Real Estate prices for residential properties can fluctuate greatly. When the demand for properties is high, the prices will skyrocket. When there are more properties available, the prices will usually drop. To balance these two extremes in the Real Estate Industry is not an easy feat.
Making, as, in the building, more houses available takes time, and it might not be in time for meeting the consumer demand. This basic principle can help consumers to make better decisions on the timing of their buying or selling of property.
Factors that have a Big Influence on the Supply and Demand in Real Estate Properties:
- Land Parcels can become finite: You cannot refill or order more land when it runs out. When you have a shortage in real estate supply, you can also not fill it by manufacturing more units of property. Land is a unique commodity that cannot be duplicated when in short supply.
- Real Estate cannot be moved from one area to another area: When a shortage of land occurs in any given area, you cannot move land to that area from somewhere else. Real Estate is a local commodity, it sits where it sits and will be influenced by the local conditions.
- Over-Supply of properties will mean Lower Prices: When too many properties, home and land, becomes available in a given area, you can expect prices to fall. You cannot move existing property to another area to keep a balance and the prices stable.
- An Under-Supply of properties will mean Higher Prices: When any given area runs out of land to build properties on or the existing homes is not enough to fill the demand, the prices will go higher. Even if the land were available, it takes too much time to build more houses, to balance out the demand.
Real Estate is a business that is influenced by the demands and changes in the local areas where they are situated. As a real estate professional, you need to keep up with the local economic indicators to be able to help your clients with the best information on the regions or areas they want to sell or buy properties.