co-founder of SD HouseGuys, the increasing availability of cheap land and labor in certain areas is expected to drive the demand for pre-construction homes in 2023. These purchases often lead to better deals than those made after the construction has already started.

 

Small Homes

Mike McElroy, a broker at Center Coast Realty, said that although single-family homes will still be in demand, smaller starter homes and condominiums are expected to gain in popularity. He noted that the aging millennials are likely to sell their existing homes and buy larger ones to accommodate their growing families.

 

Multiple Offers

Despite the lack of inventory, multiple offers are still expected to be submitted on properties. However, buyers are likely to be hesitant to pay more than the asking price.

 

Price Stabilization

According to McElroy, the prices of homes will eventually stabilize and drop by around 5% to 10%. He noted that potential buyers would also get a better deal by taking advantage of the lower interest rates.

 

Fewer Offers Without a Tour

During the early 2022 and 2021 seasons, most of the time, a listing would be put on the market, and a dozen showings would be scheduled for the next day. Then, various offers would come in before the open house even started. That is unlikely to be the case going into 2023, as more buyers are interested in seeing the property in person before buying.

 

No More 20% Down Payments

According to Patchen, other long-standing homebuying trends, such as having a 20% down payment, are no longer being practiced. She noted that there are plenty of ways to afford a home nowadays, and with rising costs, buyers are unlikely to have that much cash for a house.