There are many aspects in the marketplace that alters the value of a home, most commonly are location, and Supply.  The Supply and Demand of any commodity is responsible for the greatest changes in value, both upward and downward in the market. This principle affects the cost of all goods and services.  When an item is in short supply prices are pushed upwards as buyers are willing to pay a premium due to the lack of this item. The opposite is true, when there is an oversupply, the price of goods and services are pushed downward. This principle identifies there is a mid-point, this is called a Balance, in which Supply and Demand are roughly equal. This is very true in the housing market, over the past two years there has been a much higher demand for homes than the supply of available listings for sale and has resulted in an increase in home values. Those homes that are available, when priced appropriately, can receive multiple offers, with some above the listing price set by the Seller.  The opposite was also seen when the 30-year Mortgage Interest Rate rose from 2.65% in January of 2022, to 6.50% in November of 2022, due to the Federal Reserve raising interest rates.  Mortgages rates increased because of the Fed’s actions, and Buyers needing a mortgage, in many cases, could no longer afford to buy a home.  The number of sales dropped because the number of potential Buyers dropped.  Sellers now had a much smaller market interested in their homes, some segments of the market had no sales for several months, Sellers ultimately had to reduce their prices to be able to sell their properties.  

Market condition descriptions and analysis are included within the appraisal report. This provides the Buyer, and Lender in the case of a mortgage loan, to identify the conditions under which the purchase is being made.