The Ten Most Influential Ideas In Real Estate
October 23, 2000
University Park, PA. -- In the history of the world, few assets are treated more importantly than is real estate. A professor in Penn State's Smeal College of Business Administration has co-authored a list of the ten ideas that have changed the world of real estate.

"Because of the special characteristics associated with real estate and due to the importance placed upon it by various societies, a set of unique institutions have developed since the beginnings of civilization to cultivate, manage, transform, and conserve these incomparable assets," says Austin J. Jaffe, director of the Institute for Real Estate Studies in Penn State's Smeal College of Business Administration. 

In his recent paper, Jaffe identifies and explores ten of the most important ideas affecting land and improvements. The thesis of the paper is that the evolution of real estate markets can be traced to the fundamental developments in the history of the world, generally, and the history of real estate experience, specifically. 

"If one looks at the 'state of real estate' today, it reflects the historical experience and lessons from the past," says Jaffe. The paper, "The Ten Most Influential Ideas in Real Estate," appears in Knight Frank's 60th Anniversary & Millennium Publication. Knight Frank is a real-estate consulting firm based in Singapore.

"Several of these ideas are conceptual and theoretical; others are descriptive and empirical. Each has had enormous influences on the meaning of real estate in modern life," says Jaffe, the Philip H. Sieg Professor of Business Administration in Penn State's Smeal College of Business Administration. He co-authored the paper with Professor C.F. Sirmans of the University of Connecticut and Director of the Center for Real Estate. 

"Since the beginning of mankind, space and its control have been key issues for living and for conducting business. Not surprisingly, the same fundamental questions of the past are with us today in modern life," says Jaffe. "To paraphrase an old saying, the questions tend to remain the same; the answers just become more complicated! The reason, of course, is that the fundamental economic problems do not change over time."

The co-authors selected ideas that have had an integral role in the development of real estate analysis and practice from the beginning to the present. This list identifies the most important ideas from the beginnings of civilization to the present in terms of their influences on modern real estate decision-making, and each item is accompanied with an explanation for its inclusion in the paper

Idea #1: The Unique Nature of Land.

Idea #2: The Rise of Capitalism.

Idea #3: The Role of Property Rights and the Rule of Law.

Idea #4: The Importance of Real Estate Institutions.

Idea #5: The Concept of Urban Structure.

Idea #6: The Valuation of Property.

Idea #7: Debt and the Financing of Land.

Idea #8: Government Interventions in Real Estate Markets.

Idea #9: The Environment is No Longer a Commons.

Idea #10: Technological Change Affects Urban Life. 

"Because of its unique characteristics, real estate is probably affected by more forces in the world than nearly any other asset. Perhaps that is the reason why real estate is so captivating," says Jaffe.

Jaffe hopes people reading the paper learn the uniqueness of real estate.

"The choice of economic system is important. Property rights (and the supportive institutions) matter a great deal. Urban structure and location decisions require special economic models. Externalities exist in urban space and must be dealt with in real estate decision-making, often by government intervention. Real estate values fluctuate and change. Technology will continue to have a tremendous impact on real estate markets."

Not surprisingly, Jaffe notes, real estate research, on all of these issues, is expanding rapidly.

Editors: For more information, Jaffe can be reached via e-mail at or by phone at 814-865-1938. For a copy of the paper, contact Steve Infanti of the Smeal College of Business Administration's External Relations Office at 814-863-3798.