REAL ESTATE ECONOMICS IN CALIFORNIA
By Michael Lustig
Copyright 2011 Real Estate License Services, Inc.
Smashwords Edition
REAL ESTATE ECONOMICS
Textbook and Student Workbook, Combined
Course
by Correspondence.
For Qualification For a California Real Estate
Broker
License or to Extend a California Real Estate Sales
License (D.R.E.Approval #1224-90)
New Department of Real Estate Rules Allow You to Avoid All Quizzes and to Go Straight to Your Final Exam, Which is Open Book! You May Suggest Your Own Test Administrator Also! For Details, Please Turn This Page and Read the Student Instructions/General Information Page.
REAL
ESTATE LICENSE SERVICES
5059 Newport Avenue, #209
San Diego, CA
92107
(619) 222-2425
Includes “Student Instructions,” Quiz Questions and Answers, and Page References for the Quiz Questions for the Course “Real Estate Economics.” Please Read and follow the complete “Student Instructions” just after this page.
Copyright 2011, 2003, 2000, 1991, 1990, 1989, 1988, 1987, 1983 Real Estate License Services, Inc. Copyright registered. All rights reserved. No part of this material may be reprinted, reproduced, transmitted, stored in a retrieval system, placed in a computer or on the Internet, or otherwise utilized, in any form or by any means electronic or mechanical, including photocopying or recording, now existing or hereinafter invented, nor may any part of this course be used for teaching without permission from the copyright holder.
STUDENT INSTRUCTIONS/GENERAL INFORMATION
The California Department of Real Estate DOES NOT REQUIRE COMPLETION OF QUIZZES OR ESSAYS PRIOR TO YOUR FINAL EXAM. Study the "Written Assignment" questions based on the chapter readings as well as the answers with page references that are on the following page. YOU DO NOT NEED TO SEND IN ANY "WRITTEN ASSIGNMENT" ANSWERS. To complete this course, just study the practice questions and answers, take the final exam online or on paper and, if on paper, make sure the final exam question sheets and completed Scantron answer forms are returned to us along with the completed "Certification of Test Administrator." THE FINAL EXAM IS OPEN BOOK. If you have any questions, please call (619) 222-2421.
1) This course consists of text reading and a final examination.
2) Practice questions ("Written Assignments") covering most of the chapters in the book are based on the text reading in each chapter. Answers to those practice questions (with page referenes) are included for your convenience and may be found on the page after this page. The "Written Assignments" are for your practice only. NO QUIZ QUESTIONS ARE REQUIRED PRIOR TO YOUR FINAL EXAM.
3) The minimum time limit to complete one course is 20 days from the date of enrollment. The maximum time limit to complete one course is six (6) months from the date of enrollment. Two three (3) month extensions may be obtained (see section below on Extensions and Re-enrollments). Under no circumstances can your enrollment last beyond twelve (12) months.
FINAL EXAMINATION: When you are ready to take the final test, please fill out the form "Request To Take Final Exam." You may mail it to Real Estate License Services, 5059 Newport Ave., #209, San Diego, California 92107, or fax to (619) 222-8593. Real Estate License Services will arrange for your final examination online or with a test administrator. If your final exam is not online, you may suggest who your test administrator will be. The examination consists of 100 multiple choice questions and you must complete it within 150 minutes (2.5 hours). When you finish the test, If your final exam is not online, turn it in to the test administrator, who will mail it to Real Estate License Services. The questions used for the final exam must be mailed to Real Estate License Services along with the answers.
GRADING OF THE FINAL EXAM AND ISSUING OF CERTIFICATES: A passing grade is based on a minimum passing score of 60% on the final examination. Only the final examination grade is used in determining the student's overall grade. Students will be assigned a letter grade, but the grading system reflects the 60% passing requirements.
% OF POINTS = GRADE
100%-90% = A
89%-80% =
B
79%-70% = C
69%-60% = D
59%-0% =
Fail. In this case the course would have to be repeated and passed in
order to receive credit.
An official certificate of your course grade will be mailed to you within two weeks after receipt of your completed final examination if taken with a test administrator. Additional certificates are $15.00 each.
REFUNDS: Students may apply in writing to REAL ESTATE LICENSE SERVICES, mailing address, 5059 Newport Ave., #209, San Diego, California 92107 within 15 days from the date of enrollment and cancel and receive a refund for the full tuition. All REAL ESTATE LICENSE SERVICES materials must be returned in good condition at the time of cancellation; the materials should not be soiled, torn or marked upon. Refunds are not allowed if any work has been submitted.
EXTENSIONS AND RE-ENROLLMENTS: If the course has not been completed within six (6) months of enrollment, the student may receive an extension of three (3) months by paying an extension fee of $35.00. If at the end of that three month extension the student still has not completed the course, a second three (3) month extension may be obtained by paying an additional fee of $30.00. IN NO CASE MAY THE PERIOD OF ENROLLMENT EXTEND BEYOND TWELVE (12) MONTHS. If the student has not completed the course within 12 months from the original date of enrollment, the enrollment expires and no further extensions are allowed. The student must re-enroll and begin the course over again in order to complete the course. The student may re-enroll under such circumstances for a discounted re-enrollment of $40.00 per course.
