What Real Estate Trends Will the New Year Bring?

The real estate market is no stranger to change.

Each year brings new challenges, opportunities, and trends that shape how homeowners, property owners, and investors approach buying, selling, and managing properties.

With the new year just starting, property owners are asking a critical question—what real estate trends are shaping up, and how can they position themselves for success?

From fluctuating home prices to the rise of tech in real estate, this guide dives into the key trends property owners need to know as they plan for the year ahead.

Recovering Markets and Regional Shifts

Adjustments in Home Prices

Home prices witnessed unprecedented growth over the past couple of years. However, experts predict a leveling off or a slight dip in specific overvalued markets this year. The rise in mortgage rates has curbed some demand, leading to a cooling effect, particularly in cities with red-hot markets like Austin, San Francisco, and Denver.

For homeowners, this means a need to recalibrate expectations if planning to sell. On the upside, buyers may find more negotiating power and reduced competition for homes, especially in formerly “unattainable” areas.

The Role of Secondary Markets

One noticeable trend is the growing interest in secondary and even tertiary markets. Cities like Pittsburgh, Kansas City, and Boise are gaining popularity for their affordability and growing employment opportunities. Homeowners in these areas may see a boom in activity as buyers shift their focus to places where their money stretches further.

For property owners in traditional hotspots, maintaining property value might mean investing in upgrades to make properties stand out in an increasingly competitive market.

Technology Transforming Real Estate Practices

Virtual Home Tours and Digital Transactions

The integration of technology into real estate transactions continues to expand. Virtual home tours and digital closing processes are becoming the norm. For property sellers, offering high-quality 3D tours or video showings can make a significant difference in standing out to tech-savvy buyers.

Services like DocuSign and blockchain smart contracts also make it easier for buyers and sellers to finalize deals without needing to be physically present. Property owners should stay updated on these digital tools to adapt seamlessly.

The Rise of PropTech (Property Technology)

PropTech is revolutionizing how properties are managed, bought, and sold. From smart home automation systems appealing to buyers to platforms like Zillow and Redfin offering instant buying solutions, technology tools are reshaping the industry.

For property owners managing rental properties, platforms like Buildium and AppFolio are streamlining rent collection, tenant communication, and maintenance requests, saving time and reducing headaches.

Shifts in Preferences Among Buyers and Renters

The Continued Demand for Space

The pandemic permanently altered how people view their living spaces. Even as life normalizes, many buyers prioritize homes with home offices, outdoor areas, and flexible spaces. Compact apartments and condos may face slower demand unless they offer luxurious amenities or proximity to city centers.

Owners looking to sell or rent homes should consider staging their properties to highlight potential home office setups or relaxing backyard environments to align with buyer preferences.

Sustainable and Energy-Efficient Homes

Sustainability remains a powerful motivator for prospective buyers and renters. Homes equipped with energy-efficient appliances, solar panels, or smart home technologies like thermostats and lighting systems are increasingly attractive. Some regions are even offering tax credits for green property updates.

Property owners can increase value by investing in energy upgrades while appealing to environmentally-conscious buyers—a win-win for owners and the planet.

Mortgage Rates and Affordability Challenges

Higher Interest Rates Impacting Buying Power

This year, rising mortgage rates are expected to continue affecting housing affordability. Buyers may tighten their budgets or opt for smaller properties to manage monthly payments. For homeowners with plans to sell, pricing homes realistically and providing value through upgrades or included appliances may entice buyers sensitive to higher borrowing costs.

On the other hand, existing homeowners with fixed-rate mortgages who choose to stay put could benefit from the stability of locked-in, lower rates.

Renting Gains Traction

With affordability challenges, renting has become a viable solution for many who are priced out of buying—or prefer the flexibility renting offers. Short-term rentals for remote workers or “digital nomads” may also prove to be a growing market.

Property owners with rental properties should evaluate whether repositioning units to cater to specific demographics (e.g., flexible leases for traveling professionals) makes sense. Highlighting amenities like reliable internet connections or short-term lease options can attract this growing audience.

Mortgage Rates and Affordability Challenges

Higher Interest Rates Impacting Buying Power

This year, rising mortgage rates are expected to continue affecting housing affordability. Buyers may tighten their budgets or opt for smaller properties to manage monthly payments. For homeowners with plans to sell, pricing homes realistically and providing value through upgrades or included appliances may entice buyers sensitive to higher borrowing costs.

On the other hand, existing homeowners with fixed-rate mortgages who choose to stay put could benefit from the stability of locked-in, lower rates.

Renting Gains Traction

With affordability challenges, renting has become a viable solution for many who are priced out of buying—or prefer the flexibility renting offers. Short-term rentals for remote workers or “digital nomads” may also prove to be a growing market.

Property owners with rental properties should evaluate whether repositioning units to cater to specific demographics (e.g., flexible leases for traveling professionals) makes sense. Highlighting amenities like reliable internet connections or short-term lease options can attract this growing audience.

The Rise of Real Estate Investment Opportunities

Single-Family Rentals (SFRs)

Single-family rentals are gaining traction as more investors look for stable returns and long-term growth. Unlike multifamily or commercial properties, SFRs tend to have lower turnover rates and appeal to families who want the benefits of suburban living without the responsibility of homeownership.

Homeowners looking to generate income from their properties might consider converting their secondary homes into rental properties to benefit from this demand.

Real Estate Crowdfunding

Crowdfunding platforms like Fundrise and RealtyMogul make it easier than ever for individuals to invest in real estate without owning property outright. This is especially appealing to those seeking diversification but wanting limited hands-on involvement.

For current property owners, leveraging crowdfunding or fractional ownership platforms can enable partnerships or shared-risk investments for larger, high-return projects.

Preparing for What’s Ahead in Real Estate

The real estate landscape is dynamic, but understanding key trends lets property owners stay one step ahead. Whether you’re selling your home, managing rental properties, or exploring real estate investment, adapting to industry shifts will ensure you make smart decisions in the year ahead.

Property owners can remain competitive and unlock growth opportunities by keeping an eye on market shifts, tapping into emerging technological tools, and understanding evolving buyer and renter preferences.