Factors That Influence Real Estate in USA
Demographicis an important factor that affects the purchase of the real Estate Property. Demographicis a data which describes the population rate, the age, gender, income, migration patterns of its people. These factors affect the buying of the real estate in the international market like the people would like to buy residential property in the places which are beautiful and have all the facilities of roads, electricity and nearby markets. The growth of populationaffects the market greatly. For example, in the war days population of a particular place decreases and property market of that place faces a rapid decline. On the other hand in post war days when the population gets restored then a rapid rise in marketis observed. These ups and downs in the market due to population rate were once seen at the time of birth of baby boomers in USA, when millions of babies were born in post war days and a large number of people shifted to buy homes, shelters and markets.
Interest rates are a major factor tothe real estate market. The rise in the interest rates decreases the buying of property. People fail to buy their own home as they do not afford to pay the mortgage fees and the loan. When the interest rate increase,trendfrom the buying of residential property shifts torental property as everyone needs a shelter to live in and many do not afford to own one. On the other hand the decline in interest rates encourages people to buy their property and either own or house or establish their property. The direct buying of the property affects the market directly; On the other hand market is affected indirectly when people buy investment bonds. It is because when the interest rates fall the bonds value increases and more people buy them. Economyaffects the market in a way that the country with high gross domestic product rate, employment rate, and high levels of manufacturing of goods must be financially stable. Investors would like to invest their money in that state.
When more of the people will buy the residential or industrial place of that country thenits investment shares would become expensive. But when such countries face economic instability then the stock market getaffected globally and the big investors bear a huge loss. Rental properties face aleast loss as when the markets fall down threnyou can ask your tenant to leave the place or the lease you give to your tenant is short lease and you receive it back soon to recover your economic loss. But the lease that is given to industries is long term and cannot be recovered soon. Government policies also affect the market. In case government reduces the taxes from the residential property than more people will buy it and a rapid rise in the market would be seen. In case there is instability in the government then the economy of the country would fall and investors would withdraw their money from the banks and will saletheir investment bonds. In certain other cases like martial law the market value of the country declines and hence the value of real estate and investment bonds.