What is Real Estate? A Practical Guide for Buyers and Sellers

For many of us, owning “real estate” isn’t about being an investor; it’s about owning a home — a place to live. Yes, it’s an investment, but when you consider the question, “What is real estate?” the average person likely sees it as something very personal — a slice of the American dream.

If you’re looking to buy or sell real estate as it relates to a family home, your concerns are different than those of an investor. This guide explains what real estate might mean for you, the different types of properties, and why homeownership matters. You’ll also find helpful insights into our evolving housing market.

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What is real estate?

At its core, real estate refers to land and any permanent structures built on it — whether homes, office buildings, factories, or open land. It’s a broad term that covers everything from single-family houses to skyscrapers and plays a major role in the economy.

Real estate can typically be divided into four main categories:

1. Residential real estate

This includes properties designed for people to live in. The most common types are:

• Single-family homes: Standalone houses built for one household.
• Multi-family properties: Duplexes, triplexes, and apartment buildings.
• Condos, co-ops, and townhomes: Shared or attached housing options.
• Manufactured and mobile homes: Prefabricated housing on leased or owned land.

2. Commercial real estate

These properties are used for business activities, such as:

• Office buildings
• Retail spaces (shopping centers, restaurants)
• Hotels and short-term rentals

3. Industrial real estate

This sector includes properties for manufacturing, warehousing, and logistics. Examples include:

• Factories
• Distribution centers
• Storage facilities

4. Vacant land

Undeveloped or “raw” land that may be used for future construction, farming, or conservation.

»Learn more: Top 10 Real Estate Questions Home Sellers and Buyers Ask

Why does real estate as homeownership matter?

Owning a home is a major life-changing milestone, but it’s also a financial decision that comes with long-term benefits — and long-term responsibilities. Here’s why homeownership remains a cornerstone of financial security for many Americans:

• Building equity: Unlike renting, each mortgage payment helps you build equity ownership in a property, which can grow in value over time.
• Stability and control: Homeowners aren’t subject to ever-rising rent prices or the unexpected, costly whims of a landlord.
• Wealth generation: A home can serve as an asset that appreciates, contributing to personal or family net worth.
• Community investment: Homeowners often feel more connected to their neighborhoods and local economies.

However, homeownership also comes with costs — mortgage payments, maintenance, property taxes, and insurance.

On the other side of the table, selling a home comes with worries, work, and risks.

Fortunately, there are teams of real estate professionals who specialize in helping buyers and sellers find solutions, but it may feel daunting to find the experts who are right for you. (More on this later in our post.)

»Learn more: Rent vs. Buy: Which One Will Give You the Good Life?

How has homeownership changed over the years?

The concept of homeownership has evolved over time, influenced by economic conditions, cultural shifts, and changes in the real estate market. While owning a home has long been considered part of the American Dream, today’s housing landscape looks different than it did for previous generations.

Here are a few key trends that have shaped homeownership in recent years:

• Rising home prices: Home values have increased significantly over the past few decades, making affordability a challenge for first-time buyers.
• Mortgage rate fluctuations: Interest rates impact how much buyers can afford, and in recent years, they’ve risen after historic lows in the early 2020s.
• More multi-generational housing: With affordability concerns and changing family dynamics, more households now include parents, adult children, and even grandparents under one roof.
• Shifts in home preferences: Remote work has led many buyers to prioritize space, home offices, and suburban or rural locations over city living.

»Learn more: What Buyers Want in a Home

The table below illustrates U.S. homeownership rates over the past 65 years:

Sources: U.S. Census Bureau, HUD, and National Association of Realtors

Despite these changes, homeownership remains a long-term goal for many Americans. However, buyers today face high interest rates, affordability challenges, inventory shortages, and competitive markets.

How have home prices changed over the years?

Here is a chart showing how median home prices have changed between decades since 1960:

As you can see, the U.S. median home price at the end of 2024 was $419,200. This represents the “middle price” of all homes sold. However, your local median home price may be very different. A house in an expensive market like San Francisco will have a much higher median than one in a more affordable city.

For comparison, here are median home sale price examples in 12 major metro markets throughout the nation:

• Atlanta-Sandy Springs-Marietta: $374,700
• Boston-Cambridge-Newton: $735,700
• Chicago-Naperville-Elgin: $369,600
• Dallas-Fort Worth-Arlington: $382,500
• Houston-The Woodlands-Sugar Land: $340,200
• Los Angeles-Long Beach-Glendale: $939,700
• Miami-Fort Lauderdale-West Palm Beach: $635,000
• New York-Newark-Jersey City: $708,500
• Philadelphia-Camden-Wilmington: $376,500
• Phoenix-Mesa-Scottsdale: $476,400
• San Francisco-Oakland-Hayward: $1,315,600
• Washington-Arlington-Alexandria: $623,400

Source: National Association of Realtors (existing single-family homes)

If you’re curious about the median home price where you live, you can start by searching the internet. The best sources are often local Realtor Associations. World Population Review hosts a map featuring median home prices in each state.