Introduction

Reasons for Real estate market fluctuations

Though real estate market fluctuates often, the need for multi-family homes continues to attract investors. The prices of these homes have really gone up and there is a huge demand among the buyers. Ultra-luxury condominiums are creating new dimensions in the spheres of the real estate market.

2016 seemed to be really unfavorable for investors as there were frequent fluctuations both economically and politically. But on the other hand, there was a high decline in rate of unemployment and there was rise in home price as well as in home sales.

2017 spring and summer sales went on a high note, but the professionals have predicted that the market may slow down in 2018 and 2019.

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Causes for fluctuations in the real estate market

• The rise and fall of the economy

The economy of the nation determines the stability of the real estate market. If the economy is good, the demand for retail, commercial, residential space increases. This in turn, leads to expansion of office space and increase in rental price. On the other hand, a poor economy results in fluctuating market. It is not wise to invest in a market which concentrates on a single industry alone, as it may see a downward trend very easily.

• Interest rate

The increase and decrease in interest rate also affects the market and causes fluctuations. The recent rate hikes have made the property values to fall. The borrowing rate increases and demand for properties decreases. The fluctuations will affect mortgage rate, so people availing home loan decreases. From sellers’ point of view, the fluctuations are bad as mortgage rate and property value decreases, but buyers make use of this opportunity and purchase real estate properties.

• Government policies

The government policies will help the market to gain its stability; it is used to control both economy and rate of interest.

• Demographics

Age, income and population will have a great influence in the market fluctuations. For e.g. if people start sharing their household instead of living in an individual apartment, it is a sign that market has started fluctuating and people cannot afford single-family homes.  E-commerce, one of the reasons while retail market rates have drastically reduced. Consumers purchase most of the goods online which led to the owners of the retail market face a financial loss off late.

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Conclusion

DC Fawcett advises his investors to make long term investments as you can fetch high returns and find specific area to invest.  Real estate inventory also plays a pivotal role, if the inventories are more, then it is said to be sellers market else property value decrease causing high demand and low supply.