In the absence of foresight among asset market participants, a growth in demand for real estate assets in the capital market, holding demand in the space usage market constant, will produce which of the following short-run and long-run effects?

Question

Quizplus · Accepted Answer

In the short run, an increase in demand for real estate assets in the capital market, with constant demand in the space usage market, will lead to an increase in property asset prices due to the higher demand. Over time, as the market adjusts and possibly anticipates future corrections or as supply responds, prices may drop back down, reflecting a re-balancing of the market. This scenario does not directly affect rents in the short run, as it pertains to the capital market rather than the space usage market.

In the Absence of Foresight Among Asset Market Participants, a Growth