Abstract
Equilibrium analysis is a valuable tool in real estate investment research. In this survey, I show how equilibrium models have been used to estimate the required risk premium for different classes of real estate, to explain real house prices, and to determine investment rental market adjustment and valuation (as well as to predict future rent, price and value developments). Equilibrium analysis has also increased our understanding of differences in coupon/rental rates on loans/leases with and without various option like features. Because the work on leases has lagged behind that on loans or mortgages, application of the mortgage research methodology to lease is an especially fertile area for research.
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