When making a real estate investment, the investor needs to evaluate a multitude of factors. One of these factors is the economic stability of the area where the proposed investment is to take place. The Law of Comparative Advantage states that some geographic regions have an advantage of other regions for the production of specific goods or services due to profitability and efficiency provided by that area. As a result, certain industries tend to cluster into specific geographic areas, having a significant impact on that local economy. 

From the perspective of someone investing in residential housing, address the following:

• How do the economic factors of a geographical location impact the market for real estate investment?
• What economic information would entice you to invest in an area? What information would be a red flag?
• Does real estate investment follow the Law of Comparative Advantage? Support your response.

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