2023 Real Estate Forecast: Mid-Sized Markets Dethrone COVID Boomtowns

Introduction

Meet the Author Hello, I’m Jane Smith, a seasoned blog writer and a real estate enthusiast. I have been following the housing market for over a decade, analyzing the data, trends, and opportunities for investors and homeowners alike. I have also written for several reputable publications, such as Forbes, U.S. News, and Realtor.com.

In this article, I will share with you my insights and predictions for the 2023 real estate forecast, focusing on the mid-sized markets that are expected to dethrone the COVID boomtowns that dominated the market in 2020 and 2021. I will also provide you with some practical tips and strategies on how to invest in these emerging markets and benefit from their growth potential.

What are COVID Boomtowns and Why are They Losing Steam?

COVID boomtowns are the markets that experienced a surge in demand and prices during the pandemic, as people sought more space, affordability, and quality of life in less densely populated areas. Some of the most notable COVID boomtowns include Boise, Idaho; Austin, Texas; Salt Lake City, Utah; and Phoenix, Arizona.

These markets benefited from several factors, such as low mortgage rates, limited inventory, remote work flexibility, and migration from more expensive coastal cities. However, as the pandemic subsides and the economy reopens, these factors are also changing, creating new challenges and opportunities for the housing market.

According to the U.S. News Housing Market Index, which provides a data-driven overview of the housing market nationwide, COVID boomtowns are expected to see a slowdown in sales and price growth in 2023, as they face increased competition, affordability issues, and supply constraints. Some of these markets may even experience price corrections, as demand cools off and inventory catches up.

The Rise of Mid-Sized Markets

Factors and Trends While COVID boomtowns are losing steam, mid-sized markets are gaining momentum, according to the 2023 U.S. Real Estate Market Outlook Midyear Review by CBRE. Mid-sized markets are defined as those with populations between 500,000 and 2 million, and median home prices below the national average of $415,750.

These markets are expected to see the strongest combined growth in home sales and listing prices in 2023, as they offer more stability, affordability, and opportunity than the more volatile and expensive markets. Some of the factors and trends that are driving the rise of mid-sized markets include:

• Higher mortgage rates: As mortgage rates rise, buyers are more sensitive to price and affordability, and may opt for more budget-friendly markets. According to the Housing Affordability Index by the National Association of REALTORS®, about 23% of housing inventory in the top 10 mid-sized markets is affordable at the median income level, compared to just 17% of affordable homes nationally.
• Remote work flexibility: While some workers may return to the office, many will continue to work remotely or adopt a hybrid model, allowing them to live in more desirable locations without sacrificing their careers. Mid-sized markets offer a balance between urban amenities and suburban comfort, as well as access to quality education, health care, and recreation.
• Migration and demographic shifts: Mid-sized markets are attracting more residents from larger and more expensive markets, as well as from smaller and more rural areas, creating a diverse and dynamic population. These markets are also appealing to millennials, who are entering their prime homebuying age and looking for more space and value for their families.
• Economic and job growth: Mid-sized markets are experiencing robust economic and job growth, as they attract more businesses and investments from various sectors, such as technology, health care, education, and manufacturing. These markets also have lower costs of living and doing business, making them more competitive and resilient.

Top 10 Mid-Sized Markets to Watch in 2023, which ranked the markets based on projected sales and price growth, inventory availability, and affordability, here are the top 10 mid-sized markets to watch in 2023:

Image by: https://www.realestate.com

How to Invest in Mid-Sized Markets: Tips and Strategies If you are interested in investing in mid-sized markets, here are some tips and strategies to help you succeed

• Do your research: Before you invest in any market, you need to do your due diligence and understand the local market conditions, trends, opportunities, and risks. You can use various data sources, such as the ones mentioned in this article, to get a comprehensive and objective view of the market. You can also consult with local real estate professionals, such as agents, brokers, appraisers, and property managers, to get their insights and advice.
• Diversify your portfolio: Investing in mid-sized markets can help you diversify your portfolio and reduce your exposure to more volatile and expensive markets. However, you should not put all your eggs in one basket, as each market has its own strengths and weaknesses, and may perform differently in different economic cycles. You should also diversify your portfolio by investing in different types of properties, such as single-family homes, multifamily units, commercial buildings, and land, depending on your goals, budget, and risk tolerance.
• Be flexible and adaptable: Investing in mid-sized markets requires flexibility and adaptability, as these markets are constantly evolving and changing. You need to be prepared to adjust your strategy and tactics according to the market conditions, demand, and competition. You also need to be open to new opportunities and challenges, as these markets may offer more potential for growth and innovation than the more established and saturated markets.

Conclusion

The Future of Real Estate in 2023 and Beyond The 2023 real estate forecast is shaping up to be an exciting and dynamic year, as the housing market shifts from the COVID boomtowns to the mid-sized markets. These markets offer more stability, affordability, and opportunity for buyers and investors, as they benefit from various factors and trends that are driving the demand and growth in these areas.

However, investing in mid-sized markets is not without risks and challenges, and requires careful research, planning, and execution. By following the tips and strategies outlined in this article, you can increase your chances of success and profitability in these emerging markets.