In a real estate market, the supply and demand for property assets are influenced by multiple factors. These include the cost of land, construction time and services provided to maintain properties. The market is also impacted by economic conditions that influence consumer spending, business investment and broader social, demographic and environmental shifts. Real estate is a sector that embraces change and adapts quickly to meet shifting market needs.
A real estate market is a complex system of buyers and sellers in the purchase and sale of property, such as homes and commercial buildings. Market participants are individuals, companies and government agencies that interact with one another to buy and sell real estate. In some markets, real estate is classified as both an investment good and a consumption good. Investors can purchase property with the expectation of receiving a return on their investment (an investment good) or they may wish to live in it (a consumption good).
The economic health of a nation influences the real estate market. When the economy grows, job creation occurs and personal incomes rise, which typically leads to demand for office space, retail space and housing. The COVID-19 pandemic has shifted the economy and real estate market in ways that will take time to play out.
Market participants include homeowners, investors, builders, developers, lenders, brokers and professionals who work in real estate. Homeowners, for example, must have the financial ability to afford a mortgage and may need the assistance of a lender to do so. They must also have an understanding of the local real estate market to determine their negotiating power and purchasing potential.