gregorygarver.com

[los_martins]

it has been argued that it is a "nearly" perfectly competitive industry because the products sold in this market are heterogonous. What is your opinion? i really appreciatiate ur answer!

[rochelletherealtor]

Well, no.Perfect competition requires homogenous products--that is, all nearly the same (perhaps you just had those two words reversed in your mind?). And in real estate, location is everything, so the products are very different as you go from one location to another. On the other hand, information is this market is exceptionally good, there are many, many participants, and the only real barrier to entry is raw captial, so it's probably more perfectly competitive than many markets.It's probably more perfectly competitive than the market for, say, computer operating software, or for airline transportation, or for waste disposal service, to name a few random examples. It's probably less competitive than the market for soy futures or pork bellies.

[tom4bucs]

it can be

[MixedGurl]

No. There are many different kinds of real estate, such as mobile homes, condos, businesses, land, etc. It is not all heterogenous at all. Every home is different.The real estate market is very competitive but not perfect at all.

[ff1100k]

In addition to what Bjorkmeister said, which was very good:Every local or state law or regulation that governs land use and building makes the market less perfect. And there's a lot of them.For example, the town I used to live in repeatedly passed laws restricting building heights, restricting land use, increasing the cost of building by fees and taxes and regulations, dissuading builders from building by a host of petty little things...and then were surprised at "the lack of affordable housing". To which of course more regulations were the answer. Sigh.In big cities with rent control laws, the effect is even more obvious: Those lucky enough to have a rent-controlled apartment applaud, since they're getting housing for less than the naturally occuring market rate. But everyone else suffers, as the landlords give up on marginal buildings, and/or fail to maintain them, and the developers start concentrating on building high-margin housing for rich folks. Even though it's a perfectly logical result of rent control, some politicians are still amazed at it. But then, very few politicians are economically literate.