4 Important Stats of the Housing Market

[Agostino Pintus]

The four factors that impact real estate prices, availability, and investment potential are:

Demographics 

    Interest Rates

    Government Policies & Subsidies

    The Economy

First: Demographics

Demographics are characteristics of a population: its age, race, gender and income levels; the kinds of jobs held by inhabitants — and so on. Demographic statistics help determine real estate prices as well as what types of housing people prefer when choosing where to live. This would define whether people live in the suburbs or city and price ranges, like a starter homes for first-time buyers or luxury condos for retirees with money to burn. Major shifts in a nation's demographics can affect real estate trends for many years.

Second: Interest Rates

If someone is planning to buy a house with a mortgage, it's important to research interest rates to calculate how much the monthly payments will be. When interest rates fall, it becomes easier to obtain a mortgage loan and therefore more people can buy homes. This increased demand creates greater competition among buyers and pushes up the price of housing. As interest rates fluctuate, so does a person's ability to afford buying real estate.

Third: Government Policies & Subsidies

Legislation and government subsidies can affect real estate prices. Tax credits, deductions and subsidies are just some of the ways that governments can temporarily increase demand for real estate. Many cities will offer tax abatements for instance to spur growth and revitalize an area. Being aware of current government incentives can help you respond to market changes and identify potentially false trends.

Fourth: The Economy

The value of real estate is also affected by the overall health of the economy. This can be gauged using economic indicators like GDP and employment data, among others. When these are poor, so too are investments in real estate.

I just discussed some of the primary factors that influence real estate prices, but there are many other complex issues involved in determining the valuation of an asset. Learning about the factors that influence real-estate prices, and then applying this knowledge to evaluate investment opportunities is essential for anyone hoping to make money in real estate.

Be Bulletproof,

Agostino