New Western, the largest private market of its kind in the U.S. for fix-and-flip residential investment properties, has released its most recent research report: “The Flip Side: A Prospect of residential real estate Investing by 2023.” One of the most important conclusions of this study is an expansion that the majority of real estate investors witnessed in 2022. This was in addition to their plans to invest through 2023.

The research reveals that despite the higher rates for mortgages and the low supply of housing stock, Investors remain optimistic about the continued expansion of 2023 and beyond.

WHAT IS THE NEW WESTERN?

As a result of the housing crisis in 2008, New Western leverages data to identify investment opportunities. Today, it’s the most private market within the U.S. for both fix-and-flip and fix-and-rent residential investment properties. New Western continues to make a real investment in real estate accessible to investors of all generations and at all price points and boasts an investor network of 150,000 and $15 billion-plus in transactions in more than 40 markets. Its report contains proprietary information as well as exclusive information about what is happening in the U.S. residential real estate investment market and how it interacts, and the market for commercial real estate. The company operates in the majority of important U.S. cities, buying houses every thirteen minutes.

What’s In The New Western Report?

New Western conducted its investor survey in November 2022. The survey surveyed 886 buyers aged 18 or over from all over the United States, specifically those who purchased residential properties via New Western or plan to in the near future.
Here are some of the most important findings from the report:

• Seventy-three percent of the investors expected the business to grow from 2021 until 2022.
• 70% of the plan is to invest by 2023.
• 63% of those who intend to invest in the future say that mortgage rates aren’t sufficient to discourage them from investing.
• 59% of the population plans to purchase homes with cash only or private funds

There Is A Youth Movement Growing

Don’t be fooled by those that denounce Gen Z as “forever renters.” In contrast, a lot of people remain to rent but more and more are looking at investment in residential real estate to boost their net worth and bring an impressive income stream to their incomes each year. According to the report of New Western that 7% of investors who have purchased investment properties to repair-and-flip, or fix-and-rent, are 18 to 29 years old. The same is true for 15 percent of investors who plan to invest for the first time in 2023. In addition, 86 percent of Gen Z survey respondents expressed their willingness to join the market when mortgage rates begin to show indications for (relative) stabilized.

NEW WESTERN’S 9 PREDICTIONS FOR 2023

Based on the lessons they’ve learned through the years and taking the current market conditions into consideration, New Western has made the following predictions for 2023:

• Local investors should expect less competition and more opportunities for those who are diligent and have the appropriate qualifications.
• Long-term investors must purchase rental properties at a reasonable price to counter unfavorable mortgage rates. Cash buyers are a clear advantage.
• Investors who can generate cash flow with a high single-digit percentage will see only an increase when the market gets better.
• The removal of iBuyers like Redfin, Zillow, and Now Anywhere — from the market for investors offers more options for individuals to buy homes that are difficult to sell, renovate them, and place more habitable homes back on the market.
• The mom-and-pop investor also has the benefit of local knowledge.
• Generation Y Gen Z and Millennials Gen Z will impact the housing market by embracing the investment in residential real estate as an additional source of revenue as well as a hedge against rising inflation.
• Their mobility, in conjunction with their desire for low-cost markets that still need to be explored, and the rise of mid-metros.
• Since rent is becoming more affordable than mortgages, as New Western expects, investors who adopt the fix-and-rent method will be able to tap into a wider number of renters in the properties they invest in.
• The ideal time for remodeling older houses will yield homes that are ripe for renovation and major home improvements–a good thing for fix-and-flip investors.

Demand Will Continue To Shift From Metro & Post Pandemic Towns That Boomed

The housing market is moving out of areas that were once pandemic hotspots. Cities like Denver, Nashville, and Austin, TX, are currently experiencing a decline in homes sold. However, smaller metros are growing. Raleigh, NC, for instance, has experienced an increase of 44% over the past year in the demand of New Western investors. The other cities with potential growth are Tulsa, OK, and Oklahoma City, each experiencing the 51.4 percent increase year-over-year in sales of homes through New Western despite Redfin showing a decrease of 8.4 percent and 3.6 percent, respectively.

Best Overall Strategies & Hurdles In 2023

According to New Western’s study, the 2022 survey of investors used both fix-and-rent and fix-and-flip strategies. Although fix-and-flip was traditionally the main strategy used by investors, we’re witnessing more of a balance between the two.
The biggest hurdles that real estate developers will face in 2023 are:

• Locating properties
• Finance
• Cost of labor

Three of the top reasons that investors provide for investing in properties in 2023 are:

• Appreciation
• Passive income
• Market for Buyers

TOP TIPS TO TASTE AWAYS FOR REAL ESTATE AGENTS

The more knowledgeable you are about the property investment industry in your region and the more chances you will have to work with them:

• Find buyers for newly-renovated homes or
• Find qualified tenants to invest in rental properties
• Find out your options and then show your local investor how you could assist them in gaining the maximum returns from their investments, making it more lucrative for them to continue doing what they’re already doing, which is upgrading old properties and expanding the range of homes that are livable.