Definition of "Real estate market"

Paulo Alves, Broker real estate agent

Written by

Paulo Alves, Brokerelite badge icon

De Paula Realty USA Inc.

Defining such a broad term like this is not an easy task.

If you 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 the 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?".

So here are some things to be on the lookout:

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

- Residential
- Commercial
- Industrial

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 – most of the time aided by agents or brokers – deal with townhouses, apartment buildings and even inhabited crops of land, while the Commercial Real Estate Market revolves around office buildings, warehouses, shopping malls or big retail store facilities and the Industrial Real Estate Market is specialized in productive sites like factories, mines and even farms.

You see how each and every one of those three categories demand a specific set of knowledge? Not only that, most of the time each one of them will have its particular ratio of supply and demand.

Ok, having made that distinction, note that aside from the three categories and its 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 moment 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 and taxes! Which leads us to…

-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 that is only 5 minutes away. An office building too many miles away from the majority of its workers or a farm distant
from the necessary natural resources are also examples of how the geographic aspect can
influence the Real Estate Industry. Here's an article on our blog where we make a question regarding this phenomenon: "Could Hipster Food Markets Herald Gentrification Trends Instead of the Other Way Around?

- Government Policies. Because the Real Estate Industry produces so much revenue and can
have such a big impact on 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, deduction, subsidies - that can make it easier (or harder) to build, buy or sell on a determined location.

Talking about Government; one last thing in order to understand the Real Estate Market are its regulations.

We are talking about a heavily regulated industry. In all 50 United States (plus DC!) it is mandatory for agents or brokers to be licensed in order to earn his or her commission for the sale of a house. To get the license, the individual must be at least 18 years old, have completed high school and pass a written test about the real estate market law principles.

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!

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