A real estate market is a collection of all properties that are available for sale in a given area. This can include homes, land and commercial property. The real estate market is influenced by several factors, including supply and demand, median home prices, new construction, mortgage rates and the overall economy. Understanding these trends can help homeowners and investors make smart decisions when buying or selling a property.
The real estate industry has its own supply chain consisting of maintenance firms, contractors, builders and professional service workers who are employed by the real estate companies (PwC, 2021). Governments also play an important role in the market by providing infrastructure and enforcing regulations that foster growth and promote transparency, fairness and sustainability of the industry.
When there is a positive economic outlook, it typically increases the demand for real estate. This is because job growth typically leads to an increase in personal incomes, which then boosts demand for office space. This can also lead to increased demand for retail shops. Additionally, as people move from one city to another, they usually require housing, which drives demand for residential properties.
Real estate markets generally experience three primary phases: expansion, plateau and contraction. In the expansion phase, increasing demand for properties leads to higher property prices and increased construction activity. This can be fueled by many different factors, including low interest rates, economic growth and positive demographic trends. The plateau phase is characterized by stagnant or declining property prices. In the contraction phase, declining demand for properties leads to lower property prices and reduced construction activity.
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