When you’re looking to buy or sell, it’s a good idea to familiarize yourself with the nature of the market and pricing. The prices of real estate properties are influenced by a variety of factors, which can be broken up into micro and macro factors. Last blog we went over the kinds of things that are considered Micro Factors affecting real estate values, today let’s talk about the Macro Factors, which are the big ones that affect the general market.
Macro Factors Affecting Real Estate Values
An environment with high scale business options, tourism, good employment opportunities etc has a high tendency to attract more residents. As the area’s population continues to increase, there will be an increase in property value and raising real estate pricing. And of course, when the migration is away from an area, that hurts real estate values.
Employment and Wages
When there is a reliable increase in wages, people won’t mind taking on a mortgage to buy properties, and banks will be more willing to loan to them. This confidence confidence on both parts raises real estate pricing. When wages are not encouraging, the demand for properties will drop. This is because people will be careful in taking loans as they are not sure whether they can afford it in the future.
When the general economy is slow, there is a drop in real estate values in most areas, but not all. Investors and buyers can lose confidence and cause low market activity, which will automatically bring about depreciation in market prices. Conversely, an economy that is growing positively with great buoyancy will increase the confidence of both the investors and the buyers. There would be an increased rate of property buying and selling. And this means increased market prices.
Government policy is another macro factor that considerably impacts the demand and prices of real estate. Subsidies, deductions and tax credits are a few ways the government can temporarily enhance real estate demand. Being conscious of these government incentives can help you decide on real estate changes. You also may potentially take advantage of them.
Other macro factors that can affect real estate pricing include demographics, land availability, interest rates, taxes, construction costs, and financing availability. In their ways, each of these can sit under the umbrella of one or more of the above factors.
If you need help deciding whether now is the time to buy or sell, don’t hesitate to contact the Laura Wucher Real Estate team today.