Tampa, Miami, Orlando and Jacksonville all feature as some of the best places to buy US real estate in 2023, according to the latest report from PWC. Their annual Emerging Trends in Real Estate pinpoints Sun Belt metros as hot spots for investors next year, locations including these four Florida metros. In addition, the report highlights the high percentage of households who rent through choice rather than necessity.
General outlook for US real estate in 2023
Emerging Trends in Real Estate 2023 reveals that overall most commercial real estate professionals “remain reasonably upbeat about longer-term prospects”. According to PWC, “cautious optimism” is the general tone for next year, despite some economic headwinds and rising interest rates.
Sun Belt markets firm favourites
As has been the case over the last few years, the so-called Sun Belt markets remain firm favourites among investors. They see the best prospects in metropolitan areas in states such as Florida, Texas and Arizona.
Emerging Trends in Real Estate divides the investors’ top picks into Magnet markets, in turn, sub-divided into Super Sun Belt, 18-hour cities and Supernovas. As the graphic below illustrates, all have seen exponential growth and remain the preferred investor location since 2011.
Super Sun Belt
These markets make a good choice to buy US real estate in 2023 because they’re large and diverse. PWC says they are also “still affordable, forming powerhouse economies”. In addition, their economic performance is consistent and their recovery after the pandemic recession, “quicker and more complete”. Metro areas within this subgroup rank the highest among investors.
Top ranking Super Sun Belt metros: for 2023, investors’ choices include Tampa and Miami in Florida in their top seven choices.
The metros within this subgroup have risen within investor preferences in the last ten years. For PWC, their defining attribute is “their tremendous and sustained population and job growth”. They also have “above-average levels of economic diversity and white-collar employment”. As a result, Supernovas have “strong investor appeal”.
Top ranking Supernova metros: Jacksonville in Florida features in this list of five picks.
What’s in store for multi-family investment in 2023?
Investment in apartments ranks high on the list of best assets to buy US real estate in 2023. PWC points out that demand for rental accommodation will continue “through and beyond 2030”.
The reasons behind the sustained demand are three-fold:
· “A four-generation surge of household formation”
· A preference for rental over ownership. A survey by Harvard’s Joint Center for Housing Studies found a significant rise in “rent by choice” households over the last decade. For example, the increase in renter households with an income of at least US$75,000 rose by 48%, bringing their market share to 26%.
· An acute shortage of housing.
As a result, the future of apartment housing for investors, owners and managers is, according to Emerging Trends in Real Estate 2023, “the brightest beacon of prosperity”.
What’s in store for single-family homes in 2023?
Buy-to-let trends in this asset have also experienced changes in renter preferences. The report finds that 35% of single-family home tenants who earn at least US$1,000 a month choose to rent rather than own.
PWC also highlights the rise of build-for-rent models among investors. The report states that almost half of planned master communities include build-for-rent options.