Sample Essay on Factors Affecting Demand and Supply of Real Estate

Demand and Supply of Real Estate

Real estate is an area that covers broad issues. It is any property consisting of land and the different buildings on it and with the exceptional natural resources available. The number of people investing on the buying, selling, building and renting land has been increasing tremendously due to increased demand. Real estate has always represented a part of many peoples prosperity. The real estate market is quite competitive and volatile, but there are a number of factors affecting demand and supply of the real estate market to think through always.

There is a vast history on the real estate market. Nearly one-third of America is into real estate investments. The size and measure of the real estate market has made the industry attractive and money-spinning for thousands of investors. Demand and supply are a few elements of the business sector that have impacted the business sector greatly. Fundamentally, there are numerous factors that affect demand and supply of real estate and they include;

Interest rates

Any changes in interest rates influence a person’s ability to purchase any residential property. Essentially, as interest rates decline, the cost to obtain a good house decreases and this pushes the demand for real estate higher regardless of the location or size of the houses or related property. On the other hand, if the interest rates increase, the cost to purchase a rental house will increase lowering demand and prices of the entire property.

Economic growth

Demand for rent estate relies upon income. With the ever growing economy and rising peoples’ income, many Proofreading-Editinginvestors will spend huge amounts on houses and this will push prices up and increase demand. Rental houses for many years have been seen as luxury goods and rise in income has increased the number of people in need of houses. Rising income leads to bigger percentage of money spend on houses.


These are factors that describe the composition of a population such as income, migration, population growth and gender. Demographic shift can easily impact real estate market. With smaller income, it is not easy to acquire those huge and costly houses.

Mortgage availability

In the flourishing of years of 1996 to 2006, many banks and other money lenders were keen in providing mortgages to clients in need. Many people borrowed large amounts at lower deposits and this increased demand for real estates as more people were willing to buy. However, the disastrous recession and increased inflation years impacted the sector negatively and less real estate investments were made.

Consumer confidence

Confidence is a great trait to consider while taking risk to take out mortgage for real estate in the market. If people fear getting mortgages due to likely to decline prices of houses, many will defer while placing their orders.

The ratio of rental houses prices to income impacts their demand. Houses prices rise relatively to income. Hence, a few people will be able to invest in the real estate sector and fulfil their dreams. The size and quality of real estate market or sector make it attractive for many invests, however, it is wise to research and consult extensively in order to go for what satisfies your needs.

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