Many often wonder why it is often so challenging to understand, predict, etc., many of the variables involved when it comes to the real estate market. Why are prices so high or so low, or a buyer’s market or a seller’s market? Why do some houses sell very quickly, while others remain unsold for a seemingly long period? What causes prices to fluctuate, etc.? With that, and more, in mind, this article will attempt to consider, review, and briefly discuss 6 factors, which often determine how real estate markets might work, etc.
1. Offer and demand: Like so many economic issues and considerations, supply and demand is often a major factor in how the real estate market performs. When there are more buyers than sellers, we call it a seller’s market. When the scenario is reversed, it is a buyer’s market. When there is a balance between those looking to buy and sell, the conditions are neutral. Many factors and considerations are discussed as to what market conditions might be, including the general economy, mortgage rates, tax laws, employment/jobs, etc.
two. Economic strength/employment: When potential owners feel comfortable and secure, in terms of their employment, in the present and for the foreseeable future, they proceed with a mindset that focuses on the possibilities.
3. Consumer Confidence: The more confident consumers are in the overall strength and stability of various factors in the economy, and the more convinced they are that ownership has advantages over renting, etc., the better the chances for housing and property prices. Relevant factors include: mortgage rate trends; tax considerations; the attractiveness of certain neighbourhoods, areas and dwellings, etc.; and national and international economies in general, and the balance between positive and negative factors/trends.
Four. Mortgage interest rates: When mortgage interest rates are low, the corresponding monthly charges/expenses are reduced. This means that one can buy more house and be able to pay the costs. When the rates are higher, the monthly costs increase and this is usually a negative factor in terms of price increases.
5. Tax considerations: Tax reform legislation, passed in late 2017, sets caps on the amount of property taxes that are deductible. So homes in states, with higher state and local taxes, are somewhat at risk, in terms of maintaining their value, because this significantly increases home ownership costs.
6. Real estate is often local: There is a slogan, all real estate is local, which means that every local real estate market is different and variable. Avoid believing that what happens elsewhere is directly related to your specific region.
An educated homeowner must be careful and prepared! The more you know and understand, the better you serve everyone!
