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What to Expect for the Real Estate Market in 2023

The real estate market has changed drastically over the last few years. The pandemic brought a surge in demand for houses, followed by a freeze in the market as inflation and interest rates rose. That begs the question, what should we expect from the following year?

Most experts believe 2023 will bring a new semblance of normalcy. That means the market will settle down and return to more normal levels. Inflation should reduce or at least balance out, while interest rates will slow down. Let’s take a closer look at what to expect this year.

Housing Prices

Experts are quick to weigh in with their opinion on housing prices and values. Unfortunately, not all experts agree on this. For example, Realtor.com believes that housing prices will increase by another 5.4%, while Zelman believes the value will decrease by 5.1%. Ideally, these two extreme estimates will land in the middle, providing us with a stable market.

In other words, if we balance out the expert opinions on prices, it indicates little change. This means we’ll see a flat or neutral appreciation in 2023. This is good for sellers and buyers, as the market will not change drastically. 

Rate Lock-In Phenomenon

Mortgage rates hit a record low a couple of years ago, countering the current higher rates we’re seeing. This results in homeowners with a low rate (below 6% in most cases and below 4% in exceptional circumstances). That’s great for those homeowners, but they will unlikely consider selling their homes with an average mortgage above 6%. 

Homeowners are unwilling to give up their low mortgage rate in exchange for a higher interest rate. Some homeowners will sell regardless, either because of need or desire. But a large percentage will stay at their current home to wait out this shift.

Ironically, this is going to affect another market. Homeowners that wait out this shift may choose to work on home improvement projects. This will ultimately encourage a stronger contract market and increase home values – if done carefully. 

Reduction in Building

There will likely be a reduction in the number of homes built over the next year or two. Specifically, experts believe that builders will cut back on the number of new single-family homes they are constructing. Likewise, building permits will likely decline as homeowners settle in and wait for rates to change. 

What to Know Before Renting to College Students

Landlords, as a rule, rent their properties to many different subsets of people, including students. However, there are certain things that landlords and property owners must know before renting to students.

Renting to a student is a great way to quickly fill a vacancy, give a young person a chance, and potentially make a difference in the community. The downside is the higher risks associated with this sort of rental. Here is what you need to know before you get started.

The Risks

As mentioned above, there are certain risks associated with renting to students. For example, most students will only need to rent a space seasonally, so renting to them may create vacancies in the summer. Likewise, most students will not have an extended credit history, putting them at higher risk financially.

There are other risks to consider, such as their lack of experience (including a lack of experience paying bills) and potential noise concerns (consider the stereotypical student behavior, and this one is clear). 

Students may also not understand basic tenant responsibilities, such as how to file a maintenance request. This may result in a little problem growing in scale when it otherwise could have been prevented.

The Positives

Don’t worry; there are positives to help balance these additional risks. There is a generally higher demand for student housing, especially near school towns and properties. So filling vacancies shouldn’t be an issue. This has a secondary benefit as it reduces the need for expensive advertising. Word of mouth will do that for you.

Since students have little experience renting properties, they will not go into this process with inflated expectations. In other words, they’ll be happy to get an apartment and won’t demand all the latest bells and whistles. They will happily accept a simple property with no upgrades.

Finally, the possibility of multiple roommates in a property can help to mitigate any financial risk. The more people on the lease, the easier it will be for them to make their monthly payments. As this is a common social expectation for students, frequent arrangements are already in place for this sort of thing.

Lowering Risk

There are additional steps a landlord or property owner can take when renting to students. These steps will help reduce the overall risk. For example, requesting a cosigner or guarantor will minimize the risk of property damage and ensure that the rent gets paid. Likewise, periodic inspections can help spot damage or other repair needs before they become a more significant problem.

Finally, it is critical to set expectations in the lease. This means laying out any rules, regulations, or rules to follow. Doing so in writing will protect you and make it easier for the students to find information as they need it. 

Ways to Get Organic Leads as a Realtor

Every industry has unique tactics and requirements for getting things done. This is especially true for realtors, who must handle several elements of their own business. One such concern is generating organic leads as a realtor.

It can be challenging to create these leads, especially at first. It takes time and practice for them to feel more comfortable and organic. However, once you get the swing of things and establish a pipeline of leads, you’ll have no problem succeeding in the industry.

Networking

One of the most important things for any realtor to consider is networking. Networking can easily generate the most leads and should never be overlooked. Neighbors, coworkers, friends, etc., can all help generate word-of-mouth advertising. Each new professional connection you create introduces new opportunities.

In other words, to create a base for organic leads, you have to network. There’s no way around it, so get it done. If networking is intimidating for you, take some time to research tips & tricks. This will help you understand your strengths and weaknesses.

Branding

You’ve likely heard the term branding regarding a company’s image – but personal branding is something to consider. A strong personal brand can generate leads while you sleep if done right. How? Your name will be out there, traveling out (by word of mouth, advertising, and other branding techniques), even without your active participation. 

Put another way, the better your personal branding strategy, the more consistent your work can be. People will approach you with work, creating more organic opportunities to follow through.

