Real Estate Market

Imagine someone asking you about the definition of the real estate market. At first sight, it may seem like an easy answer. But wait! Could the real estate market meaning be more complex than it looks?

What is real estate market?

Look it up in the dictionary. You will see that the definition of Real Estate is basically "land and anything attached to it". So, a Real Estate Market would essentially be "a place to buy and sell land and anything attached to it".

But while that is correct, it is just a shallow explanation. If you stick with that one, you won't be able to make a rigorous assessment when someone asks you, "How is the current Real Estate Market?". 

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What are the three types of real estate?

First, the Real Estate Industry is typically divided into three categories:

- Residential
- Commercial
- Industrial

Let’s check them out one by one!

About the residential real estate market and what lies behind it

As you can tell, those categories relate to the use given to the land. So, the Residential Real Estate Market is the business environment where buyers and sellers – mainly aided by agents or brokers – deal with townhouses, apartment buildings, and even inhabited crops of land. 

Did you know?

• Did you know that some homes built in the 1800s are still on the market today? These homes often have unique architectural details and a story behind them.
• The best time to buy a house is usually in the spring and summer when the weather is nice. This is because families want to settle before the new school year. But winter can sometimes offer better deals!
• The tiny home movement has gained traction over the past few years. These homes are typically under 400 square feet but offer everything you need!
• With advancements in technology, more homes are becoming "smart." This means they have systems that can be controlled remotely via your smartphone, such as heating, lighting, and security features.

What is commercial real estate good for?

At the same time, the commercial real estate market revolves around office buildings, warehouses, shopping malls, and extensive retail store facilities. 

Interesting facts about commercial real estate

• Some office buildings offer co-working spaces. These flexible workspaces allow people from different companies to rent desks or offices by the day or month.
• With the rise of e-commerce, many retail spaces are being repurposed. Some malls, for instance, now house gyms, medical centers, or even universities.
• The Burj Khalifa in Dubai, standing at 2,717 feet, is the tallest commercial building in the world.
• There is a growing trend towards eco-friendly or "green" buildings. These buildings are designed to be energy-efficient and minimize their environmental footprint.

Find out intriguing details about industrial real estate!

Fewer investors are interested in purchasing industrial properties. Still, you shouldn’t believe it doesn’t have any potential! The Industrial Real Estate Market specializes in profitable sites like factories, money-making warehouses, mines, distribution centers, and farms.

Trivia about industrial real estate

• Ever wonder where all your online orders are stored before they reach you? Giant warehouses across the country are the unsung heroes of e-commerce.
• Did you know that demand for warehouse space has soared thanks to the boom in online shopping? Companies like Amazon need massive spaces to store and ship products.
• Many factories are located in industrial parks. These are designated areas explicitly designed for industrial businesses, often with easy access to major highways.
• Some old factories are being turned into trendy loft apartments or unique office spaces, giving old buildings a new lease on life.

Which external factors influence the real estate market?

Aside from the three categories and their idiosyncrasies, the Real Estate Industry is also defined by external factors. When understanding any of those three categories, one must consider external factors like:

Economy

The financial situation of the country, the state, the city, and even the neighborhood where the property is located will affect that location's market. Remember: every state has its own interest rates (due to state usury laws) and taxes! Imagine what damage inflation can cause to the housing market! Interest rates increase, and property prices skyrocket, thus effectively destroying the real estate market.

However, based on cyclical market trends, it can't rain all the time.

Geography

The famous "Location, location, location." A house far away from good schools, supermarkets, and gas stations will likely sell for less than an identical one only 5 minutes away. An office building too many miles away from most of its workers or a farm distant from the necessary natural resources are examples of how the geographic aspect can influence the Real Estate Industry. 

Government policies

Because the Real Estate Industry produces so much revenue and can significantly impact the urban planning of an area – not to mention the lives of the people living there - Governments of every level, rightly so, also have their share of influence on Real Estate Markets. Governments often pass legislation – tax credits, deductions, subsidies - making it easier (or harder) to build, buy or sell in a determined location.

In terms of government, one last thing to understand in the real estate market is its regulations.

We are talking about a heavily regulated industry. In all 50 United States (plus DC!), agents or brokers must be licensed to earn their commission on the sale of a house. To get their pocket license card, the individual must be at least 18, have completed high school, and pass a written test on real estate market law principles.

Final thoughts

The real estate market is a fascinating puzzle. Every piece, whether it’s residential, commercial, or industrial, plays a vital role. Understanding these categories gives you the insight to confidently sell, buy, or invest in the market. 

Knowing the lay of the land isn’t just about geography. It’s crucial to stay informed about the economy and government policies, too. These factors can significantly impact property values and availability. Keeping an eye on these external influencers will put you a step ahead in the game.

Lastly, don't forget the importance of professional guidance. Real estate agents are like the scientists in this field. They offer invaluable expertise and can help turn your real estate dreams into reality.

Real Estate tips:

Feeling like this barely scratched the surface? You bet. Take a look at our Glossary Terms to learn more about this fascinating industry!

Too much? Wanna sit this one out? Look through The OFFICIAL Real Estate Agent Directory® to find an agent. Let him navigate the ship over the broad seas of the real estate industry!