New Western Survey Finds Most Investors are Confident in Residential Real Estate Market Despite Challenges

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Jan 10, 2023, 08:00 ET

Poll reveals vast majority of real estate investors saw business growth in 2022, plan to continue investing in 2023

DALLAS, Jan. 10, 2023 /PRNewswire/ -- New Western, the largest national private marketplace for fix-and-flip residential investment properties, today released a report on the state of real estate investment in the United States. The analysis, which offers insight based on both New Western sales data as well as opinion polling from its network of 150,000 buyers, found that investors maintained confidence throughout 2022 and into 2023 even though housing inventory remains low and interest rates continue to rise.

The report, titled "The Flip Side: An Outlook for Residential Real Estate Investing in 2023," found that 73% of investors surveyed said their business grew from 2021 to 2022, and 70% said they plan to invest in 2023. What's more, 63% of investors who are interested in purchasing for the first time in 2023 said interest rates are not too high to keep them from purchasing homes, as 59% plan to use cash or private money.

Additionally, the survey revealed a growing youth movement in residential real estate investment. In fact, 7% of investors who have purchased investment properties previously are 18-29 years old, as are 15% of investors looking to purchase for the first time in 2023. And 86% of Gen Z respondents said they are ready to enter the market once mortgage rates show signs of stabilization.

New Western's report offers predictions for 2023. Given that finding deals, the cost of labor and funding are the three biggest challenges investors cited for 2023, career-rehabbers, mom-and-pop and semi-pros will likely take a conservative approach and look for quality deals. Fortunately, these local investors now have access to the data large-scale institutions use to evaluate deals. They will combine that with their skills and local knowledge to take significantly outdated homes in major cities, rehabilitate them and return them to the market. These are homes the average home buyer won't touch, and are significantly more affordable than new builds: Homes purchased through New Western that are later renovated sell for 31% less than new retail homes for sale in the same market.

New Western's data shows demand is also starting to shift away from some of the top pandemic boom regions. Denver; Nashville, Tenn.; and Austin, Texas, grew at a record pace in recent years, but after Q2 2022 all three cities experienced a major decline in volume of homes sold. At the same time, smaller metro areas are flourishing. For example, Raleigh, N.C., showed a 44% increase in demand year-over-year from New Western investors. Oklahoma City and Tulsa, Okla., are ripe for growth as well with an increase of 51.4% each in YOY homes sold through New Western, even though Redfin shows a decline of 3.6% and 8.4% in those markets, respectively.

"Even though rising interest rates present a challenge, the reality is we have a deficit of five million families that need homes," said Kurt Carlton, president and co-founder of New Western. "So the demand is there, but inventory nationwide is still very low. We know there will not be enough new builds to close the gap, while the exit of iBuyers from the investor market will open up a surplus of options for individual investors to scoop up deals and provide inventory by rehabbing existing homes. Traditional market headlines will focus on a macro environment that won't appear favorable, but there's more to the story in 2023. Smaller investors will leverage their local knowhow and nimble operations to find opportunities in their neighborhoods, and will continue to grow their fix-n-flip or rent businesses."

New Western's investor survey was conducted in November 2022. It consists of 886 real estate investors ages 18 and up from around the United States who have previously purchased property through New Western or plan to in the future. For more information about New Western, please visit https://www.newwestern.com.

About New Western

New Western makes real estate investing more accessible for more people. Operating in most major cities, our marketplace connects more than 150,000 local investors looking to rehab houses with sellers. As the largest private source of investment properties in the nation, we buy a home every 13 minutes. New Western delivers new opportunity for all—a fresh start for sellers, exclusive inventory for investors, and affordable housing for buyers. For more information, visit www.newwestern.com.

SOURCE New Western