Here are the fundamentals that drive 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 real estate.

Third, the location of housing relative to centers of employment establishes transportation alternatives and costs ("Location, Location, Location"). Consider the relative values of two identical houses, one of which is five minutes from work versus forty-five minutes. 

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 institutions and markets.  

Another key 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 the real estate industry organizations and service providers make it possible to easily and safely complete purchase and sale transactions.

There are many other significant factors that influence real estate, but these are the biggies.

Because the real estate market is influenced by so many factors, it is essential that home buyers, home sellers and homeowners stay informed about local real estate 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 creates as much confusion as understanding.

This report is updated frequently and is designed to keep you informed about real estate market conditions here on Seattle's Eastside. Call 800-882-8931 and enter extension 435 to hear our latest analysis of the market. Alternatively, fill out the following form to request an update by email or a custom report for a specific Eastside neighborhood.