REAL 1820 Lecture Notes - Lecture 2: Capitalization Rate, Economic Equilibrium, Market Clearing

• School: University of Guelph
• Department: Real Estate and Housing
• Course: REAL 1820
• Professor: Jian Zhou

Document Summary

The supply curve shows how much of a good / service would be supplied at different prices (s) Where the supply and demand curves intersect, we have the equilibrium point, the equilibrium quantity and equilibrium. A shift in the demand/ supply curves can happen for a plethora of reasons (ie. a player announces retirement). The demand curve shifts right as demand increases (more people want tickets) (d1) Supply curve shifts left as supply decreases (ticket holders less willing to scalpel tickets) (s1) The changes in the demand and supply curves results in a. Rent in the real estate market: short-term: < 1 year, inelastic / vertical supply curve) Intermediate term: 2-3 years: long-term: > / = 4 years. Inelastic supply w/ increased demand results in increased equilibrium (& v. v. ) Intermediate to long term market analysis: elastic time w/ increased demand over time (population increase) results in increased equilibrium price (& v. v. )