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 low, or a buyers market, or sellers market? Why do some houses, sell, very quickly, while others, remain, unsold, for a seemingly, long period? What makes pricing fluctuate, etc? With that, and more, in mind, this article will attempt to briefly consider, review, and discuss, 6 factors, which often, determine, how the real estate markets, might perform, etc.
1. Supply and demand: Like so many economic issues and considerations, supply, and demand, often, is a major factor, in the performance of the housing market. When there are more buyers than sellers, we call this, a sellers market. When the scenario is reversed, it’s a buyers market. When there is balance between those seeking to buy, and sell, conditions are neutral. Many factors and considerations, go into, what market conditions, might be, including the overall economy, mortgage rates, tax laws, employment/ jobs, etc.
2. Economic strength/ employment: When potential homeowners feel comfortable and secure, in terms of their employment, presently, and for the foreseeable future, they proceed, with a mindset, which focuses on the possibilities!
3. Consumer confidence: The more, consumers exhibit confidence, in the overall strength and stability of various factors in the economy, and the more convinced, ownership has advantages over renting, etc, the stronger the possibilities for housing and real estate pricing. Relevant factors include: mortgage rate trends; tax considerations; the attractiveness of certain neighborhoods, areas, and homes, etc; and the overall national and international economies, and the balance between positive and negative factors/ trends.
4. Mortgage interest rates: When mortgage interest rates are low, the corresponding monthly carrying charges/ expenses, are reduced, This means one can buy, more house, and be able to afford the costs. When rates are higher, monthly costs rise, and, this is generally, a negative factor, in terms of rising prices!
5. Tax considerations: The tax reform legislation, passed at the end of 2017, places caps, on the amount of real estate taxes, which are deductible. Therefore, homes in states, with higher state and local taxes, are somewhat, at – risk, in terms of maintaining their value, because this, significantly increases the costs of home ownership!
6. Real estate, often, is local: There is a slogan, All real estate is local, which means, every local housing market, is different and variable! Avoid believing, what happens elsewhere, is directly related to your specific region.