Being closely related to one’s financial health, properties are a lucrative and attractive sector for many investors today. This holds especially true for homeowners in the United States, where a significant portion of one’s wealth is held in real estate. As of 2019, approximately 69.4% of American families actually own their own primary residence. Read on to learn more about what exactly drives today’s real estate market.
The Economy
Needless to say, the health of the economy plays a big part in the value of the real estate. This can be measured through economic indicators such as employment rates, GDP, prices of goods, and others alike.
As the economy becomes sluggish, the supply of money naturally becomes more restricted. Since money becomes significantly harder to borrow, there will be fewer parties interested in buying a home. With a decrease in demand, homes will take longer to sell. As such, the increased supply and lower demand will result in a downward price trend until the economy recovers.
Interest Rates
Similar to economic health, interest rates also have a major impact on today’s real estate markets. Should you be considering purchasing a home through a mortgage, we highly recommend that you first use a mortgage calculator to research interest rates.
Lower interest rates translate to lower costs of obtaining a mortgage. This will result in an increased demand for real estate, pushing prices up. On the other hand, increasing interest rates result in lower demand for real estate, pushing prices down.
Government Subsidies/ Policies
Depending on the area you reside in, the policies set in place by the government can temporarily boost or lower the demand for real estate. Some research combined with an awareness of the current government incentives can give you an edge in determining the changes in the supply and demand of properties. In addition, it can also help you to identify potentially false trends so you can make better-informed decisions. Another way you can make better-informed decisions is through reading real estate blogs to better understand the market.
One such example occurred in the year 2009 when the US government introduced a tax credit to first-time homebuyers in an attempt to boost home sales during a sluggish economy. 2.3 million people took advantage of the policy and made a sizeable yet temporary difference.
Supply
Needless to say, another factor that drives today’s real estate market is the supply of properties. Just as with any other goods, an excess supply of properties will result in a downturn of prices and vice versa. As such, indicators such as property vacancy can indicate the health of the real estate market.
Finding a Cost-Effective Property
One of the biggest advantages associated with understanding the real estate market is the ability to make better-informed decisions. If you are looking to purchase properties but unsure of how to determine a reasonable price, then NJLux might be able to help. NJLux connects interested buyers to cost-effective properties, making it the ideal choice for interested buyers. Use the property finder today to find a property in your desired location.
