Real Estate Submarkets and Their Characteristics
The Jamaica real estate submarket
The general market for goods and service is made up of many submarkets. When left free to function without private or governmental interference, each submarket and the general market as a whole should theoretically control itself by the laws of supply and need.
One of the submarkets of the general market for goods and service is the Jamaica real estate market. While the real estate market differs in a number of distinctive ways from other markets, it acts much like all markets with respect to changes in supply and need, but with a slower response time. It has the turn up of being a single, simple entity when in fact the real estate market is itself composed of many complicate sub markets. This would include Jamaica homes for rent in addition. This would be known as a parent category.
Real estate is a commodity just as wheat, gold and sugar. By combining the other factors of production with land we can produce wheat, gold and sugar or buildings.
Major sub markets of Jamaica Real Estate
Most authorities agree that the five major submarkets of Jamaican real estate are:
1. Residential homes for rent in Jamaica;
5. Governmental and special – purpose similarities
Each of these five categories is further divided into minor submarkets. For example, “residential” as a major submarket can itself be divided into minor submarkets as follows:
2. Suburban; and
Each of the minor submarkets can be divided further into single-family and multifamily, which could then each be classified as owner-occupied and rental. The point is what appears to be one big, but simple real estate market is in reality, a complicate structure of many individual submarkets, each of which contributes to the overall market.
The characteristics of the real estate market
If the real estate market were allowed to function without any interference or restraint whatsoever, each person could use his or her character in any way that would produce the greatest return. This could consequence in one person’s use of Jamaican character causing a loss in value to another person’s character. clearly, we cannot permit land to be used for at all event purpose the owner thinks best for his or her private gain.
For example, if you lived in a very fashionable up-market residential subdivision and your neighbor bought two undeveloped lots adjoining your character for use as a pig farm or for a paper mill with its offensive odors, the social costs to you and the rest of the subdivision would far outweigh the private gain to your neighbor. consequently, the real estate market cannot be permitted to function free of all controls and restraints.
Listed below are five dominant characteristics affecting ownership and sale that set real estate except other markets.
1. The market is local in character; the product is immoveable.
2. It is slow to respond to change in supply and need.
3. There is relative permanence of improvements; land is lasting and fixed in location.
4. The market is not organized and is without central control; there is no standard product and no central information.
5. Governmental controls influence the market by zoning, building codes, taxes, etc
Local in character – The market for real estate is uncommonly local in character compared with other markets. The reason, of course, is that land and the improvements thereon are immoveable. For example, we cannot transport sugar cane lands from Westmoreland to Kingston. If we were in the market for tomatoes we could haul our produce to the place where need might be greatest. However, despite the need for housing in Area A, we cannot produce an apartment complicate or single-family subdivisions on land located in Area B and take it to where there is greater need.
Slow Response – The character market is unusually slow to respond to changes in supply and need. Very often the number of houses (supply) in an area begins to fall behind the need, however, since the design, land acquisition, site preparation and construction phases of real estate are so time consuming by the time need responds the market becomes flooded. The equilibrium between supply and need is consequently destroyed because the supply of the town houses exceeds the need at the time.
Permanence of improvements – The characteristic referred to as permanence of improvements is also closely related to the above characteristics. The typical bungalow-housing unit has a long economic life compared to other commodities. Once we have built a block of offices we are stuck with it when perhaps we could have invested our time and money in a hotel. consequently, the permanence of the improvements produced eliminates many alternatives obtainable to markets.
Decentralized character – Another characteristic of the real estate market is the without of a single, central exchange for dealing with the real estate island wide. If one wishes to buy 100 shares in General Motors, California, the product will be the same as General Motors, Florida. However, if one wishes to buy 100 hectares of beachfront character in Westmoreland, Jamaica the product will be different in many respects from beachfront character in Portland. This focuses the attention on the two main reasons why there is not a central exchange for real estate.
First, the product cannot be uniform. No two tracts of land are the same. already two lots side by side on a street have different geographical locations on this earth. This concept is referred to as heterogeneity or non-homogeneity.
Second, no central data bank or information source tells about all real character in Jamaica. Also, one needs to be careful when using information about similarities in one area to estimate similarities in another. If one wants to know about real character in any location, it is best to go to that particular place and seek local information.
Governmental Controls – The fifth and last of the dominant characteristics of the real estate market, governmental controls, plays an inordinately important role when compared to other markets. Most people are familiar with direct controls such as zoning and building codes which govern construction and use of character.
Governments also exercise indirect controls, such as the monetary policies of Central Government. For example, if Government reduces the overall money supply to slow the inflation rate, higher rates for mortgage bans turn, drives many possible buyers out of the real estate market in Jamaica. This does impact heavily on the drafting of a rent agreement in Jamaica.