7 Factors That Drive the Real Estate Market

Knowing the many factors that drive the real estate market will undoubtedly give you a head start at investing in real estate, as you will see the bigger picture of the world of real estate.

So, without further ado, here are the seven main factors that drive the real estate market.

Key Factors Driving the Real Estate Market

1. Demographics

This refers to the data reflecting the population makeup, for example age, race, gender, etc. Today’s biggest demographic drivers in the real estate market are millennials, who carry influence in metropolitan areas especially.

2. Income and Wealth

Another demographic to consider is a population’s wealth or increase in income generated. Should income increase at a rate that exceeds inflation, households gain greater power to purchase property, directly influencing the real estate market.

3. Market Size

Generally, if other variables remain constant, larger areas are linked to a greater demand in real estate. The bigger the number of households in a specific area, the larger the need for housing units, workspaces, etc.

4. Consumer Expectations

If the consumer anticipates growth and, therefore, has a positive expectation (whether business or household related), the demand for a particular property type is expected to increase.

5. The Economy

A stable economy grants consumers a greater measure of confidence to invest in real estate, as opposed to times of economic instability and uncertainty.

6. Cost and Credit Availability

The effect of lower interest rates (cost) and greater credit availability will invariably lead to an increase in consumers’ power to purchase property.

7. The Government

Governmental subsidies and policies can either hasten or halt the real estate market and are vital factors to consider.

Final Thoughts

As you can see, there are many driving forces at work in the real estate market. Be sure to consider them all when investing in real estate.

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