Part 1: Amongst other things, it includes residential property
The answer to this simple question is misunderstood by so many people. To most people, the answer is obvious: “real estate” means residential houses. This answer is not wrong, and I use it to motivate ideas in class since everybody is familiar with the context. But this answer omits the rest of people’s lives. The real estate industry in Canada covers billions of square feet of space and the assets are worth hundreds of billions of dollars. Another post identifies the range of jobs in the real estate industry.
So, why do most people worry about residential real estate? Because there is lots to talk about: 20-year-olds worry about the prices which determine the kind of house bought first, when they buy it and how scared they will be when they sit down to sign a 25 year commitment to pay a large mortgage which may last longer than a marriage. 40-year-olds worry about house prices because, maybe, they will move or buy a vacation home. 60 and 70-year-olds worry about trends in residential prices since it affects retirement wealth.
Since everybody has a friend who is either in their 20s, 40s or 70s, it is easy to start a discussion with anybody at nearly any time. Everybody always has an opinion and that opinion can always be verified by the experience of a friend of an uncle who …
Historically, land was the only source of real wealth and owning land is of fundamental importance to many cultures. Many books and movies explore this issue. A recent ad for a bank offered the investment advice: “Buy land. They don’t make it anymore.” (seen in many countries, although the ad confuses me since I think that it displays a cultural inconsistency).
These talking points are interesting but the scope of the real estate industry is so much broader. An August 2012 article stated: “ ‘Real estate … is the biggest thing you never learn in business school,’ said Ted Reilly, a Cushman &Wakefield Canada agent.” (while completely ignoring the University of Guelph; some of our students submitted comments correcting this oversight.)
This misperception may be a Canadian thing since the International Council of Shopping Centres lists more than 70 undergraduate programs in the US. For a fuller description of what you could learn, instead of learning the selling points of a three-bedroom-two-bathroom bungalow, please see our course descriptions.