How Does the Real Estate Market Work?The term real estate market refers to a property and the buildings and natural resources found on it. The market itself involves the buying and selling of a property. A real estate market also differs from one place to the next, depending on location. Housing prices in one specific geological area in a town are generally not going to be the same in another area. The market is also extremely dependent upon the supply and demand of the cycle of real estate. Once a pattern of selling and re-selling appears, we can analyze the houses for sale and predict market trends for certain areas.
The Phases of the MarketThere are four important phases to the real estate market that are essential to the process of analyzing housing trends. One can forecast where the market is heading based on historical reports made on the four phases of the market. These phases of the market will help you understand if now is the right time to put your home on the market today. The real estate market, as seen historically in the past, is a cycle. Henry George proposed the cyclical nature of the real estate market way back in 1879, and we still consider the same model in 2017. There is a high point in the cycle as well as a low point in the cycle, and this pattern has continued to show up time and time again. The four phases of the real estate market include the following: 1. Phase I: Recovery. 2. Phase II: Expansion. 3. Phase III: Hyper supply. 4. Phase IV: Recession. A quick summary of the phases of the market: With the first phase, employment is on the rise and an increase in goods occurs. There are typically lower interest rates and more businesses are likely to expand, which brings us to the second phase of expansion. Expansion involves creating an economic boom in which new homes are built and people are investing in real estate at this point. Within the next phase of hyper supply, inventory is decreasing and growth is slowing down. This not a good time to invest in any properties because the final recession phase is coming soon. A recession is a collapse in the housing market, where people become unemployed and foreclosures are the norm, as with what occurred in the great recession in 2008.
Property AnalysisIf you want to participate in putting more Calgary houses for sale, perform a general property analysis on where you live. Things to consider for your property are: 1. Recent renovations? 2. How many bathrooms/bedrooms are in your home? 3. What year was your home built in? 4. What neighborhood do you live in? 5. How large (in square footage) is your home? 6. How much land does your home include? 7. Do you have a pool, fireplace, garden? 8. Is your home close to a major city for transportation services?
Look at Homes Around YouWhat did your neighbor’s house sell for? It’s important to get a grasp of what other houses are priced at to compare listings. Pay attention to the local market in order to accurately compare your two-bedroom house to other recently sold two-bedroom houses. If you didn’t already know, your geological location can factor into current home prices. To find an accurate comparable price for your home, do some research.
- Check out past listings within a few miles of your home.
- Find at least 3-5 properties with similar characteristics to your home to determine a suitable price.
- Check for expired listings on houses in your area to set an accurate price for your home, so you don’t accidentally price it too high.