The real estate market is constantly changing, and it can be difficult to keep up with all the factors that affect it. Some of these factors are more obvious than others, but they’re still worth considering if you want to invest in property or sell your home.
We’ll go over 8 of these factors so you can better understand how they work and what their impact on the current housing situation might be.
Here are the top 8 factors affecting the real estate market:
Before looking into some of these factors which affect the real estate market, it’s important to set some ground rules on what makes up a healthy housing market.
A large down payment indicates that consumers are more comfortable investing in their homes rather than renting them out. This also means that homeownership rates will likely increase.
2. Aging Population
When trying to understand how the real estate market works, it’s helpful to look at population data as well as where people are buying or not buying homes. In this scenario, the number of older people (ages 65+) will increase because there are more baby boomers entering that age group.
This also means that because these homeowners are living in their homes longer, it creates less inventory for average consumers to choose from when looking at resale or new homes.
3. Millennials in the Workforce
The millennial generation is much larger than the generations before them. As millennials continue to grow in numbers and make getting into the workforce a priority, companies will begin hiring more full-time employees, which correlates with home purchases.
It’s important to recognize this movement when trying to understand how the real estate market works because it can indicate how many resources will be available for home prices to go up or down in the future.
4. Foreign Investments
Foreign investments are another factor that can affect housing prices because foreign investors may push prices up or down depending on what they do with their currency (buy or sell).
The value of the currency has an effect on home values because foreign investors will often require more currency to purchase property, which increases demand and therefore decreases inventory levels for average consumers buying into the market. This is something you should consider when trying to understand how real estate works.
5. Supply and Demand of Homes
The supply and demand of homes are one of the factors that affect the real estate market because it shows how much competition there is preparing to buy a home compared to what’s available.
Inventory levels generally go down when interest rates go up. The reason for this is that people are less willing to get into debt when it becomes more expensive. However, interest rates are not the only factor that affects supply and demand.
Any increase in income or decrease in unemployment can cause inventory levels to drop, which makes homes harder to find if you’re looking through online listings.
6. Online Marketing
As mortgage companies increase their online marketing, it will affect the real estate market because it means that money lenders are trying to reach a much wider audience than before.
This is important because many people who may not have considered buying a home in the past may be interested now simply because of lower interest rates or mortgage websites that reach out to them.
7. Location
Location is another factor that affects how real estate works since different locations around the country (and the world) offer different opportunities for homeownership based on their proximity to jobs, schools, transportation, entertainment, and other amenities.
Furthermore, the location of a home affects its value because some homes have more desirable features, such as newer appliances and larger lots, while some homes may not.
8. Taxes on Proprietary Leased Properties
The final factor affecting real estate is taxes on proprietary leased properties. This indicates how many residential properties are being converted into rental units, which again has an effect on overall inventory levels for average homeowners looking to buy in.
In some areas, this can be major since it means that the supply of single-family residences is low while the supply of rentals is high, putting pressure on housing prices if demand remains constant or increases over time.
In conclusion, there are a variety of factors that affect the real estate market. In this post, we’ve discussed eight different factors that will help you better understand how to navigate the ever-changing landscape of buying and selling homes in today’s economy. The more you know, the better your chances of making a smart decision regarding your future home purchase.
