Right now is a hot time to buy and sell homes. You may be wondering, “What is my home worth?” You’re not crazy to be considering that as many buyers are paying well above value for houses on the market.
In the last decade, real estate prices have been growing rapidly. In fact, many people are wondering what caused this surge in growth.
There are many factors that contribute to the price of a property. One is the availability of land. Another is supply and demand. And finally, location is a prime factor in determining a property’s value.
Let’s visit some of these factors, as well as some others.
Supply & Demand
The demand for real estate is also playing a big role in the increase in prices. The supply is limited, so it increases its price. Supply is limited due to the pandemic and people are afraid of the instability of the government.
The major factors that are driving the demand are the population growth, more people wanting to live close to cities and millennials looking for homes with an urban feel.
One of the reasons it’s hard for first-time home buyers to find affordable houses on their budget is because of competition from investors. With less than half of first-time buyers buying houses, they push up prices and make it harder for first-time buyers to compete with them.
There are many factors that affect real estate prices, but this is definitely the one that carries the most weight.
Low Interest Rates
Rising real estate prices are becoming an alarming problem for both renters and home buyers. This is because low interest rates are playing a big part in the recent upsurge of the property market. Many experts believe that this will result in a fall in property prices, but there hasn’t been much concrete evidence to show this.
Low Interest Rates are playing a big part in the recent run-up of real estate prices. The low interest rates have created an environment that is favorable for commercial and residential investments.
Low interest rates are enticing people to invest in commercial and residential properties, creating an environment where demand is high and supply is low, resulting in increased real estate prices.
Employers Forced to Pay More
With a high demand for real estate, people have more money to buy it. This is a result of higher wages being paid by employers. Employers are being forced to pay over average due to the shortage of workers being available or not wanting to work.
Higher wages have been a big part in rising real estate prices. In fact, the wage increase has been so drastic that some people are now able to buy houses they otherwise would have not been able to afford.
In many ways, the increase in real estate prices is a good thing for those looking to buy houses and build their family and life there. But others might experience it negatively because they can’t afford these houses and end up struggling with displacement and homelessness.
The government has tried to tackle the problem by implementing policies such as limiting how much money people can borrow against their homes or raising taxes on property ownership for those who earn too much.