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what factors influence the demand for homes
analysis of the real estate industry
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Introduction Real estate is a fixed, tangible and immovable asset in form of houses or commercial property (Seldin & Richard 1985). Real estate market involves developing, renting, selling/purchasing and renovating of these assets (houses). Market participants includes developers (contractors, engineers, and so on), facilitators (mortgage companies, real estate brokers, banks, management agents and so on), owners, renters (leasers) and renovators (Seldin & Richard 1985). Like other economic markets, real estate markets have internal and external forces that make impacts in the market (Seldin & Richard 1985). Demand and supply forces have the major impact in the industry as they determine growth or decline in the market (Seldin & Richard 1985). Owner, renter and user are on demand side of the market that is they are consumers. Developers, financiers and renovators are suppliers (Acton et al 1999). Unlike commodities market demand and supply forces do not float easily. This is because of the uniqueness of this market. Real market industry has these unique characteristics, durability of products as buildings can last for decades or centuries. Each product (house) is unique in terms of buildings, location, and financing thus market has heterogeneous products (Acton et al 1999). Transaction costs are high and the process is usually long. Though there are mobile homes, but the land underneath is till immobile, real estate is an immovable asset (Acton et al 1999). The main factor that affects demand in real estate industry is demographic features. The demographic variables include population size and growth, cultural background, beliefs and religion (Acton et al 1999). However, other factors like income, price of housing, cost and availability of funds, consumer preference, supplier’s preference, price of substitutes and compliments (Acton et al 1999). Shift in supply of housing is affected by cost of using land, labor, building materials and other inputs like electricity (Pascal 1967). Price of existing houses and the technology of production also affect new supply here (Pascal 1967). Price elasticity of house demand measures the sensitivity of price of houses due to changes in their demand (Pascal 1967). PED (Houses) = % Price % Units of Houses demanded In the short-run the price elasticity of demand is high, however, in the long run the elasticity is not very high (Pascal 1967).
Buying or selling a house or an apartment is one of the biggest decisions of a person’s life. And when selling or establishing a price for real estate, people seek out real estate agents to do the dirty work. A real estate agent has to convince a prospective homeowner that he or she is trustworthy and knowledgeable. In many ways, the agent acts as a counselor to individuals and families about to embark on a huge commitment. Real estate agents have a thorough knowledge or real estate market in their community. They
With stocks, investors buy a piece of paper stating they own a portion of a company. Therefore, you can actually reach out and touch your assets when you invest in real estate.
William Goetzmann, a. L. (2006). Estimating House Price Indexes in the Presence of Seller Reservation Prices. Review Of Economics and Statistics. pp. 100-112.
From a tiny bungalow in Waterloo, to a large commercial building in downtown Toronto, there is a variety of properties to choose from. The benefit of being in real estate is that people can choose between residential or commercial, as some people prefer to be in the the residential market over the commercial market. The occupation that will be discussed throughout this assignment will be a real estate agent, as there are several opportunities for growth in this occupation. From selling a two hundred-thousand dollar house to a multi million-dollar house, the growth in this field is enormous. Being a real estate agent has many positives but it also has many negatives and people have to be aware of that. Although Ontario does not require a university degree to become a real estate agent, having an undergraduate degree in bachelor of commerce certainly helps. Since a real estate agent does not need a university degree, agents need to obtain a license instead. In Ontario, a major real estate agent company is Re/max, which helps agents advertise themselves in the hopes of gaining new clients. In the end, being a real estate agent is very eventful in the fact that the market is always changing and there is always competition in becoming a top agent in a certain
PESTEL analysis factors apply to Bryant homes as follows; Political: the UK government policy directives, planning and environmental issues including sustainability affect the construction industry quite a lot. In the economical sector the economy’s health and interest rates affect demand for the commercial and the residential property, furthermore the taxation in the UK is used as a mean to encourage improving environmental performance; In addition to all this we can also add that as an economical factor the amounts of money that are needed for advertising the company’s products and services this action helps the company’s clients to understand how the company works. Also the construction industry in the UK is increasingly interested in whole life costs of the building, which includes initial capital costs and operating/maintenance costs. As far as the social factor goes changes in the birth divorce rates and the average number of people living in a household affect the demand of housing. Also we can take into consideration that there was a perception that the company’s builders had a tendency to dictate what the customers needed and had rat...
