This paper will look at the top seven trends that will have an influence on the real estate sector in 2023 and beyond.

One of the primary underlying factors for these changes is a shift from big cities to the suburbs, which began before 2020. However, it was sped up by the COVID-19 epidemic.

However, there are many other significant shifts in the real estate market to watch over the next 18-24 months.

Let’s get right into the trends:

1. House Hunting Goes Digital

The epidemic accelerated digitalization in all industries.

The real estate market is no different.

Because of the epidemic and the competitive property market in 2020, several customers bought their homes without ever setting foot inside.

Because of virtual capabilities, many people were able to virtually visit property, such as:

• Drone videos
• 3D tours
• Virtual setup

Online searches for “virtual staging,” which were on the rise prior to the epidemic, increased in 2020, while demand is expected to fall slightly after the outbreak.

During the pandemic, online real estate businesses such as Zillow enabled house sellers to explore properties, contact real estate agents, and study mortgage possibilities.

Zillow and other comparable firms also provide 3D house tours.

The home tour is not the only aspect of home buying that is going digital.

Getting a mortgage can be done online now too.

Millennials, known for their dependency on social media, are also using technology to learn more about their new neighbourhoods.

Websites such as Nextdoor enable locals to remain in touch with one another and keep up with neighbourhood events.

2. People Move From Cities To The Suburbs

The COVID-19 epidemic has driven suburban migration from large cities.

The largest metropolitan regions, such as New York, San Francisco, and Washington, DC, are expected to recover after the United States has emerged from the epidemic.
However, the trend of people choosing out of major city living may continue over the next 3-5 years.

The transition is motivated by two factors: need and choice.

Those who cannot afford to stay are forced to go.

While the affluent choose to relocate.

Those who have lost their employment and are unable to pay the high prices of large cities are relocating in quest of more inexpensive housing choices.

Finally, the suburbs are an appealing option due to reduced taxes and lower housing and rent rates.

Some people who are leaving major cities are searching for suburbs with a big city atmosphere, which urban designer Daniel Parolek refers to as “middle neighbourhoods.”

While single-family homes are the most common feature of “middle neighbourhoods,” these regions also include some of the amenities of a major city, such as multifamily housing alternatives, strong public transit, high walkability scores, retail, and restaurants.

According to Parolek, “middle neighbourhoods” are difficult to build due to rules, but this may change in the future as demand for such regions develops.

Some of the other real estate trends on this list are also being driven by the migration from cities to suburbia.

Such as the Sun Belt’s growing popularity, rising median house prices, and an overall housing scarcity.

3. The Sun Belt’s Popularity Continues To Rise

The Sun Belt is one destination for Americans who are leaving large cities.

The epidemic increased the Sun Belt’s appeal, which is projected to continue for the foreseeable future.

The Sun Belt states have accounted for over 75% of the country’s population increase during the last decade.

In addition to appealing to retirees, the region is becoming increasingly appealing to younger professionals as a result of reduced taxes and more inexpensive house costs and rent.

Furthermore, even the largest Sun Belt cities have more space than top US urban areas like New York.

The Sun Belt’s real estate markets have benefited from increased migration and population growth.

Growth has been seen not only in single-family houses, but also in multifamily housing and commercial real estate.

Dallas and Tampa, two significant Sun Belt metro regions, are among the top ten US cities with the biggest real estate potential.

According to Zillow, Austin is expected to have the highest real estate growth in the United States in 2021, followed by Phoenix and Nashville.

Major metropolitan cities, on the other hand, such as New York, Philadelphia, and San Francisco, were among the worst real estate markets in the country in 2021.

4. Single-Family Housing Demand Creates Shortages

Buyer demand for single-family homes is increasing as people move from cities to suburbia.

Realtors predicted that house sales will increase another 10% in 2021, reaching their highest level since 2006.

According to Redfin’s senior economist, searches for single-family homes reached a four-year high in 2020.

Several reasons, according to PricewaterhouseCoopers, are driving demand for single-family houses, including:

• Interest rates are low.
• Because of quarantine, social isolation, and telework, the house is becoming increasingly important.
• Pre-pandemic housing patterns were strong.

