October 22, 2020

Who’s In The Driver’s Seat In The Real Estate Industry?

In a pandemic-filled arena, which industry will be the last one standing? 

The strongest business in today’s rising economy amidst the pandemic is the real estate industry. Investors have found it lucrative that the rise in demand has significantly grown over the months and is evident in providing a profitable return.

Buyers and sellers are given ample opportunities amidst the ongoing pandemic. The real estate industry is surely taking advantage of the rise in demand and we wonder who has the leverage in a situation like such. Let’s walk you through 4 main factors driving the real estate industry today:

#1 The Demographic

Real Estate Industry

With the ongoing pandemic there has been shifts in the demographic of countries across the globe especially in the United States. Bear in mind that once a shift in the demographic is experienced within a certain location, it directly affects the price and demand for neighboring properties. 

It makes sense that this is one of the top drivers for the sustainability of investing in the real estate market. Real estate investors take advantage of the demographic shift within the vicinity to pinpoint properties that showcase a lot of promise.

#2 Interest Rates

Real Estate Industry

Interest rates play a major impact on the real estate market. If you consider buying a home with a mortgage,  it is beneficial to calculate the interest rate with a mortgage calculator or have this discussed with your real estate professional. 

A sudden shift or rise in the interest rate will directly affect a person’s ability to purchase a residential property. It is because the lower interest rates go, the lower it would be to obtain a mortgage in buying a home. This may lead to a higher demand for real estate, and in return drastically rises the price of the said property.

#3 The Economy 

Obviously, one of the main drivers that dictate and control the real estate industry is the economy. When the economy is drastically sluggish or is experiencing any form of fluctuation, it will surely affect the real estate market. 

However, the cycle or progression of changes that the economy may go through will have varying effects on different types of real estate.

A great example is the difference between commercial and residential properties. With the recent freeze of the economy and the rising number of unemployment, there has been a significant change in the market. Residential spaces are booming and commercial properties are becoming vacant. This shows that even if the economy can’t be directly taken control of, it would be best for real estate investors to consider the current status.

#4 The Government

Real Estate Industry

It is quite evident that the government will play a vital factor in driving the current status of the real estate industry.  Tax credits, deductions, and subsidies are some of the ways the government can boost and affect the demand for real estate sales. 

Knowing the incentives and loans provided by the government will assist real estate investors steer their way to making their respective sales. It also becomes an avenue that drives the market today amidst the ongoing pandemic.

Even if the aforementioned factors drive today’s market, the real estate industry is still as lucrative and remains to be in an interchangeable state. It is also safe to say that no matter who or what is in the driver’s seat, it will never showcase constant data that would reflect zero to no change.

If you are just getting started to the real estate community, you may join our REIQ Community and learn from our team of experienced investors! 

Disclaimer: The blog articles are intended for educational and informational purposes only. Nothing in the content is intended as legal or financial advice.

Source: https://www.forbes.com/sites/forbesrealestatecouncil/2020/09/11/three-ways-to-manage-macroeconomic-risk-in-real-estate-investments/#14b913cd7965