REAL ESTATE ECONOMICS- used to describe the application of economic principle in an effort to predict

patterns in real estate prices and consumptions.

WHAT IS ECONOMICS?
Economics- greek word ‘oikonomi’ means household management.
- aristotle
- production
- distribution
- consumption

WHAT IS REAL ESTATE?

- tangible assets
- land
- buildings
- improvements

RESIDENTIAL REAL ESTATE

- UNDEVELOPED LAND
- HOUSES
- CONDOMINIUM
- TOWNHOUSES
- SINGLE FAMILY
- MULTI-FAMILY

INDUSTRIAL REAL ESTATE

- FACTORIES
- BUSINESS PARKS
- MINES
- FARMS

COMMERCIAL REAL ESTATE

- NON RESIDENTIAL
- OFFICE BUILDINGS
- WAREHOUSE
- RETAIL BUILDINGS
- MALLS

REAL ESTATE ECONOMICS

- ECONOMIC TECHNIQUES
- DESCRIBE
- EXPLAIN
- PREDICT PATTERN OF PRICES SUPPLU AND DEMAND

VALUE OF AN AREA
- affected by a number of external factors like location, limited amount of usable land.

DEMAND FOR HOUSING

 - ever-fluctuating factor in demanding real estate values. if you consider real estate means of
investing, you should think about the factors and realize that the real estate market is subject to
the same economic laws as any market which is driven by supply and demand.

WHY WE STUDY REAL ESTATE ECONOMICS?

- helps people understand what causes fluctuation in real estate activity and shows these changes
can affect real estate markets.

DEMAND FOR HOUSING

- main determinants of the demand for housing are demographic. but other factors like income,
price of houses, cost and availability of credit, consumer reference, price of substitutes and price
of complements.

SUPPLY FOR HOUSING

- housing supply is produced by land, labor and various inputs such as electricity and building
materials.

REAL ESTATE MARKET

- a market where the available venue for buying and selling real estate.

WHAT REAL ESTATE MARKET UNIQUE?

- hey have a set of characteristic that the market must accommodate. these characteristic include
both physical characteristic as well as economic characteristic.

PHYSICAL CHARACTERISTIC
- indestructibility
- immobility
- uniqueness or non homogeneity

ECONOMIC CHARACTERISTIC
- scarcity
- improvements
- permanence
- location or area preference

PARTICIPANTS IN THE REAL ESTATE MARKET

- USER- these people are both owners and tenants. they purchase houses or commercial properties
as an investment and also to live in or utilize as a business.
- OWNER- pure investor, they do not consume the real estate that they purchase. typically. they
rent out or lease the property to someone else.
- RENTER- pure consumer
- DEVELOPER- people prepare raw land for building which results in new products for the market
- RENOVATORS- people supply refurbished properties to the market
- FACILITATORS- groups include banks, real etstae brokers, government regulators etc.

AGENTS OF PRODUCTION

- LAND AND NATURAL RESOURCES- “raw materials”

 - LABOR- physical work required to convert a parcel of land into property with improvements,
compensated by wages
- CAPITAL- any man made instrument that increases production of goods ex. machineries. tools,
mechanical lifts. it can also mean the cost of borrowing money in order to forego production.
compensated by interest

ENTREPRENEURSHIP
- the proces of orchestrating land, labor, and capital to produce an item. it is a type of coordination
or management. it is motivated by profit. the recovery state is usually the lowest point in the
cycle. in this stage, there is typically an oversupply of inventory due to the previous stage
expansion or growth. there will be excess construction due to the boom of the last cycle. in the
stage, the number of new developments is very low, if there is anya tall. in the recovery stage the
demand for home will grow slowly which will help with the oversupply.