The real estate market is a unique type of economic marketplace. Unlike most goods, which are consumed immediately, real estate is durable and thus immobile. This immobility requires a different kind of market adjustment, which combines the elements of both a stock and flow market. Real estate is bought with the expectation of future return (an investment good) and with the intention of consumption (a consumption good).
Like any other market, a real estate market can be affected by many factors. For example, a recession can cause people to stop buying homes and increase the supply of available houses, causing prices to fall. Alternatively, a sudden increase in the availability of housing can lower interest rates and make homes more affordable to buy. Other factors can also affect real estate markets, including local and general trends such as social tastes (think fads such as wood paneling), economic cycles, and family or business changes that necessitate relocation.
Understanding these trends is important when purchasing or selling a home. However, the information can be difficult to locate and understand, especially for those who are not experts in the field. That’s why it’s important to work with a professional who has experience in the industry and can interpret the relevant data for you.