Predicting 2023 home-buying trends
- Search volume for "mortgage rates 2023" is up 24,650%.
- Millennials (38%) and Gen Zers (37%) are the most interested in buying a home in 2023.
- The average homebuyer's budget for 2023 is between $200,000 and $300,000.
- Over 80% of Americans are willing to spend around $50,000 over budget for their dream home in 2023.
What does the 2023 housing market look like?
The decision to purchase a new house isn't easy. It requires more than hopping on Zillow and scouting out a dream home or tuning in to HGTV to watch the latest living room decorating trends. Buying a home is a big investment for the future, so a lot of thought and planning goes on behind the scenes.
Unfortunately, the only thing the average person can predict about the housing market is that it's unpredictable. Despite this, we found that homebuying interest is on the rise, as evidenced by our recent survey of 1,000 Americans. They shared their plans for the coming year — whether they're looking for a home, what kind they want and why they may be hesitant to buy. Will 2023 be the year of the big move? Let's find out.
Plans and interest
Once you decide to start scoping out the market, the amount of advice out there is enough to give you a serious case of information overload. But across generations, many people are beginning the search for a new home.
Internet searches related to buying a house have shot up recently. The search volume for "mortgage rates 2023" is up by an astounding 24,650% in the past three months. Other phrases more often plugged into search engines included: "best time to buy a home in 2023," "will house prices go down in 2023" and "buying a home in 2023." These queries increased between 1,464% and 2,548%.
And those doing the searching aren't necessarily new to the market. Nearly 20% of current American homeowners said they plan to purchase a second home in 2023. But many of these searches belonged to younger generations — 38% of our respondents planning to buy a home were millennials, and 37% were Gen Zers. Meanwhile, baby boomers seem settled where they are, with only 7% planning to buy.
With new, trendy home types now available, alternative structures such as the all-natural, earthen cob home and the adorable tiny house have become increasingly popular. These options have caught the eye of 38% and 32% of prospective buyers, respectively. But more Americans were interested in purchasing a traditional single-story (49%) or two-story house (43%). Nearly as many expressed interest in owning an apartment (41%).
Reasons to wait
With the challenges of today's real estate market, some Americans have reservations about diving in. The hefty price tag of a home is an understandable factor, but how many future homeowners are willing to overspend despite the cost?
Most Americans looking for a home have at least a rough listing price in their budgets. Among those we surveyed, 36% said they're willing to spend between $200,000 and $300,000. However, those who have purchased a home in the past — and who may have equity to use toward another home purchase — were willing to spend around $40,000 more on a down payment than first-time homebuyers. That amount might be surprising since the average listing price in the U.S. is $428,700. If housing prices continue to rise, the sad truth is that over 80% of Americans will be unable to afford a home.
It's natural to experience hesitancy when taking steps toward home ownership, especially in a market that's been so hot lately that it's expected to crash — which 53% of our study's participants feared most. Concerns over high mortgage rates (48%) and the prediction that they would decrease within the next three years (47%) followed closely behind. The possibility of a looming recession (40%) and the inability to afford a mortgage due to inflation (38%) also made the top five reasons Americans were hesitant to buy in 2023.
Location, location, location
Most people in real estate understand that location is everything, but what locales are future homeowners interested in? Small towns and big cities alike offer a selection of different home types to choose from. Will more U.S. homebuyers want English-style cottages or classic American craftsman homes next year?
A medium-sized city was the choice that 33% of respondents felt was just right. Small cities were similarly popular (31%), likely because homeowners would still have everything they need nearby without the congestion of a large metropolitan area. Still, New York City was the most popular metro destination for relocation, making the wish list of 44% of homeowners-to-be — more so than Los Angeles on the opposite coast (the top selection among 29%).
Medium cities typically offer lower home prices than large cities, which might attract the 50% of Americans looking to upsize their homes in the coming year. As for what they might expand into, the most popular architectural styles were elegant English cottage (41%) and country (41%), followed by the traditional craftsman (39%).
Moving should be an exciting experience, but the uncertainty of the housing market can make it nerve-racking. Still, according to internet search volume, many Americans are looking into it. As 2023 begins and brings new economic waves, some will be on the hunt, while others would rather wait it out. Those who choose to shop might opt for more affordable options, like tiny homes or apartments, or sustainable choices, like a cob home.
But if prices continue to rise due to inflation, it'll be harder for people to find a new place without busting their budget. That's why Americans might choose to hang on to their current living situations a while longer. In today's uncertain world of real estate, a little hesitancy may be healthy. Whatever your choice, when the time comes to take that step toward new home ownership, list your priorities and research your options. Just because the market's been hot doesn't mean you need to rush into anything.
We surveyed 1,000 Americans regarding their 2023 home-buying plans. The mean age of respondents was 34 years old. Among them, 55% were male, and 45% were female. Respondents comprised the following generational breakdown: 35% Gen Z, 36% millennials, 18% Gen X and 11% baby boomers. We also analyzed Google Trends data over the past three months to see what homebuyers search for during their 2023 house hunt.
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