6 votes
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If house prices appreciate, why do developers sell them?

They are different businesses. Developers make more money developing than landlording. Some do both. But they are different businesses entirely. Also, there is a limited supply of capital and ...
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5 votes
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Why does optimal allocation call for unlimited distribution of information?

Suppose you have a product that you can distribute for constant marginal cost $c$. For every $v\geq0$ assume there are some consumers who value the good at $v$. The net welfare created when someone ...
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  • 16.6k
4 votes

If house prices appreciate, why do developers sell them?

Why not hold onto the property, and sell it later at a higher price? Here is a non-exhaustive list of why not: Real estate bubbles going burst. Depreciation and maintenance costs. A location may ...
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4 votes

If house prices appreciate, why do developers sell them?

The simple answer is that if it is widely expected that the value of an asset will increase in the future, then the value should rise today as people bid up the price of the asset by trying to get the ...
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  • 671
4 votes
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How can valuable retail real-estate stay vacant for an extended period of time?

Before applying irrationality to explain the phenomenon, consider the following simplistic model of a rational owner: assume there is the high rent $R^h$ and the low rent $R^{\ell}$. The owner faces ...
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4 votes
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Listed property price v.s. transaction price

The listed price tells you something about the expectations of the vendor and their estate agent. It's a leading indicator, hinting at where the market may be going next. The transaction price tells ...
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  • 7,992
4 votes

Does land value tax create an incentive to merge land ownerships?

Some people strongly disagree that LVT is not distortionary: George was right that other taxes may have stronger disincentives, but some economists now recognize that the single land tax is not ...
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4 votes

Does neoclassical economics explain or assume private property rights?

It is true that mainstream economics (which includes neoclasicall economics) is empirical but note that any explanation can only arise from theory (whether theory is explicitly formulated or only ...
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  • 41.3k
3 votes

What would happen if a company bought back of all of its stock? Would it own 100% of itself?

The New York Stock Exchange has a continued listing requirement of 300 shareholders and 200,000 shares. A company will want to consider whether continuing to be traded on a stock exchange is desirable ...
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  • 934
3 votes
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Conforming mortgage loan limits by county and year

The high-cost area conforming loan limits within the contiguous United States were created by HERA (the Housing and Economic Recovery Act of 2008) and therefore do not exist prior to 2008. For periods ...
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3 votes

How can valuable retail real-estate stay vacant for an extended period of time?

Two economic models and one returns calculation that can help provide some intuition for this issue and maybe even get to a quantitative evaluation of the problem if anybody finds the right data: ...
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  • 2,590
2 votes

Unique features of Property & Urban Economics

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 ...
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  • 3,721
2 votes

Why are property price-to-rent ratios relatively low in the US?

Reviewing their methodology, they make a number of assumptions that will affect their results. They don't provide the sources of the data they use as inputs, so it's impossible to fully evaluate their ...
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2 votes

What would happen if a company bought back of all of its stock? Would it own 100% of itself?

Companies can issue new stock (pending board — and regulatory — approval) in “public offerings” and stock buybacks are basically the opposite of this. Typically a company will do this in ...
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1 vote
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Is there any economical rational for a government to maintain low property taxes and rather high work-related taxes?

It depends on the parameters of the Romanian economy. There are no publicly available estimates of relevant parameters for the Romanian economy, but using some reasonable assumptions answer would be ...
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1 vote

If house prices appreciate, why do developers sell them?

People buy houses because they want to live in them, and hope the real market price will appreciate. People who buy (or buy shares in) investment properties do so with the expectation to earn a rental ...
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  • 636
1 vote

How is it economically responsible to destroy proprty which has value?

The general answer would be that it is wasteful and selfish to destroy assets with value. I'm referring to assets as something you own, as property can be confused with land or real estate properties. ...
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  • 2,155
1 vote
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Episodes of Housing Crashes and Never Recovering

Maybe the case of Germany before and after WWI could provide you an example. See here. The short story is that there was a big housing shortage before the WWI, which, after the war, which was no ...
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