What is considered when performing Market Analysis in appraisal work?

When conducting a Market Analysis in appraisal work, it is essential to consider both demand and supply factors. Demand factors relate to the characteristics of buyers in the market, such as income levels, preferences, and purchasing power, which affect how much and what types of properties are in demand. On the other hand, supply factors pertain to the availability of properties for sale, including new construction, inventory levels, and market competition.

By analyzing both demand and supply, appraisers can gain a comprehensive understanding of the market dynamics that influence property values. For instance, even if there is a high demand for properties, if the supply is also high, prices may stabilize rather than rise. Conversely, if supply is low while demand remains high, this could drive prices up significantly. Therefore, the integration of both these elements is crucial for a thorough and effective analysis that accurately reflects the real estate environment.