List the 4 value determinants and how each influences or quantifies an item's value?
Desire - how much the purchaser wants or needs the item makes the item more or less valuable. Utility - how well the item can do the job determines its value to the purchaser. Scarcity - the item is quite valuable if it the supply is limited but its value is less if the supply is great. Purchasing power - if the purchaser cannot afford to pay a high price for the item, then the item's value is diminished because it is financially out of reach.
What are the principles of physical characteristics of real estate?
Indestructible and immovable Long term investment Land does not depreciate, only improvements depreciate Property insurance insures improvements, not the land Property is nonhomogeneous, unique
What are the unique traits or distinguishing features of real estate?
Inherent product value, unique appeal, demand must come to the supply, cannot always be sold for cash, slow to respond to market changes, local market.
Even though two parcels of land are identical in size, shape, topography, soil, mineral deposits, zoning, and just about every other way one can think, they are unique. How so?
They do not have the same location, even if one is an air lot over the other one, a surface lot, since the elevations are different. Different locations generally mean, at a minimum, different views, different access, and different utility.
Name seven factors that influence supply of real estate.
Availability of skilled labor, availability of construction loans and financing, availability of land, availability of materials, investment returns, the community's master plan, government regulation and police power.
List five influences on demand for real estate.
Local real estate prices, household composition (number and age of family members), consumer income, availability of mortgage credit, consumer tastes
Explain how employment impacts the real estate market.
Employment creates a demand for a labor force, which then creates a demand for industrial and office space. As employment grows, so does population, leading to the demand for housing. Additionally, employment creates the purchasing power necessary for families to buy housing. Without employment, the real estate market disappears.
What are the three major indicators in the real estate market and how are they read?
Vagancy rates - too high means too little movement; too low means demand is high and prices are low. Price/sales information - how much property has sold and at what price indicates how the market is functioning Building permits - indicates new construction; the more new construction, the better the market
How does the government at every level influence the real estate market?
Zoning, controlling and permitting new development, taxing, interest rates, environmental legislation and regulations