What factor significantly affects buyer demand according to appraisal concepts?

Interest rates significantly affect buyer demand because they directly influence the cost of borrowing money for purchasing real estate. When interest rates are low, it becomes more affordable for buyers to take out mortgages, thereby increasing the number of potential buyers in the market. Low rates can lead to more financing options, which can stimulate demand as buyers feel encouraged to make purchases due to more favorable borrowing conditions.

Conversely, when interest rates rise, the cost of financing a home increases, which can deter potential buyers from entering the market, thus leading to a decrease in buyer demand. This direct correlation between interest rates and buyer activity is a fundamental concept in real estate appraisal and market analysis, as appraisers must consider current interest rate environments when assessing property values and potential market behavior.

While factors like local property taxes, building aesthetics, and neighborhood demographics can also influence buyer decisions, they do not have as significant and immediate an impact on the overall demand for housing as interest rates do.