The pandemic-related demand for housing is exacerbated by another concurrent trend: Millennials entering the home-buying stage of their lives.

Millennials eager to buy their first home or start a family are also driving suburban development.

As a result, single-family housing inventory is at its lowest level in over 40 years.

In September 2020, there were roughly 830,000 properties on the market in the United States, a 39% decrease from September 2019.

The average time a house was on the market was 54 days, an 18% decrease from September 2019.

Due to the tremendous rivalry among purchasers, one New Jersey real estate agent compared buying a property in the New Jersey suburbs outside of New York City to a “blood sport.”

While these circumstances lasted until 2021, it is unknown how long they will stay beyond then.

The market is expected to level down soon.

And the rate of new development will almost certainly catch up with the increased demand.

The housing scarcity, along with increased property prices, has benefited management and construction firms.

Housing building, including single-family and multifamily, is increasing and will reach its peak since 2006 in 2020.

5. Home Prices Continue To Rise

The present real estate trends are intricately linked.

Prices for single-family houses climbed in 2020 due to growing demand and diminishing supply, and are likely to stay high in 2023 and beyond.

Shortly after the epidemic began, the property market momentarily reversed course, as prices fell and people intending to sell their houses reconsidered their choice.

However, prices began to rise again after a few months.

And the seller’s market was as robust as it had ever been heading into 2021.

In September 2020, the typical list price for a single-family house in 2020 was $350,000, an 11% increase from September 2019.

Home purchasers are not deterred by high prices.

Some purchasers are ready to pay far more than the asking price in order to secure their acquisition.

Rising property prices have increased present homeowners’ home equity.

property equity is the total worth of a property less the amount owing on it.

As a result, when market value rises, so does home equity.

In 2020, home equity increased by 6.6%, or an average of $10,000 per property.

6. Mortgage Rates Drop

In 2020, record-low mortgage rates will encourage more home ownership.

Mortgage rates are expected to reach a 50-year low in 2020, according to some experts.

Mortgage rates have already been falling since reaching a high of 4.94% in 2018.

However, mortgage rates fell to a historic low of 2.65% at the start of January 2021.

This resulted in an increase in mortgage applications, which reached a 10-month high at the start of 2021.

Due to the economic consequences of the pandemic, the Federal Reserve opted to hold interest rates near to zero by the end of January 2021.

In the first half of 2020, a surge in mortgage refinancing corresponded with a surge in online mortgage rate searches.

Another surge occurred in January 2021, when refinancing activity increased 93% over January 2020.

7. Rental Property Market Declines

The rental market for both residential and commercial properties in major cities was on the decline in 2020, owing in part to a movement in population from cities to suburbs.

Demand for rental houses in major cities will continue to diminish as those who can afford it attempt to purchase a home and those who cannot look for other ways to save money or fall behind on their rent.

Last year, the number of young professionals who gave up their residences and moved back in with their parents increased.

According to Pew Research, the majority of young adults aged 18 to 29 lived with their parents for the first time since the Great Depression in 2020.

The exodus from major cities has resulted in the greatest flat vacancy rate since 2010, as well as falling rental costs.

While rental vacancies in big metropolitan regions are growing, demand for rental properties is expanding in mid-size and smaller communities across the country as demand for houses in these places outpaces availability.

The rental market crisis is offering real estate investment possibilities.

Investors can buy distressed rental properties now in anticipation of renters returning to major cities after the epidemic is over.

Investors can also transform commercial facilities that were unoccupied in 2020, such as hotels and retail complexes, into housing units.

Conclusion

That concludes our list of current major real estate trends.

So individuals migrate to the suburbs and try to buy a house. Therefore single-family housing prices remain highs while supply remains limited.

Low mortgage rates will continue to stimulate house demand.

Meanwhile, the rental property market in major cities will remain weak, creating chances for real estate investors planning for a post-pandemic resurgence of metropolitan life.

Mortgage rates are rising, and home supply is increasing as development catches up with demand, indicating a turnaround.

It will be interesting to determine which of these patterns were caused by COVID-19. Or are they legitimate, long-term trends that are likely to last?