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- Atlanta, Raleigh, and Dallas are expected to be the top-3 real-estate markets in 2023, NAR researchers predicts.
- These markets have renters who can afford to buy homes and experienced strong job growth over the last year.
- However, current homeowners are still weary about selling their homes because of high mortgage rates.
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, researchers at the National Association of Realtors have suggested.
Lawrence Yun, a senior economist at NAR, said at the organization’s fourth annual Real Estate Forecast Summit on December 13 that cities like Atlanta, Georgia; Raleigh, North Carolina; and Dallas, 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.
“The Atlanta metro area continues to be more affordable than most areas across the country, with more than 20% of the renters able to afford to buy the typical home in the area,” NAR researchers wrote in the report. “The job market is robust, with many major tech companies from the West Coast opening offices, such as Apple, Microsoft, and Visa. As a result, the area experiences substantial migration gains and fast population growth.”
In addition to Atlanta, NAR researchers notes in the report that Raleigh and Dallas have also become two of the country’s fastest-growing employment hubs. These two cities saw their 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%.
Yun said 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 the South 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 Yun predicts 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, Yun predicts 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, Yun predicted that 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.