P A R T I I I Housing and Real Estate Whereas the monocentric city model attempts to explain broad spatial patterns in prices and land use within urban areas, the subfields of housing and real estate are generally conducted at more micro levels of analysis. | A Companion to Urban Economics Edited by Richard J. Arnott Daniel P. McMillen Copyright 2006 by Blackwell Publishing Ltd I PART TT I Housing and Real Estate A Companion to Urban Economics Edited by Richard J. Arnott Daniel P. McMillen Copyright 2006 by Blackwell Publishing Ltd Housing and Real Estate Whereas the monocentric city model attempts to explain broad spatial patterns in prices and land use within urban areas the subfields of housing and real estate are generally conducted at more micro levels of analysis. The main difference between the housing and real estate literatures derives from the motives behind the studies. Housing economists are more apt to be interested in public policy while real estate economics has more of a business perspective. Neither subfield belongs exclusively to urban economics. Housing is also studied by public finance economists who are particularly interested in the effects of taxes and other government policies on the provision of housing. As the largest component of most households wealth housing also plays an important role in macroeconomics and finance. But the study of housing has long been closely associated with urban economics because as by far the largest user of land in urban areas housing is a critical component of urban models. In addition the cost and quality of housing is a vital concern of urban households and policy-makers. The study of real estate has traditionally been the domain of business economists who tend to focus on the institutional features of real estate markets. Urban economists have helped to improve the study of real estate by constructing formal theoretical models that are based on underlying profit- and utility-maximizing behavior on the part of firms and households. Knowledge of the institutional features of real estate markets helps urban economists produce richer and more realistic models of urban areas. Why is housing singled out for study when it is just one of many goods in the economy Housing
