Research

Real Estate

Real estate is a very important part of the larger economy. New construction is more than 8% of GDP.  Adding in the values of other real estate activity leads to a figure of more than 10%.  Although it is difficult to obtain an accurate estimate of real estate wealth, by all estimates, real estate is very important.  Most estimates are that real estate wealth is at least 40% of aggregate wealth.  Furthermore, real estate activity is closely linked to the business cycle.  The consequences of the recent real estate bubble's burst for the U.S. and world macro-economies have been dire.

Real estate is also directly important for business decision-makers. Real estate is clearly important for banking and asset management.  Understanding real estate is also crucial for general managers, since they make important location decisions and because businesses frequently own significant real estate, and are therefore accidentally in the real estate business.

Real estate is an area where there is pressing need for advances in knowledge.  The recent sub-prime mortgage debacle is the most obvious example of a situation where very costly mistakes have been made.  There are others.  For instance, real estate issues are central is also to understanding sprawl and other environmental issues.  

Urban Economics

A salient characteristic of developed economies is that they are highly urbanized.   Roughly eighty percent of Canadians live in cities, with more than half in the region centered around Toronto, Montreal, Vancouver, and the Calgary-Edmonton corridor.  In addition, individual industries are also well-known to be concentrated, with banking disproportionately located in Toronto, while Ottawa has a significant share of software production. 

Cities are crucial institutions for a number of reasons.  First, they are both highly productive and highly innovative. Wages, which reflect productivity, are much higher in large cities.  So are rates of patenting.  Second, many social problems are fundamentally spatial in the sense that they are most serious in cities.  Housing affordability, crime, and education are examples.  Understanding these issues is clearly important for advancing prosperity at the national level.