4 Factors Affecting the Real Estate Market

Tuesday, May 9, 2023   /   by Trisha Davis

4 Factors Affecting the Real Estate Market

If you’ve been preparing to buy a home in the last couple of years, then you’re probably aware of the serious housing inventory shortage you may have to contend with.

Low housing supply has led to rising home prices, buyer competition and, in many markets, bidding wars.

But what caused the shortage in the first place? And why hasn’t it changed much in recent years? Here’s what you need to know.

  1. Slow Housing Construction: Builders have reduced their work since the housing crash in 2008. There have also been issues with supply chains, the rising cost of lumber and other materials, and contractor shortages. All these elements have made it harder to build new homes to increase supply.

  2. Homeowners Staying Put: Right now, mortgage rates are higher than they were at the height of the pandemic. Finding a new home doesn't always make sense for homeowners with the 2% or 3% rates seen a few years ago. Few are choosing to sell because of interest rates, but many older homeowners are choosing to age in place, too — which keeps the number of existing homes on the market low.

  3. High Demand: Homebuying demand jumped during the pandemic. And while it’s slowed a bit due to higher mortgage rates, demand is still outpacing supply. Much of this demand comes from millennials, who are now at their prime homebuying age.

  4. Institutional Investors: Big investors are snapping up properties, too, and they often hope to rent them out, which takes them off the market for sale. At one point last year, they accounted for almost 7% of all home sales.


Despite these headwinds, finding a home that works for you is still possible if you have the right help. Are you ready to buy? Reach out today.


  #monthlynewsletter #iowarealestate #yourlocalagent, #firsttimebuyers

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