Supply and demand is one of the most fundamental concepts of economics and it is the backbone of a market economy. Demand refers to how much of a product or service is desired by buyers. The quantity demanded is the amount of a product people are willing to buy at a certain price. Supply represents how much the market will or can offer. Supply and demand producing higher home prices is an obvious sign of this theory.The demand for more housing inventory has been created by the combination of rock-bottom home prices and historical low mortgage rates. More desire among buyers to buy. The limited inventory has increased the demand and therefore escalated home prices. Just like any other product, but to a higher degree, the supply and demand concept only works if consumers feel that home is priced fairly.
Homebuyers will normally not bid on a property that’s overpriced. Sellers that choose to over price their property will only make the well-priced homes more attractive. Those inflated priced homes decreases the supply by even more and intensifies the interest toward those properties that are more in line with market value. That’s one reason some homes are obtaining multiple offers and others have bogged down. The demand is coming from a variety of different customers. The first time buyer, the repeat buyer, families purchasing after a prior short sale, the investor and the property flipper. These prospects are taking advantage of the opportunities this market now offers.
With such an array of buyers purchasing homes, the obvious presumption would be there’s a buyer or two for every property. Todays buyers have long memories and they will not over pay for a home as many did during the housing boom era. Even if the occasional buyer strays and decides to over pay for a home, the appraiser will bring them back to reality. Sellers also have to realize their home is only worth what a buyer is willing to pay. There’s no demand for over priced homes. The supply and demand theory only works, if there’s a product worth buying. The demand part of that equation works better when a home comes on the market correctly priced. If a homeowner is forced to make price adjustments weeks later, they have diminished their chances of obtaining peak value and therefore lost out on the immediate benefits of supply and demand. Please visit my website www.JohnnyBrooksHomes.com for helpful tips on buying or selling a home, scan my informative blogs and easy access to view local area homes for sale in Davis, California and the surrounding communities.