53 terms

real estate exam 1

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special characteristics of real estate
fixed location
uniqueness
interdependence of land uses
long life
long-term commitments
large transactions
long gestation period
Supply
the amount or quantity of the good or service that will be offered at various prices.
Demand
the amount or quantity of the good or service that will be desired at various prices.
Equilibrium
When the price negotiated between suppliers and demanders results in the quantity of the good or service offered by the suppliers equaling the quantity of the good or service desired by the demanders.
Real estate space markets
Involve transactions for the rights to use land and buildings. Demand involves people, firms and other entities willing to pay various prices for use of space.
Class A
Buildings that will generate the highest rents per square foot due to their high quality and/or superior location.
Class B
Buildings that most tenants would find desirable but are lacking certain attributes that would permit owners to charge top dollar.
Class C
Buildings that offer few amenities but are otherwise in physically acceptable condition and provide cost-effective space to tenants who are not particularly image-conscious.
Class D
Buildings with few amenities and poor locations and/or physical condition.
Office space market
Class A
Class B
Class C
Class D
Retail space market
Freestanding retail
Neighborhood center
Community center
Regional center
Super-regional center
Freestanding retail
single tenant buildings
Neighborhood center
aka a convenience center, designed to serve a relatively small trade area. Anchor tenant is usually a supermarket.
Community center
Designed to serve a larger tade area than a neighborhood center (3 to 5 mile radius), it includes a wider variety of merchandise. Anchor tenant us usually a discount store or junior department store.
Regional center
Designed to serve a primary trade area within a radius of 7 to 12 miles, these centers offer a rull range of goods and services. Usually designed as enclosed malls with at least one, and sometimes several, full-line department stores serving as the anchor tenants.
Super regional center
Designed to serve trade areas with a radius of more than 50 miles, these centers often exceed 1 million square feet of space and offer a tremendous range of products and services.
Industrial space market
Commonly divided into three categories:
warehouse
manufacturing/production
materials processing
Agricultural space market
commonly divided into three categories:
annual (seasonal) cropland
perennial cropland
liestock facilities
Lodging space market
Divided into five categories:
highway motels
convention/business hotels
luxury hotels
resort (destination) hotels
extended stay hotels/motels
Residential space market
Divided into
single-family detached homes
single-family attached homes (condos, co-ops, town houses, etc.)
manufactured homes
multifamily homes
real estate asset market
Reflects transactions involving cash-flow rights to real estate. The term cash-flow rights refers to the claims to the future cash flows that the buildings and land are expected to generate.
Capital markets
the market for capital assets of all types
Market analysis
examination of the supply and demand sides of a real estate space market segment and the balance (equilibrium) between these two sides. the goal is to assist real estate market participants in making effective real estate decisions.
Basic inputs to market analysis
vacancy rate
rent or price level
quantity of new construction started
quantity of new construction completed
absorption of new space
Vacancy rate
measure of the amount of unoccupied space as a percentage of the total amount of space in the market

Ex: 50 empty rental apartments and 1500 total rental apartments has a vacancy rate of 3.3 (50/1500= 3.3)
Absorption rate
the rate at which homes sell in a given area during a given time period
Gross absorption
the total amount of new space that became occupied during a specified time period.
Net absorption
the net change in the amount of occupied space in the market segment during a specified time period.
Months supply
Months supply= (vacant space + space in construction) / net absorption per month
Determinants of a community's comparative advantage
transportation facilities
educational facilities
created environment
natural resources
climate
labor force
leadership
export activities
basic activities, produce goods and services for sale or consumption outside the area's borders.
population-serving activities
nonbasic activities, which produce goods and services for sale or consumption within the community itself. construction, public utilities, retail, finance, service industries and nature.
Land rent
the return that a particular parcel of land will bring in the open market
highest and best use
use of a parcel that will produce the highest return or price to the owner. Constrained by legal restrictions and the physical characteristics of the parcel.
bid-rent curve
refers o the maximum rent that a potential real estate space user would be willing to pay or bid for a specified location.
infilling
construct new buildings between (existing structures).
concentic-circle model
postulates that from a central business district, several concentric zones radiate outward.
axial model
star-shaped city with growth extending outward along transportation lines
sector growth
Theorized by Homer Hoyt who found that particular types of development tended to extend in wedge-shaped sectors from the center of the city
filtering
the passage of older hosing to less affluent families as it ages
multiple-nuclei growth
emphasizes that many commercial activities occur in cluster and that in most cities there is more than once center of commercial activity.
neighborhood
as an area in which types of property are similar; as a distinct geographic area or one distinguished by a conspicious physical feature; as a social unit, a community with religious or ethnic ties; and as a group of people with the same general level of income.
neighborhood change
gestation
youth

maturity
incipient decline
clear decline
accelerating decline
death or abandonment
gentrification
Gentrification is a process of renovation of deteriorated urban neighborhoods by means of the influx of more affluent residents. This is a common and controversial topic in politics and in urban planning.
types of residential development
single-family detatched homes
single-family attached homes
multifamily residences
manufactured homes
second homes
patio house
or zero-lot line house, is very similar to the detached house except that construction is from lot line to lot line
town house
similar to the old row house. Each unit has its own front door that opens to the outdoors, but it shares one or both side walls with adjacent houses.
plex
shares the characteristics of the town house and the single-family detached house. Each building in a plex contains two or more units, each with its own outside entrance.
manufactured homes
dwelling that is manufactured in a factory and then moved to a particular site.
time-sharing
a single dwelling is sold to a number of buyers, each of whom receives exclusive ownership of the dwelling for a specified time period each year.
gross leasable area
the total floor area designed for the tenant's use
Industrial parks
controlled, parklike developments designed to accommodate specific types of industry and providing all necessary utilities
Infill
method of city growth where open spaces between structures are filled in with new structures.