Real Estate Market Explained

Real estate is a commodity, not unlike milk, gas, or automobiles. As such, the value of real estate is affected by supply and demand. Many factors in the economy affect home prices such as:

1. Interest Rates
   If low, this will increase the demand for homes and prices may go up. If high, they lower the demand for houses and prices may go down. The Bank of Canada and the commercial banks adjust interest rates periodically as the economy changes. They try to strike a healthy balance for banks and homeowners to keep the economy thriving.
   
   
2. Employment
   If an area has high employment, this increases the demand for houses and prices go up, if an area has low employment, demand and prices go down.
   
   
3. Time of Year
   Spring is the busiest time of year in the housing market. As a seller, there are more buyers but if there are many sellers, this may force home prices down. As a buyer, you want a good supply of houses for sale since a small inventory will push prices up as buyers fight for homes. The summer and fall can also be very busy months in real estate.
   
   
4. Trends
   Typically, the housing market experiences bubbles and downturns over time.