We recently published an article about how real estate agents must promote their businesses on social media. Real estate agents are social sellers. They spend a lot of time with both clients that wish to sell homes as well as clients that wish to purchase homes.
Because of that, real estate agents must be aware of things that individuals with different jobs mustn’t always be aware of. One of those things is understanding how the overall economy in the United States can impact the real estate industry.
Real Estate Agent Info: How the Overall Economy Impacts Your Real Estate Business
There are two types of factors that affect the real estate industry. There are micro factors. There are macro factors. We’re going to discuss the key macro factor that affects the industry. Just to be clear, any factor that affects the real estate industry will have an impact on your real estate business.
Link Between Overall Economy and the Real Estate Industry
Per Resources Point, there’s a huge link between the overall economy and the real estate industry. That means, there’s a huge link between the overall economy and your real estate business.
Anything that affects the overall health of the economy is bound to affect the overall health of the real estate industry. This includes something as gigantic and far reaching as Gross Domestic Product. Simply called GDP, Gross Domestic Product is simply the total value of everything produced inside of a specific country. The higher the value of GDP, the more consumers have to spend on products.
When consumers have more money to spend on products, they’re more likely to spend that money. Houses are big ticket items. That means that most individuals must have enough money to first save. Then, they must have enough money to purchase. Then, they must have enough money to pay for their monthly mortgages.
The higher the GDP, the better it is for you, the real estate agent. The reason is because when house buyers purchase homes in high GDP situations, interest rates and home prices are also high. Everything goes up at the same time in rising GDP situations.
When GDP lowers, that means home prices depreciate. The reason is simple. A sinking GDP implies that consumers, including house buyers, can’t afford the current prices of houses. House prices naturally lower, meaning that your cut as a real estate agent also takes a hit.
We’ll get into interest rates and how rising and lowering interest rates affect your ability to sell, your commissions, your real estate business, etc., in a later blog. For now, it’s important to understand that a rising GDP, like what we have currently, lifts your boat, your real estate agent business, because house prices should rise.
The more you can sell a house for, the bigger your commission.