TRANSFERS: Courses may be transferred to another person by paying a transfer fee of $30.00 per course. Transfers are not allowed if any work has already been submitted.
REAL ESTATE ECONOMICS
To finish this course, you need to do the following:
1. Quizzes are NOT required. Included below are the answers to the questions at the end of each chapter. Page references for topics in each question and answer are also listed. Read the book and study the questions and answers. You may take your final exam 18 days after having possession of the textbook.
2. When you are ready to take your final exam, please fill out the form "Request To Take Final Exam," and fax it to (619) 222-8593 or mail it to: Real Estate License Services, 5059 Newport Avenue, #209, San Diego CA 92107. Real Estate License Services will arrange for your final exam online or with a test administrator.
Answers with Page References to Practice Questions at the end of Each Chapter in this Textbook:
Chapter 1 WHAT IS REAL ESTATE ECONOMICS
Chapter 2 KEY ECONOMICS CONCEPTS AND TERMS
Chapter 3 MEASUREMENTS AND CYCLES
Chapter 4 ECONOMIC PROBLEM SOLVING
Chapter 5 A BRIEF HISTORY OF REAL ESTATE DEVELOPMENT IN AMERICA
Chapter 6 REAL ESTATE FINANCE AND THE ECONOMY
Chapter 7 LENDING INSTITUTIONS
Chapter 14 HOUSING AFFORDABILITY
INTRODUCTION
There are several key concepts to bear in mind while taking this course. They are:
The study of economics and the business of real estate are inseparable, because land is one of the four major factors of production and because the various real estate markets together constitute a major economic force.
Economic growth, urban growth, real estate development, and land use controls are all aspects of one issue, not separate concerns.
All economic activity is cyclical, including real estate activity.
Economic history demonstrates how booms and busts in real estate, and the economy in general, take place.
It is possible for the average person to learn important economic indicators and measurements and to use them advantageously in any business enterprise, especially real estate.
The course is structured in the following manner: A discussion of real estate economics in general is followed by an introduction to key economic concepts and the rudiments of economic thinking. The role of real estate in the economy is then described through a historical overview of real estate development in America. Several of the following chapters deal in considerable detail with one of the major components of the economy, and one of the major concerns of real estate professionals: finance.
Following the discussion of finance and lending institutions, you will be introduced to one of the major concerns of economists, and one that is of particular concern to real estate professionals: the issue of growth as public policy and as a problem for our major cities.
The course concludes with an examination of how government participates in the economy through the process of taxation, and how taxation affects real estate, followed by the contemporary economic issues of housing affordability and fair housing.
Chapter 1
WHAT IS
REAL ESTATE ECONOMICS
The subject called "real estate economics" is ambiguous enough, and unfamiliar enough for many people, to require a definition and description. Before we begin to examine it and draw conclusions, therefore, let’s try to get a firm grip on just what we mean when we speak of it. Is, for example, the subject of real estate economics the same kind of subject as "tuna fishing economics"?
The answer to that question would be "no" if tuna fishing economics were simply an explanation of how to operate a tuna fishing enterprise "economically," that is, in such a way as to utilize resources carefully, keep costs down, and maximize profits. That is only marginally or tangentially what we have in mind here. We are not going to discuss in any great detail how to operate a real estate business "economically" or how to use good sound business practices in your real estate operation.
If, on the other hand, you understand tuna fishing economics as a larger subject matter, one which explores the relationship of that industry to the national economy, then you’re on the right track. A book on such a subject might consider the questions of supply and demand, consumer appetites, markets, trends and forecasts in American eating habits, foreign competition for the household’s grocery dollar, and how government food programs, subsidies, embargoes, and catch limits affect the price of a can of tuna.
Such a book would certainly be concerned with economic forecasting. It might discuss whether it is wiser to sell tuna as pet food or for human consumption, or if in fact it might be better used as fertilizer. Population projections would figure prominently in the discussion, as would the subject of seasonal cycles and business cycles. One would learn the importance of such statistical information as the disposable income of the average consumer in this country.
In other words, the simple subject of how to run a tuna fishing enterprise "economically" would more properly be called "Business Management in the Tuna Fishing Industry." Our concerns here are larger than that. When we speak of real estate economics we want to discuss the relationship of real estate to the national and world economy, as well as to certain general economic principles. Since real estate business is conducted locally, and since cities and neighborhoods are basic real estate concerns, we will also discuss how cities and communities grow and how they relate to the overall economic picture.
To pursue the point further, in the interest of clarifying our subject, consider what a book on "Public Transportation Economics" might contain. You would likely find chapters dealing with the role of public transportation in a free enterprise system, the effects of population growth in forecasting public transportation needs, government regulations and subsidies, environmental concerns, etc. You would not find a discussion of how to purchase tires in bulk, or how to design routes and schedules to meet rush hour demands, or how to market bus service.
Every enterprise, every market, whether real estate, tuna fishing, transportation, farming, auto repair, or higher education can be discussed in terms of its "economics," its relationship to the national economy and other markets, the government, supply and demand, and other economic principles. In a moment we will discuss the question of why anyone should bother with such a discussion in the first place.