What is Real Estate?
By Chris Petry
We ask a lot of questions about real estate. What are the current interest rates? Which city has the hottest market? What time of year is best to buy a home? Just what is real estate, however? In the most basic sense. The answer seems simple enough. It’s a house in the burbs. A storefront on a city street. A parcel of land in the country. It’s all those things and more. Merriam-Webster lists two definitions at its online resource:
The first definition is the most applicable to homeownership, the latter being a more general term. For example, “the Christmas decorations are taking up a lot of real estate in the garage.” The term real estate, was first coined in London, England in the late 17th century, per Merriam-Webster (yes, that Merriam-Webster). Real is derived from the Latin word realis, which means existing or true. State, also a Latin derivative, comes from status, which means state or condition. The “estate” of real estate is state, combined with the word “state,” which means to stand, itself taken from the French word estat. As you can see, the etymology of real estate is somewhat storied and complex.
Who sells real estate? Well, a REALTOR, of course. Yet, the term wasn’t applied to real estate agents until 1916. Charles N. Chadbourn, a home seller from Minneapolis, Minnesota is credited with originating the term. REALTOR is a composite term, borrowing the real from the existing term real estate and the suffix tor, which means to do or act. In this case, to do real estate or act in the name of real estate.
Real Estate, as a concept, goes back much further than the established terminology. This article from Investopedia delivers a fascinating deep dive into the history of real estate and the changes its endured over the centuries. In fact, it goes all the way back to a period in time (between 30,000 and 15,000 B.C.), wherein society shifted from a nomadic resource-acquisition model to one built around land acquisition and agriculture. Once humans abandoned their hunter-gatherer roots and began developing fixed communities, they needed stationary parcels of land in which to produce and harvest the goods necessary to maintain their new societal model.
At first the land was seized through militaristic means and land rents and sales were handled by the heads of tribes and fledgling monarchies. As farming communities grew into larger towns and cities, more labor was needed to maintain the arrangement and the leaders of those tribes or kingdoms handed over or sold land to their friends, family and subjects. Those people in turn sold and traded their land to others within and outside their town or kingdom. As new non-agriculture-related skillsets increased in demand, especially after the industrial revolution, land became a commodity to be sold or traded in return for those specialized skills. So was the true birth of the modern real estate sales model.
Knowing what real estate is, is the first step in understanding its cultural importance and socioeconomic value. It’s no mistake that real estate in the modern context sprang up from the same societal shift that created the economic class structure. More specifically, the middle class. Real estate has been shown, time and time again to be one of the best, if not the best, ways to build wealth and prosperity. Once laborers could access real estate, their social mobility increased, as well as their ability to generate wealth. If things got tough, they at least had one valuable asset that could be used to bargain with their creditors. They could create generational wealth that could be left behind to enrich the lives of their heirs, much in the way the monarchs did. Without the pomp and circumstance.
So, what is real estate? Real estate is space. Real estate is property. Real estate is a means of ascension. A tool to build wealth. A valuable investment in your present and your future. Real estate is all those things and more.
