Economic Characteristics of Real Estate
Real estate is real property consisting of the actual buildings and land on it, and its accompanying natural resources like water, crops or minerals; immovable real estate, which is not intended to be replaced, a lien, right to use, an equitable right, a proprietary right, the interest or right of redemption, a lien on public real estate or any other lien in combination with other interests. Real estate includes such other possessions as money, personal property, deeds, chattels, public domains, interests in lands or mineral rights, franchises, and interest in structures. There are a number of types of real estate, and they vary according to classification. The primary types are stand-alone commercial real estate, residential real estate, mobile home parks, farm real estate, foreclosure properties, foreclosure commercial real estate, manufactured homes, manufactured land, farm and ranch real estate, ranch and rural real estate, commercial industrial real estate, agricultural real estate, multiple unit buildings, single-family residences, condos, townhouses, residential neighborhoods, condominiums and land trust.
All the types of real estate mentioned above are composed of immovable real estate, while the immovable real estate comprises the structures attached to the land, i.e., buildings, schools, hospitals, roads, bridges, telecommunications poles, pipelines, electric lines, pipelines, natural and man-made lakes, sewers, streams, underground electric cables, underground storage tanks, gas and oil pipelines, underground storage tanks, highways, surface rights of ownership and easements. With regards to the economic characteristics of real estate, these real estate types have different effects on the economy, as each type influences differently the economy. immovable real estate directly influences production and employment, while the other types of real estate indirectly influence production and employment through influencing the availability and price of labor, land, and capital. Immovable real estate has direct elasticity effects on output and employment, whereas other types of real estate have indirect elasticity effects on output and employment.
The primary source of real estate wealth is the value of the land, while the secondary source of real estate wealth is the revenue realized from the sale of the land. A typical city with a large proportion of low-income apartments is the example of an area with heavy urban concentration and the major portion of its revenue comes from the rent of the apartment buildings. The rapid growth of this part of the economy is due to the supply of low-priced apartments and the subsequent rent of the apartment buildings. The secondary economic characteristics of real estate are the value of man-made resources, such as petroleum, coal, iron, aluminum, timber, wheat, livestock, fish and eggs, which are essential to the development of the real estate market and indirectly affect the prices of the various real estate types.