Economic Impact On The Real Estate Market

1592 Words Oct 28th, 2016 7 Pages
Economic Environment Impact
Interest rates have a major economic impact on the real estate market. Interest rates directly affect property sales. Residential property realizes the greatest affect as interest rates have a considerable influence on a homebuyer’s capability to purchase a new property. The customer is affected when there are significant increases or decreases in interest rates. Declining interest rates lower the costs of obtaining a mortgage; this in turn creates higher demand for homes, and pushes home prices up. Conversely, high interest rates increase the costs to obtain a mortgage; these increases lower the demand for homes, which creates a decline in home prices. (Stammers, 2016)
The overall health of the economy has a significant impact on the real estate industry. The economy is measured using indicators such as the GDP, employment percentages, manufacturing activity, and price of goods. When these indicators identify a sluggish economy it translate directly to declining real estate sales. RE/MAX and the customer alike are directly affected by the economy. A slow economy consists of decreased homes sales while a flourishing economy affords the customer the opportunity to buy, which relates to an increase in home sales for the realtor. (Amadeo, 2016)
Government policies and subsides have a sizable impact on property price, and demand. The government can temporarily boost demand with tax credits, deduction and subsidies. From the customers point of view…
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