Supply is the amount and type of real estate available for sale or rent at differing price levels in a given real estate market.  Demand is the amount and type of real estate desired for purchase or rent in a given market at a given period of time.

Variables that influence supply:

  • availability of skilled labor
  • availability of construction loans and financing
  • availability of land
  • availability of materials

Variables that influence demand:

  • Price of real estate
  • Population numbers and household composition
  • Income of consumers
  • Availability of mortgage credit
  • Consumer taste or preference

Typically an over-supply of homes or land in a given area will mean lower prices.    If there is an under-supply of homes and land, then prices will usually rise.