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Chapter 1
INTRODUCTION TO REAL ESTATE ECONOMICS
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What is Economics?
The study of allocating SCARCE
resources.
Using those scarce resources to
produce, distribute and consume
goods and services.
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Two categories of Economics:
 Macroeconomics: study of the national
economy and its segments including
national income, output, employment, and
growth.
 Microeconomics: study of individual firms
and households.
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What is Real Estate?
Land and attachments
Appurtenances
That which is immovable by law
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What is Real Estate Economics?
A study of people & how their actions affect property values.
• Study that uses economic principles
• Micro and macro analysis
• Analyzes trends
• Considers supply and demand
• Links general economic theory and real estate practice
General Economics
Principles
and Theory
Real Estate
Economics
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Real Estate
Principles
and Practice
Real Estate Economics is NOT:
 The study of general economics.
 The study of real estate practice.
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Why study Real Estate Economics?
 Understand value fluctuations
 Estimate real estate values
 Solve problems
 Understand fluctuations & changes to local Real
Estate markets.
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The four parts:
Basic Economic Background for Real Estate
Analysis.
2. Understanding Real Estate Markets.
3. Major Influences on Real Estate Development.
4. Analyzing Real Estate Investment.
1.
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The Stairway of Real Estate Economics
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Basic Economic Principles
The Stairway of Real Estate Economics
©2011 Cengage Learning
Government’s Role in the Economy
Basic Economic Principles
The Stairway of Real Estate Economics
©2011 Cengage Learning
Real Estate and the National Economy
Government’s Role in the Economy
Basic Economic Principles
The Stairway of Real Estate Economics
©2011 Cengage Learning
Regional and Community Analysis
Real Estate and the National Economy
Government’s Role in the Economy
Basic Economic Principles
The Stairway of Real Estate Economics
©2011 Cengage Learning
Real Estate Market Analysis
Regional and Community Analysis
Real Estate and the National Economy
Government’s Role in the Economy
Basic Economic Principles
The Stairway of Real Estate Economics
©2011 Cengage Learning
Taxes, Land Usage, and Environmental Controls
Real Estate Market Analysis
Regional and Community Analysis
Real Estate and the National Economy
Government’s Role in the Economy
Basic Economic Principles
The Stairway of Real Estate Economics
©2011 Cengage Learning
Investment Analysis
Taxes, Land Usage, and Environmental Controls
Real Estate Market Analysis
Regional and Community Analysis
Real Estate and the National Economy
Government’s Role in the Economy
Basic Economic Principles
The Stairway of Real Estate Economics
©2011 Cengage Learning
Final Real Estate Decision
Investment Analysis
Taxes, Land Usage, and Environmental Controls
Real Estate Market Analysis
Regional and Community Analysis
Real Estate and the National Economy
Government’s Role in the Economy
Basic Economic Principles
The Stairway of Real Estate Economics
©2011 Cengage Learning
Final Real Estate Decision
Investment Analysis
Taxes, Land Usage, and Environmental Controls
Real Estate Market Analysis
Regional and Community Analysis
Real Estate and the National Economy
Government’s Role in the Economy
Basic Economic Principles
The Stairway of Real Estate Economics
©2011 Cengage Learning