Housing market and residence. Where to invest and why?

Day 3,947, 05:05 • Published in USA USA • by Alias12

Hello everyone!

Thank you for all the suggestions you gave me for this article. I decided to write about the housing market. In addition, I would like to thank everyone who commented on both of my articles. I expect the same even from this article.

Without further ado, let's start our analysis.


Where to settle your residence?

eRepublik offers us five different city types, where we can choose to reside.



As you can see from the picture, the larger the city is, the more you will pay in residential and property tax and the lower your house durability bonus will be. For example, let's assume you buy a Q1 house on the market for 3100 cc.

If your residence city is a town, like my residence city is, you pay 31 cc as tax whenever you activate a Q1 house and a one time only payment of 100 cc when you move your residence. As a benefit, you get to use your house for 201 hours, instead of 168 hours. That is translated to more overtime points, which leads to more revenue from work.

On the other hand, if your residence city is a metropolis, you pay 155 cc as tax for activating a Q1 house and a one time only payment of 500 cc when you move your residence. As a benefit, you get to use your house for a full 169.68 hours, instead of 168 hours you normally can.

Assuming a salary of 750 cc per work, because that is how much a journalist like me gets paid, I prepared a table to check what level of houses are profitable for each type of residence city.



As you can see, living in a small town not only has more health benefits; fresh and bio foods, less pollution, more nature and places to play for kids, but it is also economically profitable. It gives you the highest return for every level of house you buy.

Demand and supply in the housing market

As a bonus for reading my articles, I decided to share with you some macroeconomic analysis about the Q1 housing market here on eRep.

According to eRepublik, there are a total of 58,000 active citizens on the eWorld as of Day 3947. I assume this is true and that they reside 63% in towns, 22% in large towns, 10% in cities, 3% in large cities and the remaining 2.5% in the metropolis, I could derive a demand function for Q1 houses, based on the extra revenue they provide to each citizen. I also calculate the cost of building a Q1 house in regions with different bonuses. Since I don't have exact data about the distribution of Q1 house factories around the eWorld, I rely mostly on assumptions.



I estimate that 5% of the house factories are owned by players who have their holdings in regions with 193% house productivity bonus and they receive 20% boosted productivity from buying packs. An additional 50% of the companies are held in regions with 193% productivity bonus, but by players who don't have productivity booster. The same logic applies to other categories. By assuming this, I can calculate the costs for producing in each region given a base salary of 700 cc. The cost per house produced is also the minimum price each producer is going to sell. Since one person can have more than one Q1 house factory, there can be more companies than citizens. The conclusion of my analysis is this beautiful economic demand-supply graph.



The equilibrium level that I predict for Q1 house prices is between 3200-3300 cc a unit. Like this, every citizen can get access to a house and all the producers will be able to make some small profits. Given the current level of salaries, each rationale citizen would buy a Q1 house, since it provides him more revenue by working. An increasing demand for higher Q houses, especially Q2 houses, will put more pressure on salaries. I estimated that given a salary level of 830 cc, Q2 houses can become profitable for both producers and workers. Since the salaries have increased from 650 cc before 2 weeks to 720 currently, I assume the trend will follow and salaries around 830 cc per work are to be expected. If salaries increase to 830 cc, Q1 house prices will increase by 1000 cc more to keep up with the costs, so this provides good investment opportunity for citizens with high amounts of cash to invest.

Recommendations

* Move your residence in small towns. You get more overtime points and as a results more cc.
* Q2 houses are at the moment profitable to buy only in small towns if you have a salary higher than 750 cc.
* Buy and stock Q1 houses. If my economic analysis of the housing market tends to be true, salaries are going to increase further and so do house prices. If you can afford it, buy and stock Q1 houses. They will not be so cheap in the coming weeks.


Thanks again for having the patience to read all my article.

If you liked it, please comment in the section below. I need to achieve 25 comments even in this article. Endorsements and shouts are more than welcome.

If you have any question or would like to send me feedback about the article, feel free to contact me.

Best,
Alias