Business

Real Estate As an Economic Characteristic

Real estate is basically land consisting of the buildings and property on it, and its accompanying natural resources like water, plants or minerals; and its attached market values including its housing supply. Real estate deals are all about buying and selling of lands and buildings by way of public auction, private sale or exchange. It is one of the most widely traded commodities worldwide. The real estate market includes such not-for-profit organizations as real estate cooperatives, land trusts, land ownership cooperatives, land equity transactions, land ownership associations, and real estate agents. The real estate market, when analyzed, seems to have three important components- land, people and money.

Residential real estate deals are mostly of the form residential land use agreement (RUD) where the property used as collateral for borrowing funds. Borrowing funds are raised from borrowers using the collateral and the banks which are mainly involved here are the Federal National Mortgage Association (NFMA) and the Federal Home Loan Mortgage Corporation (FMCC). The assets mainly involved here include vacant land, manufactured homes, manufactured dwelling structures, non-residential structures and personal residences. The underlying concept behind these deals is the fact that the prices of houses go up and down as the economy moves on.

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The concept of real estate has changed significantly over the years but it still retains a unique place in the economy. This is probably because unlike the stocks and commodities, real estate does not show a weekly chart which makes it difficult to predict its performance. On the other hand, other stocks and commodities show weekly charts which allow investors to make better investment decisions and also to keep track of movements in prices over time. So real estate has a unique feature among the various economic characteristics of the economy, which makes it the essential basic piece of real property.

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