6 Home Trends to Watch in 2023

  • Categories:

    Industry Trends, Marketing Insights

  • Date:

    January 27, 2023

6 Home Trends to Watch in 2023

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.

4. Niche Communities Gain Traction

Dedicated communities may have originated with the 55-plus crowd, but the concept is expanding across a broader range of lifestyles and interests.

“More and more consumers are choosing [to live in] communities that reflect their ideologies and attitudes, not just their age, life stage or income,” said Ken Pearlman, managing principal of John Burns Real Estate Consulting. “It’s about their lifestyle and living interconnected based on their shared values.”

Communities that focus on ways of living, such as agriculture, sustainability, and health and wellness are growing – now that residents care more about a community’s founding and guiding principles. In fact, some developments have clubs aligned with residents’ hobbies, family-oriented activities or niche topics like dancing.

At the end of the day, it’s about creating new spaces for people to feel welcome and connected under a common vision.

5. All-Electric Communities in Full Swing

Homebuilders are researching and developing communities powered via electricity and solar energy, eliminating the use of natural gas in the home. Several developers, such as KB Homes and Thrive, are overhauling master plans or retrofitting existing communities to meet this growing demand for energy efficiency and home health.

All-electric communities are not only more environmentally friendly, but also healthier all-around. Natural gas can contribute to lower air quality by releasing small amounts of carbon dioxide into the indoor air. Gas stoves are also becoming part of a heated debate, while the Consumer Product Safety Commission discusses banning them after studies confirmed environmental and health concerns.

As more consumers become familiar with the cost-saving benefits of energy efficiency and how these practices promote environmental wellness, experts expect this trend to grow.

6. The Home Becomes an Oasis

Between the tightening of budgets and the growing desire for a slower pace of living, consumers are utilizing their homes more and more for entertainment and relaxation.

On the entertainment side, the cost of going out continues to become more expensive. In fact, 57% of consumers have trimmed their budgets by reducing non-necessity expenditures, according to Arroyo.

“When the pandemic hit, we brought entertainment into the home for safety,” she said. “Now, we are keeping it in the home, because it is expensive to go out.”

This lifestyle change is creating a shift in how people envision their homes. With more people staying in, there will be a renewed emphasis on designing spaces to host and enjoy company.

Not only is the home becoming the source of entertainment, but it’s also becoming a retreat. As more people aspire to live a slower lifestyle, consumers are trying to recenter themselves, live more intentionally and fight back against what’s been called “toxic productivity,” Arroyo said.

Homeowners want their homes to serve as a place for quality rest and a space for improved mental health. More home designs will take into account the need for boundaries from the world, work and even family, while also encouraging better rest.

“As an industry, I think we’ve figured out what we need to do to have a physically healthy home and community,” Arroyo said. “This year is going to be about finding the right recipe for a mentally healthy home.”

Amenities that could be considered are designated hobby rooms or even nature-based experiences, designed to help people find rest in a natural environment.

This trend can also be addressed in the way we talk about current features within the home. Instead of focusing on features that promote physical well-being, gently address how homes provide greater mental health benefits to consumers.

“As you think about health, allow yourself to get a little bit warmer and fuzzier, a little bit softer in how you discuss it,” Arroyo said.

If you’re interested in more predictions and trends across our industry, read through our interview with Robert Dietz, chief economist for the National Association of Home Builders. He provides helpful tips on how industry professionals can use housing market data to alter their business strategy and make the best of a challenging landscape.

Explore more articles from Wray Ward.