Real Estate Marketplace Modeling diagram
This model is to explain the relationships among different players in a real estate marketplace, including the simple economic concept, for example, demand, supply, price, etc. The model is basically two years monthly based. It starts with a relationship between demand, supply and price. These three main determines are interdependent and affect other others. Moreover, there are few variables in the model, the price elasticity of demand and supply are included in order to successfully predict the flow of price since all determines are dynamic numbers but not a fixed number. Simultaneously, buying and selling ratio are in the model to demonstrate the proportion of residents and owners to buy and sell. When people are highly interested to buy a new home, their motivation are based on the demand and supply in the market. If demand goes up, supply goes down, price will go up. If the price goes down, demand will soon goes up because the price is low so people can become home buyers.
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When the supply in the
market is high, no home owners would like to sell their homes because the price
is low and they are not able to maximize their profit. Once the supply goes up and demand goes up, homes
will add stock into market so more homes will be for sale.
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If people become home buyers
and new homeowners, the flow will go back to people because they become owners
and their homes can be sale afterwards. Hence if a home is sold then it can
come back to homes. Sales are done deal when a home for sale becomes a sold
home and a home buyer becomes a new home owner.
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Finally, price is determined
by the buying ratio and selling ratio. Buying and selling ratio are basically
calculated from homes for sales, total homes, total population and home buyers.
Though the peak and downturn of buying ratio and selling ratio are significant
factors to decide the value of a home.
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Sliders are added to let
readers to change the parameters to have different stimulation results.