Whether you are selling a beanie baby or a house, low supply with high demand means increased prices. If you have a lot of supply combined with low demand, prices are lower. How does that relate to houses? If you ignore supply and demand when buying or selling a home, it’s like trying to jump off of a cliff and ignore gravity. Whether you acknowledge it or not, you’ll end up dealing with it. We’re here to help you understand the market forces so you can make the best decision possible for you and your family.
Interest rates can impact both supply and demand. Here’s how: low interest rates means buyers have more purchasing power which drives up demand for more properties to sell. This increased demand can drive up prices because competition among buyers will cause prices to increase. Low interest rates can also encourage more sellers to put their home on the market so they can sell one property and buy another. Trading up and downsizing occurs a lot when interest rates are low.
When interest rates are high, the opposite occurs: buyers have less purchasing power and the demand for housing goes down. Prices tend to go down as sellers compete to sell their home to a limited number of buyers. However, higher interest rates also limits the supply of homes to sell because fewer property owners are willing to sell if they will need to trade a lower interest rate that is already locked versus a higher interest rate.
Macro market information impact supply and demand. By macro market, we mean taking a look at the entire Coastal Carolinas Association of REALTORS market along the Grand Strand. State statistics are almost always meaningless and national numbers are too broad to apply to our local market. We live in an area that is growing rapidly due to the high demand of people looking to move here and enjoy great weather with lower taxes. This means demand in our area is almost always going to be steady. In the worst of markets, demand is pretty high to live along the coast. Our macro market is mostly impacted by supply. Thankfully, we live in one of the largest counties east of the Mississippi River with land available to build. It may not feel like it as a local and natives to the area don’t want to acknowledge it, but we have space for development. Please note- builders do a good job of limiting available inventory so they don’t drive their own price down. The neighborhood might finish with 500 homes but they only build so many at one time and they release them either individually or in batches as they are finished. In our market, when you’re taking a look at the inventory of homes, be sure to talk to us about new construction and how that impacts supply.
Micro market information comes down to the overall scarcity of what you are trying to buy or trying to sell. If you’re trying to buy a property that is incredibly unique and lots of other buyers will be interested, then you’re in a situation where there’s very low supply and very high demand, that will reflect in paying a higher price. If you’re listing a property that is incredibly unique, it's important to determine if there’s a high demand for what makes you special or if it's hard to find a buyer with the same tastes as you. If there’s low demand, it will bring the price down. Scarcity is important to factor in. If there’s 10 other homes similar to yours in the neighborhood, that will negatively impact price because there’s relatively high supply in your micro-market. If you are the only condo for sale in your building, that can help increase your price. As a buyer, if there are 5 properties that check all of your boxes, you stand a much better shot at getting a better price.
If you have questions about supply and demand and how your search is impacted by these factors, please don’t hesitate to contact us.
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