Most of we think housing, which widely popular as Real Estate is just about some concrete jungle and some big fat Realtor. But when you look at real estate through economics, there are lots more then that, in fact there is a whole part/branch of economy dedicated for real estate. Real estate economics is the application of economic techniques to real estate markets. It tries to describe, explain, and predict patterns of real estate prices, building production, and real estate consumption. If you talk about “housing economics” the array of coverage become narrower, where we only talk about residential real estate markets. But both have something in common, analysis of supply and demand of urban spaces.

The principal human elements in this economy are- Owner, Tenants, Developers, Renovators, and Facilitators. But sometimes you will notice two or more elements can be the same person, ex- an owner of “San Diego Real Estate” can be also a tenants as well as something. The first two elements are the demand part of this economy and the last three elements covered the supply part. You can not similar microeconomics and real estate economics, as real estate has some unique characteristics-

Durability: The land is indestructible, and the buildings over it last few decades up to hundreds of years. So when you are doing economic calculation, this durability characteristic changes things a lot.
Diverse: Each and every brick, land is unique in respect of location, building, view etc. so is its financing terms. When finance change ultimately economics change.
Higher Transaction: Real estate purchase is way different, then any other economical transaction. Because when you buy a real estate (a commercial or residential) there are certain transactions involve other then the original price, ex- legal fees, tax, deed cost, migration costs etc. You will be shock to know the transaction costs are almost 9-12% of the original real estate price.
Immobility: You can not move a real estate location. Consumers come to the good rather than the good going to the consumer. Because of this, there can be no physical market-place. So when you don’t like you can’t throw it away, you have to leave it.
Vice-Versa: Real estate is both investment product and consumer product. This dual nature of the good means that it is not uncommon for people to over-invest in real estate, that is, to invest more money in an asset than it is worth on the open market.
Time: The market adjustment process is subject to time delays due to the length of time it takes to finance, design, and construct new supply, and also due to the relatively slow rate of change of demand. Because of these lags there is a great potential for disequilibrium in the short run. Adjustment mechanisms tend to be slow, relative to more fluid markets.

Now you should understand why it is is so different, why general market characteristic doesn’t fit in here. That’s it for now;