Supply_and_Demand

Buying a home, whether newly built or an older home is a major decision that is affected by a variety of influences. If a persons plans properly for this investment and pays attention to the supply and demand of the home market, they could get a home with more bang for the buck. In other words, if you look for a home during a time when homes have an availability rate that is higher than normal, this means that the demand for the home will be lower and it will be easier to get it at a lower cost to you the consumer. If you are looking in an area where there is a high demand for people wanting to live, you will not be as beneficial from the market as looking to a location that has a low demand for people looking to purchase. For example, if you are looking to purchase a home in a major metropolitan area and do not want to have the requirement of traveling from the “city” to your home, you will pay a higher price for your home to have the convenience of living in the city versus a rural location. If you look for a home that is in a 30 mile radius of the city, you will find the purchase prices for the homes to be lower and usually incorporate more land, larger home, etc. Basically the supply and demand for home purchasing means that if there are more sellers than buyers, you should be able to purchase a home for less money than if there are more buyers than sellers. In slow markets homes stay on the market longer and the price of homes may fall. If there are more buyers than sellers then the competition for homes becomes greater and prices can start to go up. There are many ways to determine the real estate market. How active new construction is, is a fairly solid way to measure the state of affairs in the real estate industry. Most of the time you will find the cost of construction often runs parallel with the cost of real estate. As construction costs rise, the price of homes also go up. This is true if the construction costs decline, so will the price of homes. However, if construction costs surge to much, the development of large quantities of new homes is discouraged. Another contributing factor to home purchase is the national economic state. Whether in the middle of a recession or in the middle of an economic expansion, the real estate market will be affected along with the home owner’s sale and/or a home purchase. In a recession, the home buyer will find homes priced at a lower value than during an expansion. However, also during a recession, many home buyers are leery of purchasing a home due to the financial commitment/burden involved. This holds true in opposite theory for a seller. Because a seller knows they will not be able to get what they want out of their home, they may be more reluctant to sell. Lastly, The Fannie Mae agency, (Federal National Mortgage Association), The Federal Reserve System, Housing and Urban Development, and the Department of Commerce also have an impact on the housing market. The Department of Commerce is responsible for regulating brokers and sales associates. The Federal Reserve System is responsible for establishing the mortgage rates that are used and the credit available to banks, money market mutual funds and in the ability of firms to issue commercial paper. The Fannie Mae Agency provides local banks with federal money and a secondary market to finance home mortgages. The Housing and Urban Development was established to oversee Fannie Mae, Freddie Mac, Ginnie Mae programs, Community Planning and Development, and Fair Housing and Equal Opportunity. All of these organizations have an impact of these can be felt throughout the real market industry. I think two substitutes that a person could look at instead of purchasing an existing home is renting a home or apartment. While a person would not be building equity, etc. they would be pre-empting the concern regarding the financial commitment of purchasing. I think that two complements to purchasing a home would be a land contract or rent to own. Both of these methods allow for a person to have ownership in the home while not having to finance it immediately. Another type of complement would be the concept of a premanufactured or prefabricated home that can be set on a parcel of land. These types of homes are also a lower cost commitment and still provide a person with the feeling of home ownership. When it comes time for a person to make the decision to purchase a home, there are several factors, as identified above, that need to be taken into consideration. This includes, the real estate market, the national economy, type of home, the location of the home and the financial stability of the individual.