The Most Important Driving Factors Behind the Real Estate Market

October 19, 2018

About a decade ago, the United States real estate market took a major hit causing what would become the Great Recession. A lot of people, businesses, and banks weren’t prepared for it, making it the biggest economical drop-off in decades for the nation. But the economy has turned around and consumer confidence is back to high levels, even in the real estate market.

Cities across the country are seeing major growth and predicted for even more growth in real estate. While consumer confidence is a good thing, it’s important for the general public and those working in the real estate industry, such as real estate agents and brokers, to see what’s driving the market forward including the different factors that have firm influence to either help or hurt the industry.

Real Estate Insurance

Since there a number of things factoring into the direction of the market, it’s important for real estate professionals to protect themselves with a beneficial real estate insurance program. These coverage plans are tailored to provide protection when the industry turns sour. It’s important for brokers and agents to safeguard their business and their own opportunities in the event claims are brought against them, which can happen in any confident real estate market.

Economics and Employment

When consumer spending and confidence are high, it’s usually a good sign for other markets, such as real estate. With more economic activity comes the probability that people are buying and selling or renting houses/properties at a better clip. This can drive the market in a positive direction.

What’s more, the employment level, which has gotten gradually better year-over-year in the U.S., can play a role. A higher rate of employment means there are more people who are earning and looking to buy houses.

Population and Demographics

A larger population can mean more potential buyers, but might also point to stagnation depending on the demographics. If a certain area is full of mostly retirees, they probably aren’t looking to buy a house. Similarly, if an area is mostly known for its post-grad community, this can also be a factor when projecting possible buyers.

Growth of the population is also a big factor as communities are always growing or shrinking with people moving in and moving out depending on trends, employment opportunities or cost of living.

Infrastructure Spending

The topic of infrastructure spending has been in political headlines in the United State the last few years in terms of what needs to be fixed (i.e. roads, airport, bridges) and how exactly spending will take place. Areas with more access to government spending for infrastructure will more than likely have positive growth in terms of real estate value.

Supply and Demand

Supply and demand is a huge driver in the real estate market. This theory takes into account the amount of housing being developed and the amount of housing or properties required by people living or working the area. More people in one area can mean more demand to build housing and spill over to commerce in terms of needing more parks, more business space, etc.

About Associations Liability Insurance Agency (ALIA)

The ALIA Team (part of the Riverton Insurance Agency Corporation), specializes in helping real estate professionals find the affordable and comprehensive coverage they need, without the hassle. ALIA dates its roots to 1991 with the founding of FREA, Foundation of Real Estate Associates. In 2013, ALIA was created to work with multiple insurance companies thereby broadening the portfolio of products to customers. In 2017, ALIA was purchased by Riverton Insurance Agency Corp.