REAL 1820 Study Guide - Midterm Guide: Housing Tenure, Obsolescence, Custom Built (Album)
16 Aug 2013
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Both a consumption good and investment good: consumption good: provides service, investment good: single largest investment for many families/businesses, house prices generally go up over time. Fixed location: no two homes share a single location: location specific goods/services access to jobs, school quality, neighborhood, etc, implications: real estate markets segmented and localized. Heterogeneity: no two units are exactly the same: many reasons: physical characteristics, implications: high search costs/brokerage fees are generally 3% Durable: long life of real estate: price of a building decreases over time to a certain point, and then begins to increase due to historical value. Large economic unit infrequent purchase; access to capital markets and mortgages are usually required: implication: mortgage market condition influence housing prices. Extensive government regulations: e. g. zoning law, building codes, implications: government can affect real estate supply and demand. Definition of residential dwelling must contain self contained set of rooms. Must be used as residential premises, and contain bathroom/kitchen facilities.