The subject of this report, estate agencies, and Ledingham Chalmers in particular, were chosen because at some point in everybody's life, property is going to be in the picture, and most likely all business linked to that will be handled through an estate agent's. The reason for choosing property, over so many other possibilities, is that the professional skills required in each of the fields connected to property managing are fairly similar, or at least carry a few basic similarities. Hence, it was easy to draw an outline of the skills required.
The housing market is very unique as unlike other goods and services, houses have permanence, it is a fixed location good causing the rules of supply and demand to be taken to new extremes. In the case of the Toronto housing market we can view in almost real time the role supply and demand play on he ever increasing house prices, additionally the fundamental economic issue of scarcity is made extremely apparent by the limited size of the city of Toronto.
The most formidable aspect in real estate has to be maintaining one’s career. Although there are many agents in this career field, the competitive environment portrayed daily makes this career one that may prove to be unsuitable for the meek. Negotiations, persuasion, debate and often a frequent contest for supremacy in the agency are recurring tasks when trying to sell property to clients. One could think of this as similar to the board game “Monopoly”, in reverse. Rather than trying to own all the property around, these “players” attempt to sell as much land as they possibly can. Those who fail to recruit an adequate amount of clients find it hard making it “past go” and often fail in the agency or, much worse, lose their jobs. Prospective agents should spend a great deal of time enhancing their communication skills either by taking classes in public speaking or perhaps even joining a debate team. Such laborious duties make it apparent s that being a successful real estate agent is for more difficult than it seems.
In today’s real estate market there is one sensitive issues that has been debated on over the years regarding, zoning and rezoning laws and whether the home owners and investors should receive a compensation for every property affected by the zoning. The zoning laws has been known to either decreases or increases the value of a property. According to David Ling zoning is the regulation on a land use by dividing the community into various parts namely: Residential, commercial, industrial and other districts. (C.Ling, 2015)
When prices increase, the quantity decrease (Graph 1) and new firms enter the market in order to make economic profits. However this does not mean the real estate agents or brokers earn more money. On the contrary, the prices they charge may increase, but the number of houses each sell do not change (Goolsbee, 2005, Online). From this it is evident that the price of products in the real estate market is not affected by the entry of new firms.
American business man Robert Kiyosaki once said, “Real estate investing even on a very small scale, remains a tried and true means of building an individual’s cash flow and wealth”. Real estate and investing in real estate can bring one multiple strands of income. Real estate is not only buying and selling houses. There are many jobs and careers in the real estate field. Individuals are also allowed to fulfil a future in all of these career fields unlike other careers where one may specialize in only one. There are Investors, Contractors, Appraisers, Financers, Property Managers, Designers, Planners, Laborers, Flippers, Founders and Owners of Real estate companies, and the list goes on. These people all may fall into the category of a real estate agent. These individuals are the reason the community is filled with houses, apartments, businesses, firms, and other property. Real estate is forever changing as technology gets better and new natural resources are being found. Real estate is forever and we need real
dealings in rights or access to land and structures. It structures the spine of the urban economy being a settled variable business; thus a productive Real Estate business is generally critical for a well working urban environment. An effective Real Estate business is one that empowers fast improvement and exchange of area, gives sensible access to all wage bunches, earth sound and the framework overseeing the area markets ought to be incorporated with different laws
"Real Estate Industry Career Outlook, 2014: More Jobs on the Horizon?" US Housing News RSS. N.p., n.d. Web. 20 May 2014.
This price inelastic characteristic of supply is mainly because of three reasons. First, it takes comparatively longer time to produce an additional house. Second, the process of production is complicated because of its connectivity to different industries. Third, the purchase of land and other public services must be preceded before the actual production (Lee). For these reasons of price elasticity, housing problem has to be dealt with different solutions in short run and long run. Not only a simple solution of providing additional house in the short run, but a careful examination at how to accommodate the increasing population along with physical limitation inside the city should be conducted
Investors should aware the real estate market cycle. By understanding the cycle, this will help investors to predict the value of the real estate that they own and what they should do by considering the