Main Content

4 Elements that Move the Real Estate Market

Real estate is one of the biggest investments you can make. Buying a home will likely be the single biggest purchase you ever make in your life. With that said, it’s good to know what affects the real estate market. Understanding these 4 elements that move the real estate market will help you make the right move at the right time. 

  1. Coronavirus
  2. The biggest thing affecting the real estate market right now is the coronavirus pandemic. Many property markets are now on hold as people are encouraged to not travel or move unless necessary. Some transactions are still being processed and some property markets are still open, but in general the La Canada real estate market has seen better days. 

    The virus is likely going to cause some financial losses, but it’s better than the human cost the virus is going to have. The market likely won’t look the same for a while until after the virus passes. Mortgage payments are being put on hold, new builds aren’t being built, and Pasadena real estate isn’t moving much at all right now. 

  3. Demographics 
  4. Demographics refers to the overall composition of a population including their age, gender, race, income, and migration patterns. Demographic information is a major factor in the real estate market that far too many people overlook. Shifts in the demographics of an area can have a profound impact on the market. 

    There are several ways that demographic changes can impact the market. As the population gets older, for example, there’s more demand for retirement homes. When more families move to an area, there’s more demand for larger homes. Think about the demographics of an area to buy the best piece of La Canada real estate available right now. 

  5. Interest Rates 
  6. Interest rates will have a big impact on real estate. If you expect you’ll need a mortgage to pay for a home then you should do some research into interest rates and use a mortgage calculator. Interest rate changes can have a dramatic impact on whether or not you can afford to buy a home. 

    The thing to know about interest rates is that the higher rates climb, the more expensive a mortgage is. High interest rates generally mean less demand for real estate, which leads to reduced prices. It’s cheaper to get a mortgage when interest rates are low, but it may be cheaper to buy a house when interest rates are high. 

  7. The Economy
  8. The economy also has a huge impact on the Pasadena real estate market. Factors such as GDP, manufacturing, cost of living, and employment data all affect real estate. To keep it simple though, the real estate market lags when the economy lags. 

    The interesting thing is that economic factors can affect different parts of the real estate market in different ways. For example, hotels are affected more than offices when the economy is down. Less people are staying in hotels, but the same number of people are still occupying offices. Long-term lease properties like offices do a good job of weathering economic turbulence, even though short-term leases like hotels can make more money. 

Final Thoughts

These are just four of the key elements that affect the real estate market. There are many more factors at play than just these. Be sure to do some research into the market and consider hiring a real estate agent to get a great deal when the time comes to make a move. Understanding these factors, and how they affect the market, is key to making a good real estate investment.