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Real Estate Economics

Real Estate Economics. Section One Introduction. Page 5. LAND Surface, airspace, substances beneath, underground waters lateral support subjacent support 2. Affixed to the land 3. Appurtenant to the land 4. Immovable , by law

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Real Estate Economics

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  1. Real Estate Economics Section One Introduction Page 5

  2. LAND Surface, airspace, substances beneath, underground waters lateral support subjacent support 2. Affixed to the land 3. Appurtenant to the land 4. Immovable, by law Carries certain rights called the bundle of rights Definition of REAL PROPERTY Page 5

  3. Definition of economics • Formal Definition • Social science concerned with the • Production, distribution & consumption • Of goods and services. • Practical Definition • Efficient allocation of scarce resources • Frequently desire exceeds available supply • Economics • Attempts to determine how limited resources • Utilized efficiently with minimum waste

  4. Macro versus Micro Economics • MACRO Economics • National Economy • U.S. output, employment, inflation, balance of trade • MICRO Economics • Smaller units • Industry, Businesses, Household Page 5

  5. Real Estate Economics • Field of study that uses economic principles to solve Real Estate Problems • Demand for goods • Supply of goods • Allocation of scarce resources • Links economic principles with real estate markets Page 5

  6. Uses of R. E. Economics • Analyze trends • National • Regional • State • County • City • Neighborhood Page 5

  7. Course Objectives Real Estate Economics Investment Analysis Taxes, Land Usage, 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

  8. Impact of Real Estate on U. S. Economy • Desire to possess land • Underlying basis for personal & national wealth • Major employer • Raw materials • Contractors, builders • Finance and appraisal • Real Estate agents • Scare locations creates demand • Demand creates economic value

  9. Every Nation Must Answer • What shall be produced? • How shall it be produced? • For whom shall it be produced? How the questions are answered determines that Nation’s Economic System

  10. Pure Capitalism • The what is determined by what buyers are willing to purchase. This is called demand. • The HOW is determined by the manufacturing process that produces the item at the lowest cost. • The FOR WHOM is determined by people who have something of value to exchange. • That which is produced is called supply. Page 6

  11. Definition of Economics – A social science concerned with understanding human behavior. Page 6

  12. Capitalism Principles • PrivateProperty - Individuals have the right to own, dispose of and control real and personal property. • PrivateEnterprise – The majority of businesses are owned and operated by private citizens, not government. • CompetitiveMarkets – Numerous buyers/sellers who negotiate for the exchange of goods and services. NO ONE controls or manipulates. • ProfitMotive– Desire for personal gain motivates people to take a risk to start a business or make investments. • Laissez Faire– Government should have no intervention in private economic affairs. HANDS OFF ! Page 6

  13. Modern Capitalism • An Inquiry Into Nature and Causes of the Wealth of Nations • Classical discussion of pure capitalistic theory • 1776 BY Adam Smith Page 6

  14. Decisions are made by: • Capitalism • Private individuals decide • Competitive markets • Command Economy • Government decides • Socialism or communism Politics: Democracy, Monarchy, Anarchy Page 6

  15. Command vs. Market Economy Pure Socialism Mixed Socialism Pure Capitalism Mixed Capitalism Economic Systems

  16. Mixed Capitalism • Some government intervention in private economic affairs • Regulation of private industry to correct some mistakes of pure capitalism • Government income redistribution programs (the haves and have nots) • Taxation • Unemployment Compensation • Social Security, welfare, food stamps • Price stability Page 6

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