iv. Market Dynamics & Pricing

Market dynamics and pricing describe how supply, demand, location, and broader economic forces influence real estate values. These factors shape how properties are priced, how markets move over time, and how risk and opportunity vary across regions and asset types.

Absorption Rate

The pace at which available space in a market is leased or sold over a given period.

Comparable Sales (Comps)

Recently transacted properties used as reference points to estimate market value.

Demand Drivers

Economic, demographic, or behavioral factors that influence demand for real estate in a market.

Elasticity of Demand

The sensitivity of real estate demand to changes in price, rent, or economic conditions.

Highest and Best Use

The legally permissible, physically possible, and financially feasible use that maximizes a property’s value.

Inventory

The total amount of available real estate space or properties in a given market.

Location Premium

The added value attributed to a property’s geographic position, accessibility, or surrounding amenities.

Market Cycle

Recurring phases of expansion, peak, contraction, and recovery observed in real estate markets.

Market Liquidity

The ease with which properties can be bought or sold without significantly affecting price.

Market Rent

The rent a property could command under current market conditions.

Pricing Power

The ability of property owners to increase rents or prices without losing demand.

Replacement Cost

The estimated cost to construct a similar property at current prices, excluding land value.

Scarcity Value

Value derived from limited supply, unique characteristics, or regulatory constraints.

Supply Constraints

Factors that limit new development, such as zoning, land availability, or construction costs.

Vacancy Rate

The percentage of unoccupied space in a property or market at a given time.