The real estate for sale market is the economic sector that involves the buying and selling of infrastructure such as buildings either for residential purposes, business premises, and the industry segment. Like any business sector it is susceptible to the economic forces of supply and demand. The main people involved in this field include the owner, renter, developers, renovators, and the facilitators.
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This sector has a number of characteristics that are specific to it. Real estate is durable since the buildings can last for many years while the land it stands on is indestructible. As a result the supply is composed of a large share of already pre-existing stock and a tiny percentage of new development. Thus the stock varies in price only according the deterioration, renovation, and the new development coming up.
Stock in this sector could be referred as heterogeneous since every piece is unique. All buildings are different in terms of the location they are situated in, their structure and design as well as how they are financed. Change in this field takes quite a long time. This is as a result of the long duration involved in financing and construction of new property.
The real estate has the very unique feature in terms of the buyers in this market. The property can be purchased either as an investment with the expectation of earning returns or as a consumption good with the thought of using it. Individuals could also invest in the market for both reasons whereby they use the property for a while before selling it at a profit. As a direct result of its dual nature, there is a high demand since individuals tend to over-invest in this sector.
Immobility is yet another characteristic unique to this sector. The properties as well as the land it lies on are both immobile. As a result there is no physical market place meaning one has to go to where the property is situated. Therefore this issue makes location a prime factor before investment.
The main factor in demand for property is demographic, that is the population size and growth. The demographic composition plays a huge role in determining the demand and as a result the price. The performance of the economy also affects the performance of the sector since it plays a role in the ability of investors to take loans and mortgages for financing their business ventures. Naturally, the pricing determines the level of demand in the sector.
There are a number of ways to finance investment in the real estate market from government and commercial institutions. Financial aid can be obtained from commercial banks, savings banks, mortgage brokers, life insurance companies and other financial institutions. However, the best practice still remains getting funding from your own savings.
In view of the recent real estate market crash it is best to follow some guidelines. As a buyer ensure that the price you pay for the property matters a lot as well as the ability to dispose of the purchase later down the road. If not it is advisable to downsize your mortgage to be on the safe side. As a seller, identify when it is the right time to put your property on the market in order to avoid low offers.
Unfortunately there's no formula or analysis that works for every individual, the decision whether to rent or buy must be made on a case by case basis because the process requires a very subjective weig As the housing market crash recently taught us, buying a home is not always the best option for every individual. Here is my best attempt to help with the decision of whether to buy or rent real estate.
Let's start with a few concrete laws:
If you are unsure about the stability of your job DO NOT BUY, renting is the only sensible option for you. If you are comfortable with your job stability then the home buying option is on the table.
There are calculators and formulas that can help analyze whether it makes more sense to buy or rent in a particular city based on current economic conditions. These are helpful but they don't factor in all of the subjective elements listed below. The numbers alone are not determinative.
Renting Real Estate - Pros and Cons
PRO - Renting requires a relatively small initial outlay of money. Most rentals require only first, last, and security deposit. This is dramatically less that buying a home and the security deposit is returned if the property is left in good condition at move out.
PRO - Renting does not require a long term commitment. Most leases are for 12 months and then they either automatically renew or terminate.
PRO - Renting allows you the opportunity to familiarize yourself with one or multiple neighborhoods before making a long term commitment to one.
PRO - Economic and housing markets don't really affect renters. Rents may go up slightly or down slightly but things like declining home values, under water mortgages and shadow inventory aren't important to renters.
PRO - Renters don't have to allocate money for annual repairs.
PRO- Renting a home is a quick process that typically takes 2-3 weeks total.
PRO - Renters don't pay real estate taxes or worry about real estate tax hikes
CON - Renters have limited control over the property and the condition of the property they live in.
CON - Renters don't build any equity in a home. The entire monthly payment goes to the landlord.
CON - Renting is not a long term solution for most individuals.
CON - There are no tax deduction benefits for renters
Buying Real Estate - Pros and Cons
PRO - Buying real estate affords the buyer 100% control over the property. If the owner is unhappy with the condition he or she can make alterations as desired.
PRO - Interest rates are historically low.
PRO - When you buy a home some portion of the monthly mortgage payment goes towards equity in the home.
PRO - Buyers are entitled to significant tax deductions for mortgage interest and depreciation.
CON - Buyers must allocate money for annual repairs
CON - Buying a home is a long process compared to renting. The average home purchase takes 30-60 days.
CON - Buying requires a long term commitment. In most vị trí the seahara phú yên shop villas cases the buyer should plan on owning the property for 5 years or longer.
CON - Buyers pay real estate taxes and face risk of annual increases
It's easy to understand the difficulty clients encounter when deciding whether to rent or buy real estate. At the end of the day there's really no right or wrong answer, only what makes sense for an individual with a specific set of circumstances.
Understanding real estate can seem daunting but is really pretty simple if you read and follow this advice from Philadelphia Real estate agent Frank L. DeFazio. Frank has extensive background in all types of Center City Real Estate transactions.