Houses For Sale: The Study of Economics

Monday, May 14, 2012

The Study of Economics

Studying Economics

by Veronica Cabrera

May, 14 2012

I am currently studying for my broker's license. The testing requires the study of five different courses.

I have already completed Property Management and I am starting Economics now.

I thought that I should share some interesting information that I am learning.

According to the William G. Willson and Leigh Conway, authors of Real Estate Economics Firs Edition, "The real estate market is an IMPERFECT MARKET!"

It is imperfect, because it is not perfect! Seriously, that is what the books says, so I am just repeating it.

In order for me to pass the test I just have to memorize and repeat whatever the book says.

Authors stated, "for a market to be perfect the product needs to be homogeneous, there is complete information and no buyers or sellers need to influence the market"

They also stated that to create a perfect market we have to have the following:

Large number of buyers and sellers
Perfect and complete information
Freedom to enter and exit the market
Homogeneous product of availability to substitute
Product needs to be mobile and portable
NO single buyer or seller is large enough to influence the market price
Government plays a minor role in pricing

The authors blame the mortgage brokers for the economy meltdown " The greedy and unethical mortgage brokers who pushed inappropriate loans on borrowers in order to collect very lucrative fees, with no guidelines, no restrictions and no oversight, mortgage brokers were overcome by greed".

And they name as victims "unsuspecting investors and ultimately the American public"

They mentioned that some consequences were " in 2008 and 2009 the Mortgage Bankers Association reported that over 2 million foreclosures were filed. This is the highest level reported since the Mortgage Banker Association started this survey 37 years ago"