Real Estate

Real Estate and Economics 101


When I was in college, I used to wonder why in the world I needed to know about supply and demand.  Now, I understand why.  Real Estate is directly affected by micro and macroeconomics.  (All other businesses are affected too, but as a Realtor, I will focus on real estate for purposes of this blog).


For example, in this current real estate market, we have a shortage of inventory and a surplus of buyers.  What does this mean?  Well, since there is high demand and not enough inventory; we will see prices of properties gradually increase. HINT: Homeowners thinking of selling?


Of course, there are other factors that come into play like short sales and bank-owned properties.  Nonetheless, we are beginning to see more homeowners selling their homes as standard sales.  Homeowners need to think about why they need to sell.  Perhaps, they want to sell because they are relocating or because they want to downgrade/upgrade.  Or, they might need to sell because they can no longer afford their mortgage payment.  Or, sometimes, there are other unfortunate circumstances like the death of a homeowner, a divorce, or an illness.


There is a trend for real estate transactions to slow down during the holiday season.   Usually, homeowners will list their homes after the holidays and buyers will start looking for homes in Spring so they are in their new home by the end of Summer.  With the interest rates at their lowest in history probably until mid 2013; I have great hope that the real estate industry is on its way to recovery—despite the U.S. fiscal cliff conversations.




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