REAL 1820 Lecture Notes - Lecture 2: Capital Market, Party Wall, Convenience Store
28 Nov 2015
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1 real estate has many distinctive characteristics, different from other personal family assets. Consumption good - provides service for family by providing them shelter. House price appreciation - price goes up over time (raised 6% 2014 to. 2015 in guelph (338,538 to 359,775) 6% is the rate of return on your investment. 2 fixed location: no two homes share the same spot. Location- specific goods and services - access to jobs, neighborhood quality, school quality, etc. Implication: real estate markets are segmented and localized. Many reasons - physical characteristics (size, age, bedrooms, bathrooms, fireplace, basement, etc. ) Implication: high search costs (the cost you pay to find the property you are looking for. ) Long life or real estate. Infrequent purchase - access to the capital market is important, mortgage is usually required. (mortgage market. People need a mortgage because they can"t pay up front. ) Implication: mortgage market conditions (e. g. mortgage and credit availability) influence housing price. 6 extensive government regulations (i. e.
