Key Players On Real Estate Economics Every Agents Should Know!
Real estate economics is the application of economic principles to real estate markets. Both agents and brokers should study real estate economics to better understand the forces that impact the price and transfer of property in their real estate farm area. For homebuyers or sellers, real estate economics can help determine the best time to buy a house or list a property.
The buying and selling behaviors of market participants dictate overall supply and demand, which in turn impacts the economic health of the real estate industry. If supply and demand are equally moderate or high, the economy is healthy; if, however, they are equally low or one heavily outweighs the other consistently, the industry suffers.
Real estate economics is substantially impacted by the supply and demand of property — factors driven by market participants like property users, owners, and renters. These parties create real estate demand, while the business decisions of developers and renovators drive real estate supply.
This is affected by the people involved in real estate, or the players in the real estate economics, and they are the following:
- Owner users: This group includes people who both own their homes and live in them, making them investors and consumers. Stated another way, these owner users account for all owner-occupied homes in each market.
- Owners/Landlords: Real estate owners are people who exclusively invest in real estate and do not reside in the property themselves. Instead, these participants generally rent the property to a third party after purchasing it.
- Renters: Renters are real estate consumers, meaning that they do not invest in real estate. Rather, they exclusively “consume” it.
- Developers: Developers are real estate investors who prepare undeveloped land for construction and build new housing for the market.
- Renovators: This group of real estate market participants supplies renovated buildings to the housing market for investors to purchase or renters to live in.
- Facilitators: Facilitators include banks, real estate brokers, lawyers, and others that facilitate the purchase and development of real estate.
- The buying and selling behaviors of market participants dictate overall supply and demand, which in turn impacts the economic health of the real estate industry. If supply and demand are equally moderate or high, the economy is healthy; if, however, they are equally low or one heavily outweighs the other consistently, the industry suffers.
If you’re an agent and want to better understand the relationship between the economy and your local real estate market, or simply want to know more information on players in the real estate economics, feel free to contact us @216-619-4387. We’ll be more than happy to assist you!