Looking back at 2022 for real estate, it is safe to say it has been somewhat of a roller coaster. During the first month of the year, we continued to see a lot of the same real estate market that we had seen the year prior: rising prices, bidding wars, limited inventory, & low mortgage interest rates. However, with out-of-control inflation we began to see some aggressive rate hikes by the Federal Reserve. As a result, more buyers became priced out of the market with each subsequent rate hike. Over the course of the year, we saw mortgage interest rates more than double from approximately 3% to 7%. The result has been a housing market that has essentially come to a screeching halt as compared to last year. Looking ahead, it is likely that we see a slow market next year but this will be largely due to greater economic factors. What about some home trends to look out for in 2023? We discuss below.
Home trends for 2023
The pandemic has certainly resulted in some changes for the real estate market. Some of these changes are expected to be permanently adopted and will likely continue to be seen in 2023. Below are some trends to be on the lookout for:
- Outdoor space & backyards: A result of the pandemic has been the importance of having functional outdoor space. With this said, backyards are now being mentioned 22% more often in for-sale listings as compared to last year. This trend is expected to continue in the new year.
- Multi-functional rooms: Another byproduct of the pandemic on the real estate market has been the popularity of the home office. With this said, more home buyers are looking for homes that will accommodate their virtual working conditions. In addition, many Americans have become used to having a home gym as well. As a result, having a multi-functional room that can serve as both a home office and home gym has increased in popularity. We expect this to continue in 2023.
- The kitchen island: Most will agree that the kitchen is the centerpiece of the home. Whether it is a typical busy weeknight of parents preparing dinner and kids doing homework or it is a social gathering, most people tend to congregate in the kitchen. For this reason, the kitchen island has quickly become a highly desired feature in the home. Looking ahead to 2023, we expect the importance of the kitchen island to be even more pronounced.
- Mirrors are making a comeback: Although we don’t expect to see the mirrored walls and ceilings of the 1970’s returning next year, we do expect the use of mirrors to be more common. With the strong desire for more space in the home, mirrored surfaces provide more light reflection and thus allow the home to appear more spacious.
- A push for privacy: Although open floor plans are still very popular, they can make it challenging to find privacy or a quiet space for remote working conditions and video calls. Nowadays, it is common to see both parents and children working or schooling from home. Needless to say, this can make for a loud home that lacks the required privacy for productivity. Floor plans in 2023 and beyond may take privacy into consideration.
- Home renovating will continue: The low inventory of homes for sale combined with higher home prices and mortgage rates have led many homeowners to stay put and renovate instead. Given the fact that these same conditions will likely persist for most or all of 2023, we expect to see the renovation trend to continue.
Looking ahead at 2023, the housing market will be largely impacted by overriding economic factors. For starters, if inflation can begin to come down significantly we should see less pressure on interest rates. Should we see some relief on mortgage interest rates, it is quite possible that we will see a return of some home buyers. Of course, this is also assuming that the economy can avoid a recession. For the most part, many expect 2023 to be somewhat of a holding pattern for the housing market. Although home prices are not projected to increase by much or at all, they are also not likely to plummet. A slight correction in home prices is quite likely though.
Now more than ever, it is important to hire a local and knowledgeable real estate agent to assist you with either the purchase or the selling of a home. If you are in the South Florida market, Live South Florida Realty, Inc. is your best option. Contact Natasha today to get started. Also, be sure to download the Florida Home Search app for your mobile device!