According to housing experts, 2023 will likely favor buyers. However, new-home buyers will still face challenges, along with newer kinds of competition like institutional investors. Here’s where the housing market might go and how builders like you can strategize.
Buyer friendly, but not a true buyer’s market
For two years, sellers have had a firm grasp on the market. But with rising inflation and higher interest rates dulling competition, committed buyers could have an upper hand in 2023. However, buyers will still combat affordability issues and rising interest rates, which will likely prevent a full-blown buyer’s market.
This could mean that you might see fewer offers on homes and longer times between listing and closing. Additionally, home prices are likely to decelerate, which could cut into your profits a bit after incredible acceleration from 2020 through 2022.
In this context, it’s crucial for you to focus on the value of your homes. With more buyers considering new homes over resale homes, it’s a good time to educate your clients on the benefits of considering a new home.
When looking at new homes, buyers are generally interested in customization options, a sense of community, and the peace of mind that comes with the perception of “this is new, so it’s likely not going to break.” Leaning into these elements within the homes you build may give you an upper hand as buyers find more leverage.
Rising rates are a double-edged sword
Rising interest rates (they’ve more than doubled since the beginning of 2022) are affecting buyers differently. The most obvious way is that they’re pushing many buyers to the sidelines, as higher monthly rates make it harder to justify a purchase.
On the other hand, rising rates have reduced competition, giving buyers who can afford higher rates more leverage. This waning competition has given buyers more leverage to make requests of sellers, in both the new home and resale spaces.
One commonality between these groups is that they’re likely to expect incentives. Offering well-built new homes is indeed an incentive to many buyers, but you may need to consider additional incentives as well. For example, if you have a mortgage affiliate, it may be possible to offer rate locks and buydowns, the latter of which could give buyers a little more runway to make payments comfortably.
Rent increases could be an X-factor
Experts are forecasting that rent growth will likely be extremely strong in 2023. This growth could dovetail with the booming Build to Rent (BTR) market that builders are immersing themselves in.
Interestingly, though experts predict overall rent increases, rents in the BTR space have begun to decrease ever so slightly. This could make the BTR market a comfortable middle ground for buyers looking for the experience of home ownership who also may not have the means to buy a home outright.
As the BTR market continues to mature in 2023, you’ll need to consider how to address the needs of investors and renters.
One of the best ways to appeal to both crowds is to provide much-needed peace of mind. And nobody can provide that better than 2-10 HBW in the BTR space.
With 2-10 HBW, you can continue to protect your profits, promote your quality, and plan for the future by controlling what’s behind you. You can also provide the peace of mind that investors and renters need in a challenging market.
Learn more about how you can take advantage of 2-10 HBW’s expertise in the BTR market.
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