6 Key Factors Wholesale Partners Need to Know Impacting the Real Estate Market

For third-party originators and wholesale partners, understanding the factors that affect the real estate market is crucial for your success. Whether you're a residential or commercial mortgage broker, private lender, or affiliate partner, having a strong grasp of market dynamics enables you to better advise clients, build credibility, and grow your pipeline of leads.

While real estate is undoubtedly a lucrative sector, it’s also influenced by several variables. These market factors can determine everything from supply and demand to financing opportunities. Below, we’ve outlined six key factors that impact the real estate market, with a focus on how you, as a financing partner, can leverage these insights to better serve your clients.

1. Demographics: A Foundation for Market Trends

Demographics of the real estate market can have a lasting impact that many professionals often overlook. Demographics include age, gender, income, population growth, and various other data points. These factors can contribute to real estate market trends, generating results that can last decades. 

As a financing partner, you should always think about how the current demographics of a particular market affect supply and demand, and how they will affect the future of the market. For instance, when older generations retire, there is typically a shift in current trends and the type of demand in the real estate market.

Tip: Demographic data enables you to uncover potential markets that are starting to grow. Show your clients which market trends exist while you explore investment possibilities.

2. The Economy: A Barometer for Real Estate Activity

The overall health of the economy can affect the real estate market. For example, the nation’s GDP, employment data, and price of goods can all affect real estate. When the price of goods is rapidly going up, you can expect to see construction costs go up, impacting housing prices. It’s not uncommon to see short-term real estate feel more of a downturn than long-term real estate during a declining economy. As a broker or private lender, keeping an eye on these economic indicators helps you provide valuable advice to clients.

Stat to Know: During economic downturns long-term rental properties consistently deliver superior returns above other asset classes while maintaining stability through short-term market instabilities.

3. Government Policies and Subsidies: Influencing Market Dynamics

Government policy can affect the real estate market by temporarily stimulating demand. When the tax credit for first-time homebuyers was introduced in 2009, many homebuyers took advantage of this limited-time tax credit, creating a boost in market demand and helping jumpstart the economy. Tax credits, deductions, and subsidies are just some of the ways the government can temporarily stimulate the real estate market.

Actionable Insight: Provide your clients with regular updates about government policies which can generate benefits for them. For example, customized industry newsletters along with regular blog posts can help establish your company as the premier source for industry news and updates.

4. Interest Rates: A Driving Force in Client Decision-Making

Interest rates are among the most discussed factors affecting real estate market trends, and for good reason. When the market is experiencing low interest rates, it’s typically followed by a higher demand for housing. For many homebuyers, paying a smaller interest rate on a property is an incentive to purchase. Those who are considering purchasing a property but are not fully convinced can be persuaded with lower interest rates. When the market is experiencing high interest rates or rapid increases, there may be a surge in demand as many homebuyers rush to grab a decent interest rate on their loan before the rate gets too high. If interest rates stay high, eventually demand will die down as these buyers are squeezed out of the market.

Pro Tip for Wholesale Partners: Use fluctuations in interest rates to your advantage by offering timely solutions tailored to market conditions. If interest rates are rising, encourage clients to act quickly before rates climb higher. Conversely, in low-interest environments, you can promote long-term financing options that lock in favorable rates.

5. Availability of Funds: Shaping Market Activity

During tough economic times, insufficient funding can lessen demand in the real estate market. When emotions are high in the market, there is generally more risk associated with investing. Lenders will be more hesitant to approve loans to those with low personal cash flow. When there is a surge of capital in the market, lenders will loosen their standards regarding your an applicant’s personal cash flow as there is reduced risk. The availability of funds is associated with risk in lending, making it one of the key factors that impact the real estate market.

Key Insight: Your clients should take advantage of market upturns by obtaining financing during periods of financial accessibility. This approach allows businesses to reach their highest possible returns during extended periods of time, and be more resilient to economic downturns.

6. Supply and Demand: The Backbone of Market Dynamics

Like any industry, supply and demand will affect the real estate market. There are two types of markets in real estate: a buyer’s market and a seller’s market. Both are based on supply and demand; a buyer’s market is when demand for housing is weak and price can be easily negotiated. A seller’s market happens when the demand for properties is high and there is a shortage of good, quality homes. The balance in the market then shifts toward the seller, leading to increased housing prices. It can be hard to predict where the market is going, but listening to key economic factors can help you develop a winning strategy.

Did You Know? Rental properties show solid performance in restricted supply markets because they serve the growing population of people who prefer renting over home ownership.

Why This Matters to Wholesale Partners

Through understanding real estate market trends you influence your position as a residential mortgage broker, commercial mortgage broker, or wholesale lender. By staying informed, you’ll be better equipped to:

1. Attract More Clients: Your ability to showcase market dynamics will make clients place confidence in your investment management abilities.
2. Enhance Financing Solutions: Your ability to adapt loan solutions through market analysis will help your clients find investment success.
3. Build Long-Term Relationships: Your role as a knowledgeable partner helps clients trust you enough to choose you for future business opportunities.

Future Outlook: Real Estate Market Trends in 2025 and Beyond

Future success for financing partners will depend on their ability to identify emerging trends that help them maintain their industry leadership. Clients choose long-term rental investments as they are a reliable strategy even in times of increasing interest rates and inflationary pressures. Recent surveys show real estate investors remain optimistic about market improvement during the upcoming period with 61% of investors expecting positive growth potential.

Financing partners who respond to changing market trends through flexible financing options and expert market guidance will succeed in the evolving wholesale business.

RCN Capital: Your Trusted Lending Partner

RCN Capital specializes in providing short-term and long-term financing solutions tailored to the needs of real estate investors. Brokers and wholesale partners who work with clients on rental properties or fix-and-flip projects can benefit from RCN Capital's competitive financing rates and flexible loan terms which boost market competitiveness.

Your partnership with us gives you access to resources that benefit your clients and help your business expand. Together we will guide the changing real estate market toward lasting business achievement.