EM6-3000 Applied Finance for Real Estate

Contents and structure

This course is divided into 3 separate parts:

• Analyzing the main macroeconomic factors affecting houseprices and the interaction between changing house prices and movements along the business cycle.
• Valuating housing and commercial real estate
• Calculating cashflows and the internal rate of revenue on different kind of loans (fixed-rate mortgages, adjustable rate mortgages), .

Learning Outcome

Knowledge:

-understand what macroeconomic variables affect the sales volum and prices price of both housing and commercial properties

- understand the historical development in housing prices

- Have a knowledge of different valuation methods for housing

- Know how to estimate the internal rate of return and how to make av value assessment of commercial property.

-Skills:

- Be able to analyze how changes in macroeconomic variables such as interest rates, unemployment, employment, inflation and expectations affect housing sales volumes and housing prices

- Be able to explain the macroeconomic factors behind a real estate bubble and a a real estate price crash, respectively.

- Be able to explain what the government can do to curb large and rapid price fluctuations in the housing market

- be able to calculate the rate of return on a commercial property

- be able to apply different methods for valuing housing

- be able to calculate effective interest rates on different kind of mortgages (fixed-rate mortgages, adjustment rate mortgages)

General competence:

-be able to understand public data and the public debate concerning prices and sales in the real estate market

- Recognize how interest rates and unepmloyement rates affect housing prices

- Have a proper knowledge of when the economy turns into real estate bubble.

- be able to conduct a valuation of houses and commercial properties.

Entry requirements

None

Recommended previous knowledge

BØA118 (Macroeconomics), BØA204 (Investment and Finance) and BØA111 (Mathematics for Economists), or similar courses.

Teaching methods

Lectures and seminars

Compulsory learning activities

Up to two written assignments (arbeidskrav) to be solved either individually or as part of a group.

Assessment

Written, 4 hours school exam.

Grading: A-F, where F is "did not pass".

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