Real estate is the property, land, buildings, air rights above the land and underground rights below the land. The term real estate means real, or physical, property. “Real” comes from the Latin root res, or things. Others say it’s from the Latin word rex, meaning “royal,” since kings used to own all land in their kingdoms. The U.S. Constitution initially restricted voting rights to only owners of real estate.
There are four types of real estate:
Real estate also refers to producing, buying and selling real estate.
Real estate affects the U.S. economy by being a critical driver of economic growth.
Construction of new buildings is a component of gross domestic product. It includes both residential, commercial and industrial buildings. It contributes 7 percent, or $1.2 trillion, to the U.S. economy.
New home building is a critical category. It includes construction of single-family homes, townhouses and condominiums. The National Association of Home Builders provides monthly data on home sales and average prices. The data on new home salesis a leading economic indicator. It signals how the housing market will do in nine months. That’s how long it takes to construct new homes. The NAHB also reports new home starts, Those are the number of home construction projects on which ground is broken.
Real estate agents assist homeowners, businesses and investors buy and sell all four types of properties. The industry is typically divided up into specialists that focus on one of the types.
Sellers' agents help find buyers through either the Multiple Listing Service or their professional contacts. They price your property, using comparative listings of recently sold properties known as "comps." The can help you spruce up your property so it will look its best to customers.
They assist in negotiations with the buyer, helping you get the highest price possible. Here are more sellers' agent services.
Buyers' agents provide similar services for the home purchaser. They know the local market. That means they can find a property that meets your most important criteria. They also compare prices, called "doing comps." It allows them to guide you to areas that are affordable. Buyers' agents negotiate for you, pointing out reasons why the seller should accept a lower price. They help with the legalities of the process, including title search, inspection and financing. Here are more b services.
Real estate agents who want to increase their professionalism become REALTORS®. The National Association of REALTORS® publishes provides monthly reports on the number of homes resold and their average price.
It's a better indicator of the health of the overall housing industry than new home construction. That's because new home builders can be overenthusiastic about future sales and overbuild. They can also cut prices to force sales. Individual homeowners must follow the market's supply and demand. They don't have the clout to manipulate the market. NAR provides the current housing market statistics.
Everyone who buys or sells a home engages in real estate investing. That means you must consider several factors. Will the house rise in value while you live in it? If you get a mortgage, how will future interest rates and taxes affect you?
Many people do so well with investing in their homes they want to buy and sell homes as a business. There are many ways to do that. First, you can flip a house. That's where you buy a house to improve then sell it. Many people own several homes and rent them out. Others use Airbnb as a convenient way to rent out all or part of their homes. You can rent vacation homes using VRBO or Home Away.
Before you do that, make sure you know what's the current business cycle. You don't want to start potentially risky investing if the real estate market is going to crash.
You can also invest in housing without buying a home. You can buy stocks of homebuilders. Their stock prices rise and fall with the housing market. Another way is with Real Estate Investment Trusts, called REITS. These are investments in commercial real estate. Their stock prices lag behind trends in residential real estate by a few years.