RES 431 1232017 9:44:00 PM RES 431 M001 Petrova 13017 [email protected] Why its important for the government to have a role in the Real Estate Markets?: Market failures There are many complications that are usually Spillover effects from nearby land uses ( Absolute monopoly Disney Land and the real estate around it. Features of Real Estate that Cause Market Distortions : Spillovereffects from nearby land uses Uniqueness of location (absolute monopoly) Instability of surrounding land use Unknown quality or condition of existing structures always see the real estate when you want to buy it. Resulting Market Failures in Real Estate: Monopoly Utilities Holdouts owners that are holding up the sale to the investor because they know the investor need the land. They are extracting befits. Externalities ex. Spillover effect (new malls, noises) Incomplete information Uncertainty of residential values The Revolution in Land Use Controls Comprehensive Planning as a Solution to Market Failure Cul de sacs a road where you have houses arrayed in a circle at the end of it. creates a sense of neighborhood. More secure because its a dead end. they sell at a premium because more isolated . Vs. Grid street transportation is more convenient. Multiple ways of accessing.