Real Estate Investing 2022 Market Report with 2023 Outlook

An Outlook for Residential
Real Estate Investing in 2023

Despite negative real estate headlines that have persisted throughout the past year, did you know that 2022 actually was a strong year for single-family home investors?

These solopreneurs and career-rehabbers continue to buy outdated properties and bring a fresh supply of homes back into the market.

In this report, we reveal how these SFR investors do it and the variance that exists between the investment market and the traditional real estate market.

LEADING INTO 2023

Demand will remain. And home prices will moderate to make room in buyer’s budgets for rising rates.

The outlook for mortgage rates has changed since the peak of just over 7% in November 2022. With 85% of existing mortgages carrying a rate below 5%, expect homeowners to remain in place, limiting new listing inventory.

Mortgage applications will pick up but it will take time to educate consumers on the new rate environment. Useful tools like mortgage rate buy-downs will offer consumers more options when financing and allow lenders to become competitive.

We can expect traditional real estate market headlines to focus on the macro environment, which
won’t appear favorable.

BUT, THERE'S MORE TO THE STORY IN 2023.

SIX PREDICTIONS FOR 2023

Local investors should expect less competition and eventually a more predictable outcome. More opportunities will be available to investors who have the proper skills and diligence.

Long term investors should look to opportunistically acquire rentals at favorable price points due to unfavorable rates. If you’re a cash buyer, you’ll be in the driver’s seat. If you can produce cash flow with a rate in the high, single digits you only have upside as the environment improves.

The exit of iBuyers from the investor market, like Redfin and Zillow, opens up options for individual investors to scoop up deals and provide inventory in their local neighborhoods by putting renovated, liveable homes back on the market. The mom-and-pop investors are uniquely positioned to thrive because they know their neighborhoods and have local expertise.

Gen Z and Millennials will impact the housing market in new ways as both lean into real estate as an investment strategy and hedge against inflation. Their mobility and interest in forming households in untapped, affordable markets will result in the growth of mid-metros.

As rent becomes more affordable than mortgages, the opportunity arises for investors who have chosen to lean into a fix-and-rent strategy in 2023.

And the prime remodel years for homes will continue to rise into 2027. Homes between 20-39 years old hit that stage in a home’s lifecycle when major improvement projects are needed and this widens opportunity for the fix-and-flip investor.

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