Economics Of Real Estate Market

Question 1

What is a market?

Answer 1

A market in real estate is bought, sold, traded and leased within a real estate market

Question 2

Market Demand

Answer 2

the amount of property buyers, and tenants wish to acquire (purchase, lease or trade) at any given time

As households become cheaper, more people decide that they can afford a house, so quantity demanded increases

Question 3

Market demand short vs long term

Answer 3

Short run - 1 year
Intermediate run - 2-3 years
Long run - 4+ years

Question 4

What causes demand curve to shift?

Answer 4

• change in income
• cost of mortgage
• economic growth
• population
  -(UN)employment

Question 4

Sellers Market

Answer 4

shortage in housing or more potential buyers than homes

• prices are higher due to increase in demand
• HOMES sell, more offers

Question 5

Interest Rates

Answer 5

• interest rates determine how much we have to pay to borrow money to buy a property
• Low interest rates tend to increase the demand for property therefore driving up prices

Question 6

WHY did bank of Canada increase interest rates?

Answer 6

• To help flight inflation
• Inflation is a rise in prices (Consumer Price Index 6.8%) in April 2022

Question 7

Demand Curve Interest Rates

Answer 7

• An increase in the interest rates causes a a leftward shift of the market demand curve for houses
• The prices of homes will decrease

Question 8

Buyers Market

Answer 8

Occurs when there is a surplus in housing or more homes for sale than buyers
- Prices tend to be lower because of increased supply
- Home are more likely to sit unsold

Question 9

What Causes RE Supply curve to shift

Answer 9

• Existing Inventory, existing home is put on the market
• New Home Construction
  -Government Policies, Change in regulations that make it harder or easier to build

Question 9

Real Estate supply:

Answer 9

the amount of property available for sale or lease at any given time (square footage, acreage, dwelling units)

Question 10

Short Run Supply Curve

Answer 10

The short Run Curve is vertical (Supply is inelastic)
Short term: less than 1 year
Intermediate Term: 2-3 years
Long Run: greater than 4 years

Question 11

Export Sector ( primary force for city growth)

Answer 11

1. services not only local people but more importantly people in other areas. Therefore brings revenue from others areas back to the city

Question 11

Housing Start

Answer 11

The beginning of construction work on the building where the dwelling unit will be located - CMHC

Question 12

Service Sector:

Answer 12

The service sector has under it the healthcare and welfare industry, the education system, religion and charity…