Here is the 2021 Arizona Real Estate Salesperson Exam Lesson 5: Real Estate Economics

2021 Arizona Real Estate Salesperson Exam Lesson 5: Real Estate Economics

Here is a free lesson for the 2021 Arizona Real Estate Salesperson Exam Lesson 5 . The full series of lessons is available at the Website

https://www.reexampodcast.com

Real Estate Economics

Supply = how much of a product or service is available

Demand = how much of a product people want

If supply increases, price decreases.

If demand increases, price increases.

Market equilibrium: when supply and demand are balanced.

Economic Characteristics of Real Estate

• It is governed by supply, demand.

• It has durability

• Heterogeneity

• High Transaction costs

• Long time delays

• Both an investment good and an consumption good.

• Immobility

• It has inherent value

• It has unique appeal

• It is illiquid

• It has a slow response to cycles

• The market is decentralized

• Depreciation vs. Appreciation

• Strait-Line (Cost - salvage value)/Useful life

• Double Declining Balance = Beginning book value x Rate of depreciation

• Units of Production (Not used in real estate)

• Sum of Years Digits (Remaining life/Sum of the year’s digits) x (Cost - Salvage Value)

• Demographics affect demand.

• Types of demographics

• Population size/growth

• Family size

• Age and Family makeup

• Death rates

• Marriage and Divorce rates

• Housing supply is produced using land, labor, and materials. The supply is determined by the cost of those materials, the price of existing houses, and the technology that produces them.