Existing homes

Definition

Existing homes refer to residential properties that are already built and have been occupied prior to their sale. These homes play a critical role in the real estate market as they account for a substantial portion of home sales, influencing the overall supply and demand dynamics within the housing market. The condition, location, and pricing of existing homes can significantly impact buyer interest and market trends.

5 Must Know Facts For Your Next Test

1. Existing homes typically make up about 90% of all home sales in the United States, making them a crucial segment of the housing market.
2. The sale of existing homes can be influenced by factors such as interest rates, local economic conditions, and housing inventory levels.
3. Existing homes may come with various challenges, including maintenance issues or outdated features, which can affect their market value and buyer appeal.
4. The National Association of Realtors provides data on existing home sales, which is often used to gauge the health of the overall real estate market.
5. Prices for existing homes can vary widely based on location, neighborhood desirability, and recent sales trends in the area.

Review Questions

• How do existing homes influence supply and demand dynamics in the real estate market?
  • Existing homes significantly impact supply and demand because they constitute the majority of transactions in the housing market. When more existing homes are available for sale, it increases supply which can lead to lower prices if demand does not keep pace. Conversely, a shortage of existing homes can create heightened competition among buyers, driving prices up. This interplay helps determine market equilibrium and influences buyers' decisions.
• Discuss the role of interest rates on the sale of existing homes in relation to demand.
  • Interest rates play a vital role in influencing demand for existing homes. Lower interest rates often lead to more affordable mortgage payments, which can encourage more buyers to enter the market. This increased demand for existing homes can push prices higher and create a competitive environment. Conversely, when interest rates rise, borrowing costs increase, which may dampen buyer enthusiasm and reduce demand for existing properties.
• Evaluate how changes in local economic conditions affect the sales price and volume of existing homes.
  • Changes in local economic conditions can have profound effects on both the sales price and volume of existing homes. For instance, a booming job market may attract more people to an area, increasing demand for housing and driving up prices due to heightened competition. On the other hand, economic downturns or job losses can lead to decreased demand as potential buyers become hesitant to make purchases, resulting in lower sales volumes and potentially declining prices as sellers compete to attract buyers.

Related terms

New homes: New homes are residential properties that are newly constructed and have never been lived in, typically sold by builders or developers.

Real estate market: The real estate market encompasses the buying, selling, and leasing of properties, influenced by factors such as supply, demand, pricing, and economic conditions.

Home appraisal: A home appraisal is an assessment of a property's value conducted by a licensed appraiser, often required during the sale or purchase of a home.