Since, we are currently, experiencing, an historic period, regarding the ever – increasing, prices, many houses, seem to be selling, for, some people, seem to think, this is the way, the real estate market, always is, rather than considering the bigger = picture! In fact, historically, this market, often, fluctuates, sometimes, proceeding, as a sellers – market, while, at other times, as a buyers, or neutral one! Although, over time, the price of houses, has kept up with, and, even, slightly exceeded, inflation, there is no consistent trend, as to how this occurs! How long, the current conditions, will continue, and, what might, occur, next, as well as the timing of, this, is uncertain, and, of course, not guaranteed! After, over 15 years, as a Real Estate Licensed Salesperson, in the State of New York, I have seen, many different market – conditions, and, believe, in the bigger – picture, and over – time, there are, at least, 6 issues, which impact pricing. With, that in mind, this article will attempt to consider, examine, review, and discuss these, and why, they matter.
1. Supply and Demand: In the longer – run, the economic concept, of Supply and Demand, is, probably, the most relevant, single – condition, in what happens to pricing! What this means, simply, is when, the number of sellers, outweighs, the number of potential, qualified buyers, home prices, won’t, generally, move up, but when there is a lack of inventory (homes available for – sale, on market), prices rise! When, things are, in – between, we witness a neutral real estate market! Presently, the reason, we witness, such an extreme, amount of price increases, is, the aftermath of the closing of economies, etc, the lack of inventory, many buyers, etc, and a perception, apparently, indicating it is the time, for them, to act!
2. Overall economy; consumer/ job confidence: Whether, it is the actual, overall economy, and conditions, or, simply, a perception, when buyers are optimistic, prices rise, and the opposite often occurs, when they are pessimistic! In addition, the degree of consumer confidence, as well as belief in job security, etc, makes a huge difference!
3. Perceptions of buyers and sellers: When buyers perceive real estate, as offering, meaningful value and viability, it helps drive them, to offer higher prices, and, even, sometimes, creates bidding wars! However, when sellers, become greedy, and offer their houses, at far – too high, prices, it often, slows this trend!
4. Mortgage rates: When mortgage rates are low, it permits potential buyers, to get, more house, for their bucks, because, their monthly installments/ payments, are lower! The current market, is, sort – of, a Perfect Storm, of low supply, great demand, and historic – low, mortgage rates!
5. Local issues (positive and negative): Many believe, much of real estate, is, local, because local issues, whether positive or negative, often, creates, either, conditions, which make one area, more attractive, or less – so! These include: safety/ crime; conveniences; transportation; education/ schools, etc!
6. How a house compares to similar others: Qualified real estate professionals, create, fully – prepared, relevant, CMA’s or Competitive Market Analysis, which, compares, a specific property, to comparable/ similar ones, on the local market, at that time!
If, you plan to, either, purchase, or sell a home, doesn’t it make sense, to understand, the factors, involved? Will you become a more – educated homeowner, or buyer?