Demand And Supply Affect Home Values

Prices in a market increase and decrease because of demand and supply.

Demand for housing remains fairly constant. The only thing that changes demand for housing is either more people, or less people. Usually this is a slow steady increase in demand from more births than deaths.

Supply however is very changeable. The more people trying to sell their house, the higher the supply of homes. The less people trying to sell their house, the lower the supply.

HIGH SUPPLY = PRICES DROPPING (aka Buyers Market)

LOW SUPPLY = PRICES RISING (aka Sellers Market)

Also a major factor in the housing market are interest rates. Interest rates affect how much buyers will have to pay for their mortgage. Roughly a 1% change in interest rates will change the price a buyer can afford by about 9%.

INCREASING INTEREST RATES = PRICES DROPPING

DECREASING INTEREST RATES = PRICES RISING

The important point to understand is that as an individual seller, you cant control the market. There is a fair market value for your house that can be found.

Hmmm, as a seller I’m not sure I like the sound of this, as my agent are you going to advertise hard so I get my price?