Spring 2013

Session 1:

Wednesday, January 14, 2013

REAL ESTATE ECONOMICS

Real Estate EconomicsDefinition of EconomicsDefinition of Real EstateCourse DefinitionMotivation

Why study economics?Why develop economic models for real

estate?

What is economics?The study of human interactionThe study of scarcityThe study of resource allocationThe study of production and consumption

Real estateProperty, land or fixtures whose nature is

definable and whose ownership rights are specifiable through law.

Real estate economicsUnderstand value and return of residential

and commercial real estate.Develop theories and models that help us

think through the complicated dynamics of property, value and exchange.

Why?Personal reasons

To best understand owning v. renting, buying v. investing, when to buy, what to buy, how to buy, where to buy.

Professional reasonsTo best serve customers in their real estate

transactions—property or financing or investment advise.

EconomicsOpportunity cost and marginalityProduct/GoodConsumers and producersDemand and supplyEquilibrium and elasticityChanges in market conditions

Real EstateDepartures from simple market analysis

Product heterogeneityMarket levels/segmentsBuyers and sellersBuilders and developersPayment over long time periods

Credit issuesReinsurance issues

GovernmentFederal

RegulationsLaws

StateRegulationsLaws

County and City/townRegulationsLaws

GlobalizationThe Global Financial System: work in

progressMoneyBankingMonetary FlowsMonetary PolicyGlobal CoordinationReal Economic EffectsInvestor Behavior