There are several factors and conditions affecting the value of a real estate. For a homebuyer or an investor like you, it is important that you know what these factors are so you can assess by yourself if the property has proper pricing. Having sufficient knowledge about how the market set the worth of a property will help you not get involved in an unfair and unreasonable deal. Below are the factors and market principle that can affect the pricing of real estate properties.

• Supply and Demand – This basically tells that if there is higher demand and lower supply for a product, it is more likely that there will be an increase in its worth. This means that if there is high demand for a real estate property, chances are it will cost you very much. Extreme demand for properties can also make homebuilders develop more houses to meet the demands of the people. However, there can also be excessive supply especially if there will be an overproduction of real estate properties and then later on, decrease in demand. Surplus of properties for sale plus a weak demand can set the value of the property very much lower.

• Conformity – One of the aims of most of the housing development companies is to make their properties look all the same, have similar qualities and exude the same style so it would be easy to realize their true and optimum value. A house with three bedrooms is not in conformity if it is located in a community for five-bedroom houses. If this is the case, the true value of the three-bedroom property will be hard to achieve.

• Change – Change will always happen in every community and city. Sometimes, it is for the better and sometimes, there are changes for the worse. However, whatever change it may be, it can affect the value of a property located on that place. Economists suggest that a community can encounter four stages of change, namely development, then stability, followed by decline and lastly, renaissance. For an instance, the city of Albuquerque is in the development stage right now. This means that the worth for Albuquerque real estate properties is in fairly high yet affordable prices.

• Progression and Regression – When you talk about progression, it means that properties that are naturally low in value can have chances to increase their worth if they are in the neighborhood of high-value real estate. In contrast, regression suggests that properties with high value tend to decrease their price if amongst the low-value real estate.

• Competition – There can be an excitement in competition if the demands for properties are very high. Higher demand and stir up in competition can also result to profit increase, which can then lead to more development of real estate. If not properly balanced, there can be a surplus in real estate properties because of excessive production. Sadly, when this happens and the demand started to decrease, the industry of real estate investment can fail and collapse, resulting to failing real estate economic market.