Referrals

Never underestimate the value of a good referral. They’re like gold, showcasing your talent and reliability to potential clients. Referrals come in many forms. For example, it may be a comment from a past client on your website. Or it may be an associate forging a connection between you and a prospective client. 

Don’t forget always to show appreciation for these referrals. Especially the ones that have gone above and beyond for you. Encourage this behavior by sending them a thank you note or showing appreciation.

Social Media

Finally, don’t forget about social media. Social media is a powerful tool, with varying effectiveness depending on your goals and utilization. When using social media to generate leads, be sure you’re picking the right platform for your goals. For example, you don’t want to be on TikTok if you’re looking for leads in older generations. 

Finding your stride with social media marketing may take a minute, but once you’ve nailed it, the leads will come in. Just keep working on it and be willing to adapt your strategies.

Great Real Estate Podcasts To Listen To In 2022

Want to improve your knowledge about real estate? The following podcasts are great for you to keep up with all the latest news and analysis about the industry. They’ll also provide you with entertaining and informative shows about home renovations and investing. Here are a few great podcasts to listen to in 2022.=

Best Real Estate Investing Podcast Advice Ever With Joe Fairless

Joe Fairless is a well-known real estate investor and host of this weekly podcast, which covers various topics related to the industry. He has a wide variety of blog posts and videos, and he frequently interviews other industry professionals. Each episode of the show provides valuable advice and insight from various guests, such as house flippers, renters, and passive income investors.

House Party

If you’re a fan of celebrity property purchases and the buying and selling of real estate, House Party is a must-listen. This weekly podcast from realtor.com talks about the latest trends in the industry, as well as the stories of real estate professionals who have experienced various home disasters. Co-hosts Rachel Stults and Natalie Way also share their personal stories of moving across the country and dealing with various real estate-related issues.

Cashflow Diary

Author and entrepreneur J. Massey is the creator of Cashflow Diary, and he also provides free training courses to aspiring and experienced real estate investors. He has a wide variety of blog posts and videos that he frequently interviews other industry professionals. He can help you find the best deals and strategies for buying and selling real estate.

Bigger Pockets

BiggerPockets is a weekly podcast that features off-the-cuff conversations with real estate investors and entrepreneurs. Co-hosts Brandon Turner and Josh Dorkin talk about their backgrounds, experiences, and failures. Each episode of the show features a different real estate investor talking about their successes and failures. The goal of the program is to provide a community of like-minded individuals who are committed to building their financial education.

The Remote Real Estate Investor

There are a variety of real estate investing podcasts available, but one that stands out is The Remote Real Estate Investor, which is hosted by Tom Schneider, Michael Albaum, and Emil Shour. The hosts of this show talk about the various advantages of remote investing. Topics covered in this podcast include investing in markets that are far from home, managing a property manager, and identifying markets to buy-in.

Buying A Home In 2022

Real estate is constantly changing, and buying a home has become extremely difficult over the past few years. In 2021, property values skyrocketed, making real estate great for sellers but challenging for buyers. Experts expect the market to relax a little bit in 2022, but it’s still not the most ideal situation for many buyers. That doesn’t mean you should avoid buying all together. If you do your research and are diligent, you can certainly find your dream home. Read on to learn a little bit about buying a home in 2022.

 

Home Prices Will Keep Rising, But At A Slower Rate

Although home prices are expected to continue rising in 2022, they’ll be at a slower pace than they were in 2021. According to the National Association of Realtors, home prices are expected to increase by just 2.8% in 2022. Other experts, such as the mortgage bankers association and the housing finance company Fannie Mae, predict a more modest increase of around 7%.

 

Mortgage Rates Will Increase, But Still Be Low

Despite the expected increase in mortgage rates in 2022, the average 30-year fixed-rate remained at a historic low of 3% in 2021. It’s important to note that even if the increase is as predicted, the mortgage rates will still be fairly low.

 

According to Yun of the National Association of Realtors, the average 30-year fixed mortgage rate will increase to 3.7% in the coming months. Other organizations such as The Mortgage Bankers Association or Fannie Mae believe that it will raise to 4% and 3.3%, respectively.

 

Actually Buying A Home

Knowing a bit more about the housing situation in 2022, you may decide to go ahead and start house hunting. But are you prepared? Ask yourself a few questions to be sure you understand what you’re getting yourself into.

 

Are You Financially Prepared?

No matter what the housing market is like, it’s always important that you make sure you’re financially prepared to buy a house. This means a lot more than being able to make a mortgage payment each month. You’ll want to make sure you have the money put aside for closing costs, moving costs, potential repair costs and so much more. You’ll also want to make sure you have a high enough credit score to take out a mortgage.

 

Research Neighborhoods

It’s important to research the places you’re considering moving to. You don’t want to buy a house and then find out months later that you hate the area. If you have kids, research the local school system. You may want to look at crime rates, or what the weather tends to be like in the area so you can avoid potential flood zones. These things are important to make sure you’re happy with your home in the long run.

 

Find The Right Real Estate Agent

Finding an experienced real estate agent who cares more about making their clients happy than they do making a sale is integral to finding the perfect home. Research local realtor reviews, or ask friends and loved ones for recommendations. The agent you work with can make or break the entire homebuying process.

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