There are many different models used in this field, depending on the question being asked. For example, commercial and residential properties have very different needs. That said, there is a key model which can be the framework for a broad analysis:
The key model in urban economics is the monocentric model, which is a derivation of the rural land price theory and has industry concentrated in the central business district (CBD). Start with closed model (a city in isolation). Then look at the open model (allow for movement between cities) and competition between cities (inter - regional equilibrium). Density and distribution of population and sectors. Interaction with the labour market – why wages are higher in larger ‘skilled’ cities but real wages are not.
This model has extensions which can help explain why some industries choose to operate outside of the CBD.
There are some special considerations often used for analysis of property:
Cities offer advantages and disadvantages. Amenities are more available (both publicly and privately provided) but there are also negative externalities such as congestion, pollution and cost of living.
- Development and speculation
Speculation has a large role in the property market. There are many external factors which encourage such speculation. For example, zoning limits supply of available land very quickly. With good population growth forecasts, it is very easy to anticipate demand growth for land.
- Public policy and government intervention.
In many economies, it is a highly regulated industry for a few reasons. Often times it is highly politicised (housing affordability is very important for many voters), policy decisions in this sector have direct and salient impacts in the day to day lives of residents. Think: rent control, public housing, zoning.
Wikipedia on real-estate is pretty well resourced. Included in there (among others) is information on:
- Demand for housing
- Supply of housing
- Real estate financing
In such a diverse field, there are many other factors to consider. The importance these variables are vary dependent on the type of analysis required.