REAL ESTATE PART 2
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Knowledge about the Real Estate Asset Market
Knowledge about Cities and Real Estate Space Market
______ of US land is in urban areas, but ____ of real estate value is in urban areas.
To understand real estate, you need to understand _____. That is why you need to study __________.
cities; urban economics
Real estate is essentially an _________ phenomenon.
True or False?
Cities are an isolated phenomena.
False. Cities are not isolated phenomena. Each city is part of a "system" of cities. Each city has a place and role as an element it this system.
What are the two fundamental characteristcs of cities?
Size and Location
What is Zipf's Law? What's the formula?
The "Rank/Size Rule" or (Zipf's Law) states that if there are N cities in the system of cities, the population of the nth city should follow:
What causes the rank/size rule?
- Suppose all cities....
- grow at random rates over time
- tend to grow at the same average rate
- have the same "volatiility" in their growth rates
- ...then "Zipf's Law" rank/size pattern will result.
What model explains the reason why land value is higher when closer to Central Business District?
The Alonso's Bid Rent Model
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