The purpose of this analysis is to explore how four economic indicators - interest rates, inflation, unemployment, and GDP - have affected the buying and selling of real estate and properties in America.

Interest rates

The decline in interest rates from 2.25 percent in 2019 to 0.25 percent in 2021 and 2022 had a significant impact on the real estate market in America. This increase in affordability led to a surge in demand, resulting in the sale of over one million more homes than the previous year. The fluctuations in interest rates can significantly impact the real estate market. When interest rates are high, borrowing costs increase, making it more difficult for people to finance home purchases, leading to a decrease in demand for homes. Conversely, when interest rates decrease, borrowing costs decrease, making it easier for people to finance home purchases. This increase in affordability can lead to an increase in demand for homes, which can drive up prices and increase the number of real estate transactions.

Inflation

Inflation can affect the buying and selling of houses as it can increase the cost of borrowing money (higher interest rates) and decrease the purchasing power of consumers, which may lead to a decrease in demand for housing and ultimately lower housing prices. However, inflation can also lead to an increase in the cost of goods and services, including the cost of building materials and labor, which can result in higher housing prices. Between 2012 and 2021, the average home price in the United States doubled from $230,000 to $390,000. During this period, the inflation rate in the United States fluctuated but generally increased from around 2.00% in 2012 to 8.00% in 2021.

unemployment

Increasing unemployment rates generally lead to a decrease in people's purchasing power, which can result in a decrease in demand for buying and selling properties. Such a decrease in demand usually leads to a reduction in property prices. However, in situations where unemployment increases, people may be interested in selling their property to gain capital. The unemployment rate in the United States peaked in 2012 and had been decreasing until 2019, reaching 3.7% from 8.1%. However, in 2020, it increased again to 8.1%. While the unemployment rate directly affected the U.S. housing market in 2012, lowering people's purchasing power for property, we do not see such an effect in 2020.

GDP

The GDP rates in 2013, 2016, and 2018 were respectively at their highest levels of $691.1 billion, $624.48 billion, and $533.06 billion within the period of 2012 to 2021. With the growth of GDP, household income and wealth increase, allowing more people to buy homes or to buy larger and better homes. Conversely, the housing market may also have a direct impact on GDP. For example, an increase in activity in the real estate market can be a significant factor for economic growth, as this activity leads to job creation and income growth in industries and services related to construction and property. In conclusion, the four indicators of interest rates, inflation, unemployment, and GDP all have a significant impact on the buying and selling of real estate and properties in America. Fluctuations in interest rates can significantly impact the real estate market, while inflation can affect the buying and selling of houses by increasing borrowing costs and decreasing purchasing power. Increasing unemployment rates generally lead to a decrease in demand and property prices, but may also lead to an increase in selling activity. Finally, GDP growth can lead to an increase in household income and wealth, allowing more people to buy homes, while an increase in activity in the real estate market can be a significant factor for economic growth. "I analyzed off_chain for the first time and enjoyed it, and learned a lot. Hopefully, it will be useful."👩👩

macroeconomic factors that influence the real estate market