How the Real Estate Market Affects Home Prices 


According to data analysis, the average appreciation rate of homes in the United States over the last 25 years is 3.9 percent. However, don’t expect your home value to grow simply by sitting on your hands; for most homeowners, appreciation won’t happen on its own. To ensure a value increase, you’ll need to keep an eye on your home’s condition and the growth of your community. People take up special courses to earn about real estate, validum website helps all such aspirants. Appreciation is the product of a variety of variables interacting and eventually coalescing to raise prices. Let’s take a look at how the real estate market affects home prices in general. 

    • The law of supply and demand

The supply and demand law, which you studied in Economics, is the most important factor in home value fluctuations. When a limited supply of homes for sale meets high consumer demand, property prices increase as buyers engage in bidding wars to purchase a home from the limited stock. Recently, we’ve seen a rise in home prices, and the main factor driving it in my market right now is a scarcity of inventory. 

  • Sales that are comparable

The selling price of similar homes in the region, known as “comps,” is used by real estate agents and appraisers to determine the value of a house. As a neighborhood experiences bidding wars, homes sell for higher prices than their predecessors, allowing new listings to set higher list prices and reach even higher selling prices if bidding wars persist.

  • Jobs market

As prospective home buyers gain financial strength and stability from new jobs to purchase, strong job growth also leads to a rise in buyer demand. As new employees compete for housing near business centers, property prices rise in regions experiencing job growth.

  • Population increase

Population growth always goes hand in hand with job growth, increasing buyer demand and driving up property prices in desirable communities. When people begin to leave the city and move to a desirable location, property prices in that area would naturally increase. That is the law of supply and demand in action.

  • Cost of borrowing

More borrowers enter the market when mortgage rates are low, hoping to save thousands to tens of thousands of dollars over the duration of their loan. If a market’s housing inventory does not keep pace with the demand, property prices in the affected region will rise.

  • Educational schools in the district

According to research, when choosing a neighborhood, 26% of recent homebuyers were affected by the reputation of their school district. The percentage leaps to 46 percent among buyers aged 30 to 39, followed by a 36 percent rise among buyers aged 22 to 29.

  • Economic ventures that are new

Buyer demand is driven to communities by new or revamped shopping centers and trendy businesses, which boost property prices in the process. It is believed that commercial growth benefits rural communities in particular. 


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