Real Estate 101 – Supply & Demand

I remember sitting glassy eyed in Econ 4 while at the University of Missouri. A rough night of doing god knows what made it hard to focus…

Clearly I was oblivious to the importance of such a concept of Suppy & Demand in regard to economics. Oh, how I wish I could go back and smack myself in the face and wake myself up. Economics is everywhere, at work all the time, and now as I discuss selling and/or purchasing a home, is at the foundation of your home’s worth.

I’ll admit, some people are not enthused to read about this stuff…and I don’t blame them. Again, that’s why you hire a professional. This post is not a marketing ploy, so on with the education.

The basic principle of Supply & Demand states that the price/cost of any commodity varies directly with Demand and inversely with Supply. Namely, as Demand goes up, prices will go up. As Supply goes up, prices go down.


For your property, Supply is the amount of other real estate available (for sale or rent). This can be at various prices in a given market (we’ll use KC for our example) for a given period of time.

A sudden influx of workers into a market area (Claycomo Ford Plant expansion) will increase demand, thus allowing you to sell at a higher price. Another factor to consider when buying a house now is the low interest rates. By having low rates, you will save on housing costs.