Here are the fundamentals that drive residential real estate:

First and foremost, the local economy (which is influenced by the National economy) determines local employment, which determines the need for housing in the local market ("Demand"). When the local economy is doing well, people are employed and earning income which makes it possible to purchase homes so they have a place in which to live.

Second, the inventory of homes available for purchase in the local market provides the homebuyers with housing alternatives ("Supply"). When the circumstances are right, housing will be available. The relationship between Supply and Demand directly affects the price of residential real estate.

Third, the location of housing relative to centers of employment establishes transportation alternatives and costs ("Location, Location, Location"). Consider the relative value to you of two identical houses, one of which is five minutes from work versus the other which requires a forty-five minute commute!

Next, the availability of credit, and the interest rates and terms available, make it possible for homebuyers to purchase a home much sooner than if all cash were required (“Financing”). This depends primarily on National and International financial markets and conditions.

Another major factor is the existence of an efficient market, which means that the elements necessary for buying and selling real estate are orderly and secure from potential transaction risks (“Infrastructure”). Our federal, state and local governments, and real estate industry organizations and service providers make it possible to easily and safely complete purchase and sale transactions.

Two other key points:

1. All Real Estate Is Local. National, regional, state, county and city data may be of interest, and may have some influence.

2. The Market Value of a house is determined by “the market,” not the Seller or the Buyer acting alone. The market price is the price at which a willing seller will sell, and a ready buyer will buy.

All parties of a residential real estate transaction, including the seller, potential buyers, lenders and appraisers will research the selling prices of recently sold similar homes in the immediate neighborhood, as well as other factors.Based on the factors each party considers important, especially recent sales prices, each party will independently determine their own value.

Because the real estate market is influenced by many factors, it is essential that home buyers and sellers need to stay informed about local real estate factors and trends. This is not really possible if your only source of information is the popular media (television, newspapers, newsmagazines, Internet, etc.). The cacophony from these sources can create as much confusion as understanding. Realtors® make their living staying on top of this information and provide buyers and sellers with the professional support and negotiating skills to optimize their position in a transaction.

Click this link for an economic summary of residential real estate market conditions in the Seattle Metropolitan area. This report, provided by the National Association of Realtors and the U.S. Census Bureau, provides an overview of the economic conditions that affect the residential real estate market in our metropolitan area.

To get even more specific, call 800-882-8931 and enter extension 435 to hear our latest analysis of the Eastside market based on MLS and real estate professional sources. You may also complete the form on this page to request an update by email or a custom Comparative Market Analysis report of a specific Eastside neighborhood. There is no obligation for this service.

Remember: All Real Estate Is Local!