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3 Big Factors That Influence The Real Estate Market

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The US real estate market has made an excellent recovery since the housing crash of the late noughties, with limited inventory and low interest rates fostering a great environment for sellers in many parts of the country. Buyers, on the other hand, are up against prolonged searches and escalating prices as they enter a market thats only getting more competitive. Though these shifts are all over the news, some people are still a little confused as to how real estate prices are actually determined. Here are some of the biggest factors affecting the housing market

The Economy

The strength of the countrys economy has a huge impact on the real estate market. This is because people’s ability to support housing prices hinges on factors such as unemployment, income growth, and overall GDP. The recession of 2008-2012 really highlighted the link between a countrys broader economy and the real estate market. Local economies with a lot of real-estate related jobs, in sectors such as construction and mortgage financing, experienced major depreciation in property prices. However, there are various smaller factors which can outsize the broader, national factors in the impact they have. In California, for example, income growth has been slightly higher than the national average in recent years, which has given people the freedom to spend more on housing, and in turn bumped up property prices.

Local Comps

Local comparable properties, sometimes shortened to comps by people in the market, will also have a major impact on a given propertys market value. Appraisers and estate agents tend to look at the recent sales of properties with similar features, and use these as a benchmark against a propertys potential price. There can be greater variations when it comes to unique properties, such as when youre looking at rural mountain cabins for sale. Foreclosures and short sales can also make things more complicated, as they tend to sell at lower prices, and decrease the local areas average sales price. Whatever little distinctions are present, comps are always a key driver in the work of an appraiser.


Weve all heard location, location, location, but what does that actually mean when it comes to property prices? In most cases, its a number of geographic factors that will influence a property owners lifestyle. The quality of nearby schools is often one of the most important factors for any buyer who has kids of school age. For young, single professionals, the distance from desirable employment opportunities is another commonly cited priority. The proximity to shopping, social, and recreational centers is also fairly important for all buyers, but most notably younger ones just entering employment age. The proximity to school, work and recreational facilities make the trinity which go into a highly valuable property. Honing in on one of three wont blow the roof off the price per square foot. However, two out of three will mean that youll be up against some seriously stubborn competition, and the prices to go with it. If you nail all three of these, youll need a small fortune to finance your real estate investment!