Real estate consists of a significant portion of one’s assets. About one-third of the net-worth of a typical American which translates into a valuation fo about $20 trillion dollars. Because of the size and the scale of the real estate market, more people are compelled to invest in this sector. Here are the key factors that drive the real estate market today.
These represent the composition of a population like gender, age, income, population growth, etc. These statistics are important factor that affects the pricing of real estate and the types of properties that are in demand. Demographic trends can significantly influence the real estate market.
2. Interest Rates
Interest rates also affect the real estate market. The changes in the interest rate can affect a person’s ability to buy a property.As the interest rate falls, the cost to obtain a mortgage to buy a home gets lower. This boosts the demand for real estate, and so the prices go up. The opposite happens when there is an increase in the interest rate.
3. Government policies
These can have great impacts on the demand and prices of properties. The government can increase demand using tax credits, subsidies, etc. Knowing about the present government incentives can help you know the changes in supply and demand.
The overall health of the economy in the region affects the value of the real estate. Economic indicators like employment data, GDP, prices of goods, manufacturing activities, etc. tells about the economic conditions of a region. If the economy is sluggish, so will the real estate.
All these factors affect the condition of a real estate market of a certain region. By having good knowledge on these can help you make an informed decision regarding investments.