As home prices and rents continue to rise in cities stretching from Seattle to New York City, homebuyers may find themselves looking for new opportunities throughout in the southeastern states in 2023. Source: Business Insider International
Texas could become one of the hottest real estate markets in the US for 2023.
Texas could become the three hottest real estate markets in 2023 because of their relative affordability, strong job growth, and prevalence of remote working opportunities.
A major catalyst as to why these cities could see a significant uptick in homebuying activity next year is the fact that about 20% of renters in each market can afford a mortgage on a median priced home in their city. For example, renters in Atlanta pay an average of $1,997 per month as of November, according to Redfin data, compared to Georgia's overall median mortgage payment of $1,450. The story is similar in both Raleigh and Dallas.
Dallas have also become one of the country's fastest-growing employment hubs. This city saw its number of jobs increase by 5.1% and 6.5%, respectively, between October 2021 and October 2022 compared to the national average job growth of 3.4%. These factors make it reasonable to expect "home prices to climb by at least 5%" in the south in 2023 while more traditional employment hubs like San Francisco could see home price declines of between 10% and 15%.
One major issue that could derail home price appreciation in Texas is that fewer homes are being filtered to new buyers as current homeowners continue to weigh the risk of selling their property and buying a new house with a mortgage that is substantially more expensive than the one they are currently paying. This is one reason why predictions that existing home sales will dip to 4.78 million next year from 5.13 million in 2022.
As of October 2022, there were more than 4.43 million existing-home sales compared to the 6.1 million sales that NAR recorded in October 2021, NAR's 2023 economic outlook said. Meanwhile, predictions said that mortgage rates will settle around 5.7% in 2023, which is still almost double the rate that homebuyers were able to get before the pandemic began.
Another issue these markets will have to overcome is the decline in housing starts—which measures the number of housing construction projects that begin in a given timeframe. Overall, there will be more than 1.44 million housing starts in 2023, which could come in below the historical average of 1.5 million because of persistent supply chain bottlenecks.