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Real estate prices affected by supply and demand


Published: Jul 08, 2013

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There is a misconception shared by many real estate sellers and buyers in The Bahamas that real estate agents are in charge of controlling today’s prices and determining current and future market values.

The reality is that in The Bahamas, as well as the rest of the world, the price of real estate is affected by supply and demand.

Economic theorists believe that when you have a large supply of goods and few buyers, and in this case we are talking about real estate properties, prices will certainly decline. On the other hand, if the supply of properties is limited and there is an abundance of ready, able and willing buyers, property prices will definitely increase.

In an oversupplied real estate market, buyers will have many houses to choose from and a “buyer's market” will be created. In a real estate buyer's market the few available buyers can pick and choose from the many properties sellers have to offer dictating how much they are willing to pay. We must also keep in mind that a second important factor in creating a buyer’s market is the fact that sellers will often find themselves in the position where they need to compete with each other for those few lurking buyers. This competitive attitude together with the sellers urgencies to sell will lead to lower prices.

A different pricing effect often occurs when buyers in a real estate market have few viable housing alternatives to choose from. This scenario will lead to what is called a “seller's market”. In this case, the demand from buyers is so great and the properties for sale are so few that sellers are able to command top dollar.

Next time you talk to your BREA agent in regards to giving you an opinion of value to competitively list your home, please keep in mind that our opinions are strictly based on the latest sales comparisons in your neighborhood and today’s market values which are influenced by the supply and demand of properties.


• Carmen Massoni is president of Bahama Islands Realty and has 18 years of experience in the real estate profession in The Bahamas. She has been the recipient of many international awards recognizing her as a top producer amongst her peers. If you have any questions or need real estate advice, call 322-7770 or email Carmen@BahamaIslandsRealty.com.


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