|
Real estate economics is the application of economic techniques to real estate markets. It tries to describe, explain, and predict patterns of real estate prices, building production, and real estate consumption. The closely related fields of housing economics is narrower in scope, concentrating on residential real estate markets as does the research of real estate trends focus on the business and structural changes impacting the industry. Both draw on partial equilibrium analysis, urban economics, spatial economics, extensive research, surveys and finance. A social science that studies how individuals, governments, firms and nations make choices on allocating scarce resources to satisfy their unlimited wants. Economics can generally be broken down into: macroeconomics, which concentrates on the behavior of the aggregate economy; and microeconomics, which focuses on individual consumers. The main participants in real estate markets are: Owner/User - These people are both owners and tenants. They purchase houses or commercial property as an investment and also to live in or utilize as a business. Owner - These people are pure investors. They do not consume the real estate that they purchase. Typically they rent out or lease the property to someone else. Renter - These people are pure consumers. Developers - These people prepare raw land for building which results in new product for the market. Renovators - These people supply refurbished buildings to the market. Facilitators - This includes banks, real estate brokers, lawyers, and others that facilitate the purchase and sale of real estate. The owner/user, owner, and renter comprise the demand side of the market, while the developers and renovators comprise the supply side. In order to apply simple supply and demand analysis to real estate markets a number of modifications need to be made to standard microeconomic assumptions and procedures.
Trackback(0)
 |
TrackBack URI for this entry
Subscribe to this comment's feed