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Market Value Monday: Government Regulations

How can the government influence the market and help you with your next home purchase?

When the real estate market sees trouble, it is usually the place of the government to step in and regulate to bring the market back up. There are so many factors that go into the real estate market, it is common to see it fluctuate often. Demographics can play a huge part in the real estate market including average age of citizens, gender, race, income, population and population growth. Each of these can affect the market in a different way and are evaluated by local brokerages such as BridgeView. Since the financial crisis of 2008, the overall economy has not been as strong as past years therefore resulting in a sluggish real estate market. The economic cycle has one of the most direct effects on the real estate market, the less money that is in circulation, the less demand for houses because people can’t afford them. Each cycle we have can affect a different sector of real estate in a unique way, and should be taken into account when looking for a new property.

Government policies such as subsidies, tax credit, and deductions are popular solutions to boost the economy. It is important to be aware of these policies and whether they are in place in order to predict market trends in the immediate future. The after affects on the market can also have a direct affect on you as a consumer. These policies are put in place to boost demand and enter more money into the market.  Tax credits give people incentives to invest or buy new properties because it reduces how much you have to pay in taxes. Tax credits can also allow you to be eligible for certain things in the market that you previously weren’t. There are agencies you can meet with to see if you are eligible for tax credits due to your income or economic situation. Deductions can also be out in place to subtract even more from taxes and allows people an increase in income. Deductions are often attached to rent or lease options to target that portion of the market. Subsidies can also be an option where the government backs an economic assistance program for lower income citizens to help them cover things like mortgage payments. By assisting people with hefty costs such as those, there is usually a positive response and we see an increase in demand.

Government policies are short term solutions to help our the real estate market, and here at BridgeView we hope to advise you as best as we can when on your real estate journey.

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