Industry Trends
Marketing Insights
Each year, the New Home Trends Institute — part of John Burns Real Estate Consulting — rolls out a highly anticipated list of trends for new homes and communities in the coming year. Many home and building industry professionals use this list to plan for the year’s consumer and design trends.
The New Home Trends Institute’s “23 Trends for 2023” includes dozens of insightful, practical and helpful tidbits that industry experts can reference throughout the year.
While I could recap the entire presentation, I’ll instead highlight a handful of the biggest takeaways and what they could mean for your business in 2023.
1. Homeowners Making Do … for Now
Many homeowners feel locked in place due to financial constraints, which impacts their repair and remodeling spending decisions.
Following the early 2000s recession, many buyers locked in incredibly low interest rates. Those buyers now feel tethered to their low interest rate and are unwilling to make a move due to today’s much higher rates, according to Pawan Thampi, senior vice president of building products consulting for John Burns Real Estate Consulting.
About 86% of mortgage holders currently have interest rates below 5%. Of that group, 42% feel stuck in their current homes because of rising rates.
While many “stuck” homeowners may want to make the most of their situation, inflation and fears of another recession will likely slow plans to remodel or renovate. This, in turn, should fuel minor fixes or changes as homeowners defer major projects that aren’t necessities (such as kitchens, bathrooms, etc.) for a few years.
This lines up with predictions from other experts who believe the remodeling industry will slow in 2023 due to recessionary concerns, only to pick back up in 2024 and beyond.
2. The Home Bargain Hunt Is On
Everyone loves a deal, and homebuyers are no exception. Over the years, consumers have become savvier bargain hunters.
Mikaela Arroyo, director of the New Home Trends Institute, notes that younger generations look for money-saving opportunities when they hear talk of a recession. Some consumers even think it’s best to wait until the housing market tanks to find the home they want at an affordable price.
“For millennials, the benchmark recession from their formative years was the Great Recession,” Arroyo said. “So, there is a population out there that thinks prices are going to completely tank if they hear the word recession. They’re going to try to time a deal.”
While a recessionary impact on the housing market is yet to be seen, builders are reporting more price cuts. One survey found that 59% of builders cut prices month over month in November, signaling that bargains are indeed out there and that even more saving opportunities could be on the horizon, as builders see lower margins and settle for pace over price. Meanwhile, 4% of builders actually increased prices during this period.
3. Homes Become More Practical, Cozier
The notion of making homes work more efficiently with less space has been around for several years and doesn’t show signs of slowing. Arroyo said many consumers will face tough tradeoffs, especially in the kitchen and bathrooms.
For example, in the kitchen, homeowners are willing to sacrifice a walk-in pantry for more floor space or a formal dining room for an eat-in kitchen nook. In the bath, homeowners are giving up the traditional tub for a larger shower. Architects believe this trend will continue to grow over the next few years.
While maximizing livable space will continue to be popular across the board, how this is accomplished will vary. For instance, some will open up the great room to make a small space feel larger. Others will keep the footprint and simply use their cozy, smaller spaces for extra functions.
Gone are the days when a home office took up an entire room. Now, homeowners want to take advantage of every ounce of square footage.
