Thread: What factors lead to increase in house prices

Uniqueness and immobility are the two that make the biggest impact. It's simple supply and demand. When supply increases while demand stays the same, prices fall, and the opposite is true for supply decreasing. When demand increases and supply stays the same, prices also increase and the opposite is true.

Supply is affected by labor force, construction costs, government controls, and financial policies.

Demand is affected by population, demographics, and employment and wage levels.

This is very basic.

If you are thinking of selling your home, keep in mind that buyers appreciate a clean look for your homes view. You can increase the value of your home making a few simple improvements. Keep clean your carpet and wash walls & floors with cleaners.

Really there are only three classes of things that drive prices up. Below they are listed.

1. Buyer's Perception of Scarcity - This one is the biggest and can at times seem to be for no sensible reason.

2. Affordability - Either by a reduction in interest rates or a rapid increase in the median earnings of an area.

3. Increases in commodities used in the construction of homes

Supply and demand is the normal rule of thumb. However, in these days and time you have to weigh what's going on with the government and the current lending policies. One could argue that this is a direct variable involved with supply and demand. I argue that it's important enough to watch very carefully over next couple of years. Agents are going to have to be very flexible during this time of change in our country. The name of the game is survival. Good to you.

supply and demand are the biggest drivers. Major new employers in the area will push up the demand for houses.

Right now there is plenty of demand, just not enough supply of money for buyers, which pushes prices lower

All markets are supply and demand. However, all markets demand is affected by one thing: perception of supply and demand. Some people believe in efficient markets, meaning, that as soon as information hits the market, price changes. I am not an efficient markets person. If you can affect perception of supply and demand, you can affect supply and demand as a whole. Look at the Buffet Effect. If Warren Buffett enters a market, people follow, because he affects perception.

Big drivers of value are a neighborhoods location to employment and schools. Good employment, good schools equal good values. In other words location, location, location.

I agree with supply and demand 100%. However you also need to take into account the foreclosures, short sales and the home owner resales. This situation in Florida is driving prices down. Two years ago we were booming and we will be again. We just have to unload some excess inventory. the California market was booming just like Florida 2 years ago. It will come back.

The first and foremost reason is demand for the houses exceeding the supply side. Also increase in immigration has added fuel to the fire.