Chapter 59: Real Estate Economics

Erick Eschker

Real estate economics Real estate economics is the study of the markets for land and structures, including residential housing, commercial office space, and industrial warehouses. Although much theory has existed for decades regarding real estate markets, questions are being answered today regarding mortgage finance innovation, the rise of suburban business and residential centers, and the effects of zoning laws. The housing boom and bust of the first decade of the twenty-first century has meant that households, businesses, and governments have become more interested than ever in real estate and its effect on various aspects of the economy. In this chapter, the theory of real estate markets is first presented, including the relevance of real estate rental price, the heterogeneous nature of real estate, the importance of location, and the interaction with the macroeconomy. Next, various contemporary applications of real estate economics are discussed, followed by a description of government policy ...

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