How the Law of Supply and Demand Affects Home Stagers – Part 1

In a slow real estate market, sellers are desperately looking for ways to sell faster and for more money. They need home staging services now more than ever before and it comes down to the simple economic laws of supply and demand.

Here´s how it works:

When demand exceeds supply, prices rise.

This is what we saw in most real estate markets for approximately the last 10 years.

Fueled by easy credit, low interest rates, high real estate appreciation, and the general feeling of wealth and abundance that came from a rising stock market, there were lots of buyers chasing a dwindling number of homes.

Because demand was higher than supply, homebuyers felt pressured to make quick decisions, and bidding wars were common. This drove up prices even more.

Home sellers held the power in this situation, thus the term "seller´s market."

TV shows and articles about house flipping and home staging became popular and increased the general awareness of the difference staging can make. Despite being in a hot real estate market, the home staging industry grew as savvy sellers and property investors looked for ways to make even more money when they sold.

When supply exceeds demand, prices fall.

This is what is happening in today´s real estate market.

People who got in over their heads with easy credit have been forced to sell or put their homes in foreclosure. As banks absorb their losses, credit becomes tighter. Homebuyers with good credit ratings, who normally wouldn´t have any problem getting approved for a bigger mortgage, are having a harder time getting loans, which further reduces demand. That´s why government plans are aimed at freeing up credit again!

A slow real estate market is called a "buyer´s market" because there are lots of homes for sale and fewer buyers fighting for them. The perceived pressure to make a quick buying decision is gone.

In part two of this article series, learn how this law of supply and demand affects home stagers.