What factor can lead to an increase in demand in the real estate market?

Low-interest rates are a significant factor that can lead to an increase in demand in the real estate market. When interest rates decrease, borrowing becomes less expensive for potential homebuyers. As mortgage rates drop, more people are encouraged to enter the housing market, as the lower monthly payments make homeownership more accessible. This increased affordability can stimulate interest in purchasing homes, thereby driving up demand.

In addition, lower interest rates can incentivize current homeowners to refinance their existing mortgages, freeing up additional capital for other purchases or reinvestments, which can further enhance demand in the housing market. Conversely, when interest rates are high, borrowing costs rise, which can deter potential buyers and slow down housing demand.

The other choices reflect factors that typically do not promote demand. Rising prices of goods might lead to reduced purchasing power, high unemployment rates usually lead to decreased consumer confidence and spending, and a decrease in consumer confidence can result in individuals feeling insecure about making large investments like buying a home, all of which would likely reduce demand rather than increase it.