Real Estate Economics Spring 2013 Session 1: Wednesday, January 14, 2013
Real Estate Economics • Definition of Economics • Definition of Real Estate • Course Definition • Motivation • Why study economics? • Why develop economic models for real estate?
What is economics? • The study of human interaction • The study of scarcity • The study of resource allocation • The study of production and consumption
Real estate • Property, land or fixtures whose nature is definable and whose ownership rights are specifiable through law.
Real estate economics • Understand 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 reasons • To best serve customers in their real estate transactions—property or financing or investment advise.
Economics • Opportunity cost and marginality • Product/Good • Consumers and producers • Demand and supply • Equilibrium and elasticity • Changes in market conditions
Real Estate • Departures from simple market analysis • Product heterogeneity • Market levels/segments • Buyers and sellers • Builders and developers • Payment over long time periods • Credit issues • Reinsurance issues
Government • Federal • Regulations • Laws • State • Regulations • Laws • County and City/town • Regulations • Laws
Globalization • The Global Financial System: work in progress • Money • Banking • Monetary Flows • Monetary Policy • Global Coordination • Real Economic Effects • Investor Behavior