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Real Estate Assets plays an important role in a person’s wealth, especially homeowners. Two dominating factors, Size, and Scale makes the Real Estate Marketplace attractive and profitable for investors. We will discuss value and investment opportunities of real estate as they shape this marketplace. We are also going to describe how they affect the market including its value and investment opportunities while explaining how you can track them and make money. The following are factors that dominate the real estate market:
Interest Rate
Interest rate also have a drastic impact on the real estate market. If you want to buy a home for a mortgage, you have to research interest rate with a mortgage calculator. The changes in interest rate affect a buyer’s ability to buy a piece of residential property. This is because if the interests are lowered, it will lower the cost of getting a mortgage to buy the home. It will ultimately create a high demand for real estate and push the prices high.
You need to notice the interest rate, cost to obtain mortgage increase and lower the demand and price. But when you look at the impact of interest rates on equity investments, it is very similar to a bond’s relationship with interest. Lower interest rate means valuable bonds and high yield real estate investment trust, not residential real estate.
Government Policies
The legislation is another factor that dominates property demand and prices. Aspects like tax credit, subsidies and deductions are few examples of how government chances the demand for real estate. These incentives dominate the changes in supply and demand while identifying the fall trends. For example, in 2009 the United States introduced a first-time homebuyer tax to credit homeowners.
This was an attempt to jump-start home sales in a bad economy. This led to 900,000 homebuyers to buy homes with variable home loan rates. It temporal but an incredible change and it was only because of a new tax incentive. It shows that the demand for housing was going up for other factors as well.
Demographics
Demographic describes the composition of a population including its age groups, race, income, population growth, gender, and others. Demographics is a deciding factor which evaluates the value of real estate assets, and market trends. Even the smallest change in demographics have severe and long-term impacts on the real estate market. Still, most experts choose to ignore this data. For instance, Baby boomers who were born between 1945-1964. They are an excellent example of how demographics change real estate. The transition between these boomers to retirement led to more generational trends. The changes of 2010 will still be felt for decades to come.
There are many ways to shift demographics. But for an investor, it is important to ask how this will affect the demand for second homes when more people will start to retire? How will this affect the demand for large homes and what to do if income is small, but the children have moved out? These questions will let you narrow down the type and location or investment long before the trend starts.