Supply Factors & Demand Factors of Real Estate market

Supply factors of Real Estate market

The supply factors of real estate are given below:

1.      Vacant units:

Ø      Normal rate of vacancy = 5% available unit

Ø      If demand factors are high and vacancies are at normal then it will probably been indication that a development of Real Estate is in order.

Ø      If the vacancies are abnormal, for example-15%, it might be indicating that sales in a development would lag until surplus housing units are sold or rented.

2.      Construction costs:

Ø      If all consumer goods or construction materials are high cost, then supply of real estate hindered

3.      Labour supply:

Ø      Another factor to be taken into consideration is skilled labour

Ø      A shortage of skilled labour in an area will have a tendency to affect the supply of housing that can be built.

4.      Availability of credit:

Ø      Low credit/no loan programme decrease the construction cost.

Ø      When bank get loan, then construction rate high.

Demand factors of Real Estate market

Some factors which may sometimes be converted into sales. This are-

1. Population:

Ø      In a specific area/city/region, population is rising, falling or static that influence the demand of real estate sale

 

2. Age distribution:

Ø      Age distribution gave idea about the type of buildings or real estate sale

Ø      If the population of age over 65, then building need for retirement person.

Ø      If age group within 30-40 then building type will be flat or family living apartment.

 

3. Family size:

Ø      Family size is another market factor.

Ø      For example- it has been determined that condominium owners generally have 3 or fewer members in the household.

Ø       On the other hand, if it is determined that each household in the market area has more than 3 members, it probably a bad market for condominiums and a better market for 3 bedroom homes

 

4. Income, employment, wage:

Ø      If the income increase, then the demand of the real estate increase

Ø      High employment ratio creates higher purchasing power and then the demand of the real estate increase

Ø      High wages creates higher purchasing power and then the demand of the real estate increase

 

5. Marriage and divorce rate:

Ø      When the marriage rate increase then the demand of the single family housing increases

Ø      When the divorce rate increase then the demand of the single family housing decreases

6. Doubling up:

Ø      The use of one housing unit by two or more families is usually referred to as doubling up.

Ø      In general, doubling up increases with a decline in general business activity.