Housing prices are constantly changing, which can make both buying and selling a home more complicated. While it’s difficult to predict future changes, it’s important to understand the key factors that affect the housing market and home prices. Here are the five major things that affect housing prices:
The overall health of the economy is a major influence on housing prices. While made up of myriad factors, the “health” of the economy can usually be determined by employment data, manufacturing data and prices of goods. As the economy flourishes, housing prices increase. Likewise, if the economy is suffering, prices often decrease.
The fluctuation of supply and demand affects goods and services, and property is no exception. Because physical property is a finite resource, supply and demand can become extremely important in densely populated areas. The differences between a buyer’s and seller’s market is the amount of demand compared to the amount of actual housing inventory.
If the Federal Reserve changes interest rates, mortgage lenders have to adjust accordingly. This results in a different interest rate on your mortgage or loan. Even though the change may be less than a tenth of a percent, it can make a tremendous difference in housing prices. As mortgage rates increase, many would-be homebuyers cannot afford higher priced homes. On the flip side, lower mortgage rates can encourage more buyers to enter the market, which affects pricing through supply and demand.
The location of a home affects its price immensely. There are multiple factors in a location that can affect pricing, such as specific neighborhoods, highways, specific attractions or cultural interest, hospitals and schools. Home prices are higher in areas with rapid growth and lots of commercial activity. Some other location-based variables that can affect the price of a home include crime, healthcare access and proximity to industry.
Understanding the variables at play in the overall economy will help you navigate the housing market with confidence. Keep these factors in mind during your home search or selling process to stay up-to-date on what affects housing prices.
Ted draws energy and joy from building synergetic relationships with his Clients. Ted's nature is graciously gregarious and persevering; he's honest; and he's been dedicated to a substantial list of clientele throughout his 25 years in the hospitality business and almost two years as a REALTOR. His passion is creating a sincere, successful relationship with people.
Ted grew up in a family of Realtors in central Indiana, earned a degree in economics and philosophy from the University of Notre Dame, and jumped into all aspects of the restaurant business. His ensuing hospitality career path eventually led him into the Event Management Sales & Service role in hotels and quickly guided him to Los Angeles, San Francisco, and finally to a luxury resort in the Napa Valley, where he, his husband, and their dog have resided for almost a decade now.
The irony is not lost on Ted that his ‘growth’ journey has culminated in“living happily ever after” in an agricultural area with a small-town feel and sense of community strikingly reminiscent of his youth…and as a REALTOR nonetheless!