It is difficut to jump right into a conversation around real estate topics. Have you ever noticed when opinion makers writeup their latest takes on what should happen with rent control or land taxes or zoning how incredibly broad a field they lay out before their readers? This is as helpful as coming up with a policy for diabetes on a worldwide scale. Someone who must cope with this disease has wide ranging opportunities for care, access to drugs and simply inside knowledge of norms and practives depending on where they live. One insight can’t possibly have a global impact.
In order to talk real estate one must select a starting point. For years, following the great recession, the analysis focused on why homeowners lost their homes. Other people are obsessed with real estate developers in the same way Swifties demure on whether she will make it to the next Kansas City Chiefs game. Still others love to banter about city councils and figure out how many votes it will take to tweak zoning from single family to multi-family. And what is to be done about parking?
This is TMI. Way too much.
I find the most fruitful place to start is at the time of transaction. When I was a loan officer decades ago we called it ‘the deal.’ Our manager, a plump Napoleon-type who loved to give you a hard time late on a Friday afternoon so you would think about him throughout the weekend, said the term was off the table. Too tacky (unlike him). From then on, as we sat behind oversized wooden desks that would make Matlock proud, we were to call every loan we closed a transaction.
So at home-economic we will always come back to the deal that was made when two people shook hands and exchanged a good or service for something of value.
Say you wanted to set up an analysis of tenant/landlord relationships. The starting point would be the lease. The written agreement that is signed between the parties prior to occupancy outlines the terms of the agreement including the monthly obligation and the landlord’s responsibilities. Simple right? Nada- there is much more nuance. And the configurance of renters and landlords (because there are many varieties of these actors) can cause all sorts of imblances that are not fully flushed out in the contract. But the parties to the deal and the agreement they reach is where to start.
More noodling on models to come.
Home Economics 