Now I have some understanding of inflation, supply and demand etc but I decided that real estate can't be compared to any merchandise so here's the question: how and why do real estate prices change? What can influence the real estate price change?
basic supply demand. add in interest rates, employment rates, foreclosure rates.
Real Estates price hides on the basic of supply demand, add in interest rates, employment rates mostly on facilities available in area.
Real estate falls under supply and demand too but it is aimed popularity of location. Still, every market is independent of one another and often independent from one neighborhood to the next. So with so many house being available to buy (high supply) and only a few buyers all looking for the deal of the century (low demand) the sellers were forced to sell below market simply to make the sale occur. And all the recent sales are used to determine value of other nearby properties. Before the housing crash there were more buyers than sellers (more demand the supply) and this competition for the same property between buyers would often result in a bidding war, And when that house was sold te next seller would use that sale as comp for their own house and sell it for the same price or maybe a little more, and so on and so on.
