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Welcome back to Real
Estate Economics.
This is talk number
7 in our series and
talk number 4 about
Real Estate Markets.
I'm John McDonald,
Emeritus Professor at
the University of
Illinois, Chicago and
Emeritus Professor of
Real Estate at
Roosevelt University.
Today the topic is Change
in Real Estate Markets.
We're going to look
at what are frankly
some extreme cases of
changes in real estate markets
to see how real estate
markets respond.
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We're going to be looking
at urban housing markets,
office building markets,
and hotel markets.
We're using studies that
I did and there are
lots of others.
But I like the ones that I did.
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So, changes in urban
housing markets.
Just some basic facts
about housing markets.
First of all, housing
is very durable.
With proper care,
it can last for decades,
even 100 years.
Housing however can be
built pretty quickly,
and so housing markets will
behave quite
differently depending
on whether demand for
that particular market
increases or decreases.
An increase in
demand tends to increase
housing prices, of course,
but supply can be
increased pretty quickly.
May take a couple of years,
but in the real estate
world, that's pretty quick.
So, on the demand side
when it goes down,
that lowers housing prices of
course, a decline in demand,
but supply responds very
slowly because housing
is very durable.
Vacancies rise, fewer houses are
occupied as demand goes
down as prices fall
but eventually houses are
abandoned and torn down.
But that can take a
decade or even longer.
So, let's take a look at
some metro areas that
are extreme examples of what
I've been talking about.
