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 Real Estate Economics  posted by  duggu   on 11/22/2007  Add Courseware to favorites Add To Favorites  
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Wheaton, William, 11.433J Real Estate Economics, Fall 2008. (Massachusetts Institute of Technology: MIT OpenCourseWare), (Accessed 10 Jul, 2010). License: Creative Commons BY-NC-SA

Suburban community filled with new houses.

New homes are quickly replacing farmland in this suburb west of Des Moines, Iowa. (Image courtesy of Lynn Betts, USDA Natural Resources Conservation Service.)

Course Highlights

Prof. Wheaton provides lecture notes that expand upon the material in the course textbook, which he co-authored. Some of the assignments challenge students to solve problems using computer or data files.

Course Description

This course, offered by the MIT Center for Real Estate, focuses on developing an understanding of the macroeconomic factors that shape and influence markets for real property. We will develop the theory of land markets and locational choice. The material covered includes studies of changing economic activities, demographic trends, transportation and local government behavior as they affect real estate.

Technical Requirements

File decompression software, such as Winzip® or StuffIt®, is required to open the .zip files found on this course site. Microsoft® Excel software is recommended for viewing the .xls files found on this course site. Free Microsoft® Excel viewer software can also be used to view the .xls files. The .exe files found on this course site are executable programs.



This course applies the latest economic thinking and research to the task of analyzing real estate markets and forecasting supply or demand.


In addition to the lectures and readings, the course involves five computer-based exercises, a midterm and a final exam. Their weightings on a student’s course grade are shown in the table below.

Computer-based Exercises 30%
Midterm Exam 35%
Final Exam 35%



The course materials are two. First, there will be 12 lecture PDF files that represent the material in the lectures. This material represents a significant update and expansion of the text:

DiPasquale, Denise, and William Wheaton. Urban Economics and Real Estate Markets. Prentice Hall, 1996. ISBN 0132252449.

Second, there is a reader of journal articles, available to students at the MIT copy center.


1 1 The Real Estate Sector: The Capital and Property Markets  
  2 Micro and Macro Economic Analysis  
2 3 Location and Rents: The Indifference Principle, Submarkets and Land Use Segregation  
  4 Urban Growth, Rents and Prices Problem Set 1 Due
3 5 The Highest Use for Residential Development

Location, Land Use and Density
  6 Land Use Transition between Land Uses (Gentrification)  
4 7 Historical Development and Changing Technology

Transportation, and Shipping Costs

Tax and Public Policy Effects
Problem Set 2 Due
5 8 The Office Market, and the Labor Market  
  9 Theories of Multiple Centered Cities  
6 10 Retail Travel Patterns and the Distribution of Stores

Pricing and Spatial Competition
  11 Shopping Centers and Store Clustering  
    Midterm Exam  
7 12 Property Taxes, Public Expenditure and Local Services, Community Choice, "Capitalization", and Income Segregation Problem Set 3 Due
  13 The Fiscal Incentives for Land Use Regulation  
8 14 Public Goods and "Neighborhood" Effects

Internalizing External Effects through Government or Contracts
  15 Congestion, Transportation Infrastructure and Planning Development  
9 16 Units, Households and Tenure Choice  
  17 Housing Appreciation, Mortgages and the Cost of Owning Problem Set 4 Due
10 18 The Operation of Non-residential Markets  
11 19 Long Term Trends in Space Usage and Demand

Herd Behavior and Development "Games"
  20 The Time-series Properties of Housing and Commercial Space Markets  
12 21 Stock-flow Theory and Real Estate Cycles  
  22 Expectations, Information, and "Efficient Markets"

The Issue: Can markets be forecast?
13 23 The Determinants of Metropolitan Growth  
  24 A Model Analyzing Metropolitan Growth Problem Set 5 Due
    Final Exam   Tell A Friend