When people buy or sell houses, either to live in or being an investment, professionals do refer to this in the form of the housing market. A house is regarded as the most highly valuable thing many people will ever own.
The importance of the housing market cannot be ignored. It is indeed quite important for the economy. The housing market is truly linked to consumer spending. When house costs go up, homeowners turn into ideal off and feel quite confident. Some people will borrow more against the value of their home either to spend on goods and services, renovate their home, supplement their pension or pay off other debt.
When it comes to house costs going down, homeowners risk that their homes will be worth less in comparison to their outstanding mortgage. People are therefore quite likely to cut down on spending and hold off from making ideal investments. Housing investment is a small but indeed unpredictable part of how we measure the entire output of the economy. If you purchase a newly built home, it directly contributes to the entire output.
Real Estate is known for presenting an important portion of most people’s wealth and it is truly true for a variety of homeowners. Therefore, the importance of the Housing market cannot be ignored indeed. The size and scale of the real estate market make it an attractive and lucrative sector for many investors.
Do you want to understand how the housing market and changes in house prices affect the rest of the economy?
- Rising house prices truly encourage consumer spending and lead to higher economic growth because of the wealth effect.
- A sharp drop in home prices adversely affects consumer confidence, and construction and leads to lower economic growth.
- Rising house prices can also redistribute wealth within an economy increasing the wealth of homeowners but mitigating effective living standards for those not owning a home.
The size and scale of the real estate market make it quite attractive as well as a lucrative market for many investors. Investors can truly invest directly in physical real estate or choose to invest indirectly through managed funds. The entire calculation revolves around many things including house prices could fall and therefore there are many things to pay attention to while going for it. Investing directly in real estate involves buying the residential or commercial property to use as an income-producing property or for resale at a future time indeed.
Indirect ways to invest in the real estate market include investing in real estate investment trusts, real estate exchange-traded funds, CREFs and infrastructure funds. Because of the higher liquidity available in the market, the lower transaction costs, and lower capital requirements, average investors turn to indirectly investing in real estate.