Many of us, who are concerned, on a daily, with the various nuances of real estate, get so involved with buying, selling, marketing, and promoting homes, we regularly ignore, the various financial factors and alternative conditions that impact the real estate market. A number of these factors are local, in nature, whereas others could also be national or international. Some are real, whereas others are perceived (for example, belief in their job security, negative possibilities because of some action taken by the government, etc). With that in mind, this writing can attempt to briefly consider, examine, review, and discuss, how the overall economy impacts the real estate or housing markets.
Mortgage/ interest rates: once the Federal Reserve announces they’re rising, planning to, or considering raising rates, in most instances, mortgage rates follow. Even several years ago, we have a tendency to witnessed traditionally low mortgage rates, and today, while, from a historical perspective, they’re still comparatively low, they’re regarding simple fraction higher than they were, at the low. Once mortgage rates are low, several consumers qualify for the higher price, and thus, we regularly witness a rise in home prices. As they rise, generally, prices, and, especially, the rate of increase, slows.
Taxes: when local real estate taxes are relatively low, the result on monthly carrying charges may be positive, for the housing market. After they rise, they cause householders, to own to pay more monthly. Some homes, neighborhoods, regions, counties, etc, have lower taxes than others, therefore once one region suddenly raises rates, that local market is hurt, and sure close areas profit. Also, in higher tax areas, like New York, New Jersey, Connecticut. Massachusetts, Illinois, California, last year’s tax legislation, could have potential long-term ramifications, on the housing market. That inclusion, known as State and Local Taxes, or SALT, limited/ capped the federal tax deduction, permitted, for state and local taxes, to a total of $10,000. Since many homes in these regions, have a lot of higher taxes, and, many of those areas, even have state and/ or regional taxes, these caps, have the potential, to hurt the real estate market, especially, if, they increase, any more.
The overall economy, and world news: for instance, if this, partial government closing, continues, for a considerable amount, several employees, industries, and tiny businesses, especially, are going to be negatively impacted! There appear to be many fears, doubts, and insecurities, regarding safety, etc. The more confident, the general public is, the higher off, usually, is that the realty market.
The stronger the overall economy, and also the more consumer confidence, likewise belief, in a very sturdy, property employment/ job market, the more people, maybe prepared, willing, and able, to pay for a brand new home, of their own! Perceptions are usually, way more essential, and relevant, than the other single factors!
Real estate markets may be considered, Buyers Markets, Sellers Markets, and/ or neutral ones! When there are a lot of buyers than homes on the market/ sellers, it’s a Seller’s Market. When there are a lot of sellers than those qualified consumers, looking, it becomes a Buyer’s Market, and once it’s somewhere, a lot of balanced/ in – between, it’s a neutral one. Obviously, in most cases, the highest prices, occur in Sellers Markets, supported the economic conception of providing and Demand!