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.
Since 1990 I've been happily helping people just like you realize their dream of home ownership, and loving every minute of it! I'm an educator by heart, so you won't feel overwhelmed with the whole process. I'll be there with you every step of the way and more! I've been where you are now more than once and I understand all the emotions and apprehensions that come with a move. If you're relocating, I will make sure you have all the information about neighborhoods, schools and services that are important to you. I am detail oriented and I have a strong background in research. I have my BA in Economics from Lewis & Clark College, and graduate studies in Counseling Psychology at St. Martin's University. I'm a graduate of the Masters Sales Academy for Realtors. I've also been an instructor for new real estate agents. I've been recognized with the National Sales Award "The Dozen" for being in the Top 5% of all Realtors & the local Realtors Thurston County Star Agent Award.
