What Is Real Estate?

Real estate is property consisting of land and the buildings and natural resources (minerals, water, crops, etc.) on it.

There are four types of real estate:

  1. Residential (single-family homes, condominiums, townhouses, etc.)
  2. Commercial (offices, stores, hotels, services and other businesses)
  3. Industrial (factories and warehouses)
  4. Land (vacant land, farms, ranches, and reclaimed sites)

What Is the Real Estate Market?

The real estate market is all properties available for sale in a certain area.  It functions based on the laws of supply and demand. When the supply is greater than the demand, prices fall. When the demand is greater than the supply, prices rise.

The real estate market is like any other market; however, factors such as seasonality, durability, and locality set it apart.

The United States (U.S.) real estate market is made up of hundreds of city and regional real estate markets.  Prices in these markets typically move independently.  However, there are some factors that can affect the U.S. market as a whole.

Supply and Demand

Local Factors

May affect one market but not another:

  • Income
  • Job Availability
  • Limited Land
  • Transportation
  • Extreme Weather

General Factors

Affect the real estate market as a whole:

  • Interest
  • Inflation
  • Taxes
  • Social Status
  • Investment