Upcoming Real Estate Trends in 2023: A Glimpse into the Future
Taking the Long-Term Perspective
The real estate sector is evolving beyond what it interprets as temporary challenges, such as rising interest rates, declining gross domestic product (GDP), and reduced deal flows. Instead, it’s embracing a forward-looking approach to real estate assets. Among the real estate experts we interviewed for this year’s edition of Emerging Trends, there is an air of cautious optimism. Their strategy: Weather the current downturn and reposition their organizations for an upcoming era of sustained growth and robust returns.
What stands out to us is the industry’s willingness to cast its gaze beyond short-term obstacles. As expressed by one real estate professional, “A decade from now, the prices that seem exorbitant today will likely appear as sound investments.”
This year’s Emerging Trends also reaffirms two occasionally conflicting trends in the property market: Certain aspects of the industry are “normalizing” and returning to pre-COVID patterns, while others appear to have undergone permanent transformations due to the pandemic’s impact on how and where we utilize different property types. These shifts are unfolding in the way real estate experts assess prospects across the 80 markets we’ve closely monitored. Irrespective of these trends, we firmly believe that companies must remain adaptable and capable of swift adjustments in response to market shifts.
Let’s examine the leading real estate markets for the current year
Some facets of the industry are returning to normalcy, resembling their pre-COVID patterns, while others seem to have undergone lasting changes, adapting to the ‘new normal’ brought about by the pandemic, influencing how and where we utilize various types of properties.
Reaffirming the trends observed in this year’s Emerging Trends report is the prominence of ‘magnet’ markets, with many of them located in the warm Sun Belt regions. These markets occupy the top positions in the ‘Markets to Watch’ section of Emerging Trends, while the ranking of markets in cold-weather Northeastern and Midwestern climates has declined.
The majority of the real estate markets highlighted in this year’s survey are located in the faster-growing Southern and Western regions, shifting away from coastal areas. Nashville retains its position as the top-rated metropolitan area, with the Dallas/Fort Worth area making a notable leap, climbing five spots from last year to secure the second position. The Atlanta metropolitan area also performed well, advancing from the eighth spot last year to claim the third position.
Quality of life and affordability play pivotal roles in people’s decisions regarding where to reside. Many markets that received relatively lower scores this year lack adequate infrastructure to support their population size and growth.
Despite a decline in rankings, Raleigh, Phoenix, and Charlotte still hold positions in the top 10. Reflecting a slowdown in coastal growth, Seattle has exited our top 10 list, while Miami has ascended to secure the seventh position.