Ten Principles of Real Estate Markets

This policy booklet is based upon an academic class entitled Introduction to Urban Real Estate (Econ/Fin 371) offered by the University of Illinois at Chicago (UIC) and taught by the author, and others, to mostly upper-class undergraduates.

The main principles discussed were developed first using the Econ/Fin 371 class textbook Urban Economics and Real Estate Markets by Denise DiPasquale and William C. Wheaton (Prentice-Hall, 1996) and expanded by using an additional text Urban Economics and Real Estate Theory and Policy by John F. McDonald and Daniel P. McMillen (Blackwell Publishing, 2007).

The Reference section in the back is enhanced by numerous articles from Heartland's Budget & Tax News monthly publication among others, arranged by key topics from Heartland's PolicyBot.

Each principle is explained and updated, by the author, in this booklet (along with several PowerPoint slides and Chicagoland examples from class presentations where appropriate) to be used by legislators, students, and analysts in late 2008 and beyond, to more fully understand the inner workings of the residential real estate markets in cities around the United States in the face of changing economic/financial times.

Ten Principles of Real Estate Markets

• Real estate markets can either boom or bust.

• Real estate follows the normal rules of supply and demand.

• Expand employment opportunities for the entire area to grow.

• Act for the LR: Consider electing a long term planner to the city board.

• Use privatization of amenities and public services as a policy plan.

• Look to expand land outward; commuting costs can make or break your city.

• Have specific non-discriminatory demolition laws on the books.

• Keep taxes and fees on real estate as low as possible.

• Keep Fannie and Freddie solvent.

• Use zoning laws in a non-discriminatory manner.

The entire working paper (63 pages) is available in PDF format.