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5 Key Factors That Drive the Real Estate Market

Wednesday, November 15, 2023   /   by Teresa Pileggi

5 Key Factors That Drive the Real Estate Market

5 Key Factors That Drive the Real Estate Market


Overview


By now, you are aware that the real estate market is one of the most lucrative areas that you can


invest in and make more money. While this is true, the return on investment is always dependent


on a number of factors. From the demographics to the interest rates at the moment, an array of


factors affect or drive the real estate market. As an ambitious investor, there is a need for you to


be acquainted with these factors and how they affect the real estate market so that you can make a


wise decision. Remember that these factors can affect the real estate market either positively or


negatively. In this article, we shall illustrate these factors so that you can know them better. Read


on to know more!


1. Demographics


One of the key drivers of the real estate market is the demographics of a certain area, city, or


neighborhood. Simply put, demographics refers to the data that describes or shows how a


certain populace is composed. Some details covered here include migration patterns, income,


gender, race, age, population growth, and so much more.


You have to pay attention to these factors whenever you want to invest in a real estate property.


In fact, these facets affect the kind of properties you are bound to find in a certain neighborhood


or city.


2. Interest rates


Besides demographics, the other factor that drives the real estate market is the interest rates


charged by different financial institutions. For instance, when the interest rates are low, most


people will be able to take loans and invest in real estate properties.


From buying pieces of land to purchasing different properties, there are many options that you


can consider once you get the much-needed financing. However, if the interest rates are high,


most investors will shy away from taking loans. Instead, they might consider forfeiting the entire


undertaking until the interest rates get to manageable levels. Waiting for interest rates to drop


will cause you to pay more money for a home in the long run.


3. The economy of your country


If your country’s economy is not doing well, the real estate market is bound to get hurt. For


example, during the COVID-19 times, there was a great recession all over the world and the


effects are still being felt to date. Suppose you become a victim of such circumstances; you will


not be able to make ends meet. As a result, you will not have enough money to invest in the real


estate market. Even if you have a job during such moments, you may be worried that you might


lose it in the long run.


As a result, you might end up using your savings to purchase different properties. If the savings


are limited, be sure that you will not have the luxury to purchase more properties like you would,


in case the economy was good. Remember that if one is confident about his or her job, be sure


that such an investor will be ready to take loans and invest in real estate properties out there.


4. Stock market


Most people usually tie their wealth to the stock market. As a result, this is a critical factor that


can drive or affect the real estate market. Suppose the market crashes, most people will not have


enough money to make a down payment. Such was evident in 2008 in the United States.


If this happens, most people will be inclined to save their hard-earned money rather than spend it


on real estate properties. However, once the stock market starts to take a positive trajectory, most


investors will be confident to purchase different properties within their neighborhood and


beyond.


5. The Government


The current government is a critical driver of the real estate market. To put this into perspective,


when a government offers subsidies, it will spur growth in the real estate market. Other times,


the government can offer loans to different people so that they can make purchasing a home a bit


easier.


However, there are instances it might change a number of policies that can eventually lead to


slow real estate market growth. All these factors will affect the price of the real estate properties


either positively or negatively.


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Pileggi Real Estate Team - eXp Realty
Tom Pileggi, Broker
P.O. Box 1665
Holland Landing, ON L9N 1P2
416-917-6566

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