development in the current period. The effect of real estate market adjustments tend to be mitigated by the relatively large stock of existing buildings. Heterogeneity. Every unit of real estate is unique in terms of its location, the building, and its financing. This makes pricing difficult, increases search costs, creates information asymmetry, and greatly restricts substitutability. To get around this problem, economists, beginning with Muth (1960), define supply in terms of service units; that is, any physical unit can be deconstructed into the services that it provides. Olsen (1969) describes these units of housing services as an unobservable theoretical construct. Housing stock depreciates, making it qualitatively different from new buildings. The market-equilibrating process operates across multiple quality levels. Further, the real estate market is typically divided into residential, commercial, and industrial segments. It can also be further divided into subcategories like recreational, income-generating, historical or protected, and the like. High transaction costs. Buying and/or moving into a home costs much more than most types of transactions. The costs include search costs, real estate fees, moving costs, legal fees, land transfer taxes, and deed registration fees. Transaction costs for the seller typically range between 1.5% and 6% of the purchase price. In some countries in continental Europe, transaction costs for both buyer and seller can range between 15% and 20%. Long time delays. The market adjustment process is subject to time delays due to the length of time it takes to finance, design, and construct new supply and also due to the relatively slow rate of change of demand. Because of these lags, there is great potential for disequilibrium in the short run. Adjustment mechanisms tend to be slow relative to more fluid markets. Both an investment good and a consumption good. Real estate can be purchased with the expectation of attaining a return (an investment good), with the intention of using it (a consumption good), or both. These functions may be separated (with market participants concentrating on one or the other function) or combined (in the case of the person that lives in a house that they own). This dual nature of the good means that it is not uncommon for people to over-invest in real estate that is, to invest more money in an asset than it is worth on the open market. Immobility. Real estate is locationally immobile (save for mobile homes, but the land underneath them is