Real estate represents a significant portion of most people’s wealth, and this is especially true for people in the United States. According to economic research published by the Federal Reserve Bank of St. Louis, the homeownership rate in the U.S. in the first quarter of 2024 was 65.6%.1

The size and scale of the real estate market make it an attractive and lucrative sector for many investors.

1. Demographics

Demographics are the data that reflect the composition of a population, such as age, race, gender, income, migration patterns, and population growth.

2. Interest Rates 

Interest rates also have a major impact on the real estate market. If you’re considering buying a home with a mortgage, use a mortgage calculator to see how different rates of interest can affect purchase prices.

3. The Economy

Another key factor that affects the value of real estate is the overall health of the economy. This is generally measured by economic indicators such as the GDP, employment data, manufacturing activity, the prices of goods, etc. Broadly speaking, when the economy is sluggish, so is the real estate market.

4. Government Policies and Subsidies

Legislation is another factor that can have a sizable impact on property demand and prices. Tax credits, deductions, and subsidies are some of the ways the government can temporarily boost demand for real estate. Being aware of current government incentives can help you determine changes in supply and demand and identify potentially false trends.