5 Key Factors That Influence The Real Estate Industry

By Author: Manoj Upadhyay
Total Articles: 38
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Real estate constitutes a considerable portion of the income of most individuals, and this holds extremely true for many homeowners around the world. Those who are familiar with the real estate market know that it doesn’t stand still – it is constantly evolving, moulding, and improving with every passing year as the world around it does too.
 
The real estate industry is a lucrative one – those who have invested in it and succeeded know that. Those investing in the market do so because of the unique nature of benefits it offers and allows them to secure their money for the long term. But a lot of people don’t realize that it is also a gamble – one toe out of line and your real estate dream could likely turn into a nightmare. Even though virtual real estate viewings have made the process considerably easier, it doesn’t mean that the risks have reduced.
 
Homeowners will probably be aware of the influence a specific market cycle has on net worth. If you’re in the process of buying ...
... a home, the market will decide how much you will have to pay. In order to help you understand the key factors that drive the real estate market, we have curated a list below.
 

Supply and Demand

 
Supply and demand will dictate the direction of the housing market, as perhaps the most basic concept of economics. The more houses that are available at a given time, the less competition there will be. On the other hand, if a desirable neighbourhood is void of sellers, the prices will increase as more people compete for the same properties. Supply and demand will result in one of two market conditions – seller’s market or buyer’s market.
 

Demographics

 
The composition of a population – age, race, gender, income, migration patterns, and population growth – are statistics that are often overlooked but hold significance when it comes to real estate. Major changes in the demographics of a country can have a huge impact on housing trends for several decades.
 

Government Policies

 
Government policies are an important factor to consider when it comes to investing in property. Price and demand on a property can be impacted considerably by legislative decisions. Tax credits, deductions and subsidies could cause a temporary boost in demand for real estate. Secondly, understanding the political climate is vital in order to identify changes in supply and demand and make smart investment choices.
 

Interest Rates

 
A potential buyer’s ability to purchase a residential property can be greatly influenced by a shift in interest rates. A drop in interest rates lowers the cost of the mortgage to buy a home, which in turn creates a higher demand for real estate. Interest rates have a substantially different impact on real estate investment trusts or other equity investments in real estate, more closely resembling that of the relationship between a bond and interest rates.
 

The Economy

 
Last but not the least, the overall health of the economy is a major factor that affects the state of the real estate industry. The value of real estate is generally measured by economic indicators like the GDP, manufacturing activity, employment data, etc. This suggests that the economy and the housing market are generally interrelated – when one rises, the other rises and when one falls, the other falls as well.
 
Another way you can understand the real estate market is via virtual property visits, which will allow you to acquire different insights and a new perspective on how the industry functions and which direction it might take. If you are someone who has invested or looking to invest, this can be a great way to increase your knowledge on the matter.