The exact values determined by supply and demand in the market are not easy to measure in the real estate market. This is partly because it takes a long time to build new homes or renovate old ones to put them on the market.

Also, real estate is not like other industries in that it takes a long time to buy and sell homes and other properties. This means that transactions can take a long time to complete, making real estate somewhat illiquid.

Some of the factors that affect the demand for housing include lower interest rates or lower borrowing costs. When interest rates are low, people are generally willing to take on more debt because they can afford relatively more debt for the same monthly expenses. In other words, they can finance the purchase of a home because when rates are low, the amount of interest they will have to pay is not as burdensome.

When more buyers enter the market, the demand for homes in turn increases. And if the supply of housing remains tight, prices can rise even more in a low interest rate environment.

Meanwhile, the supply of housing is in a state of constant fluctuation. Supply can increase when people move elsewhere: some are downsizing, some are trying to make room for a growing family, and some are buying their first home. Similarly, development and construction of new homes may increase, adding to existing inventory.

On the other hand, there is a reduction in housing stock during natural disasters such as floods and earthquakes, as well as demolition of existing homes.

Land ownership is also a limited resource, so the number of new units is usually limited.