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Real Estate Economics
Real Estate Exam #4
Terms in this set (42)
Inflation is a general decrease in price of goods and services
According to the monocentric city model, land rent increases when population grows, assuming that transportation technology remains the same.
The spatial pattern of the majority of US metro areas today conforms to the pattern described by the monocentric city model.
When pursuing a project development, a market and feasibility analysis is necessary. This starts with the delineation of the market area, which is the extent of the housing sub market in which the project will compete.
Residential and commercial real estate are both characterized by short cycles
Standard demand and supply analysis for real estate assumes that, in each market, producers of real estate are price-takers who make zero profits in the long run.
The bid rent curve plots the maximum rent that different land users would be willing to pay for particular locations, according to their willingness to move away from the CBD. This model considers that land use values are highest at the CBD and decrease as it moves towards the suburbs.
A sale-and-leaseback is a financing strategy where, after the purchase of an asset, a company sells immediately the property to an investor and lease it back for a long period of time.
Market analysis is an examination of the supply and demand sides of a real estate space market segment and the balance (equilibrium) between these two sides.
Urban areas only have advantages such as the reduction of transportation costs, division of labor and informational spillovers.
An important factor for the growth of "edge cities" is the creation of "beltway" around large cities, which create intersections of important highways.
eviction is the legal process for terminating a leasehold estate when a tenant has violated the lease terms or refuses to return possession of the property after the lease term expires.
asset manager is a professional who provides a wide range of real estate services for their companies, among others: management, acquisition, financing, and disposition.
True- Asset Manager
Real rent (as opposed to nominal rent) is defined as follows: nominal rent__________by the_________
Divided, Price Level
In supply and demand analysis for real estate, the________curve is characterized by a back-ward bend at the__________of the pre-existing stock of housing for the market in question.
Supply, Kink, Quantity
Cities tend to develop in places that offer firms a comparative advantage.
In the basic supply/demand equilibrium model, the supply curve is upward sloping while the demand curve is downward sloping . In this model, the equilibrium price is reached at the intersection between the demand and the supply curve.
Upward sloping, downward sloping, intersection
The concentric-circle growth model postulates that:
From a central business district (CBD), several concentric zones radiate outward
Real estate asset market prices are determined by:
Opportunity cost of capital, growth expectations, and risk
Which of the following is NOT a function of the property manager:
Acquisition of targeted space
Consider the basic supply and demand equilibrium model and select the WRONG answer:
Prices are positively related to changes in supply
Consider the basic supply and demand equilibrium model and select the CORRECT answers. (Choose ALL answers that apply)
- All else equal, a change in consumer tastes and preferences for a specific type of real estate causes an outward shift in the supply curve for real estate.
- Factors that lead to increased demand in housing markets will result in price increases, other things held constant.
- If both supply and demand change by the same proportionate amounts and in the opposite directions, equilibrium prices will not be affected.
Consider real estate as an asset, which of the following is correct:
The owner of the asset as a claim on cash-flow rights
What is a neighborhood?
- Geographic area in which types of property are similar
- Same general income level of a group of people
- Community that share a religious or ethic affinity
- Geographic area that distinguishes by its features
Match the best characteristic which describes each model of urban growth pattern:
- Users who are able to pay higher rents are located closer to the central business district
- A urban area that is well serve by transportation notes expanding the city along transportation lines
- Commercial activities are link to clusters expanding the cities
- The concentric-circle growth model
- Axial Growth Model
- Multiple-Nuclei Growth Model
Match the concept to its best characteristic:
- Asset Manager
- Property Manager
- Functions include management, acquisition, financing, and disposition of corporate real estate assets
- May be involved in all aspects of the operation of a rental property
Choosing a good marketing strategy is important to the success of any rental project.
The _____________________ prohibits anyone from refusing to rnent to someoe because of their race, color, national origin, religion, sex, familial status, or physical disability.
1988 Fair Housing Act
If a property manager is employed directly by the property owner, the most common form of compensation is a fee based on a percentage of the property's__________income. This fee typically ranges from________to 10 %, depending on factors such as size of the project and competitiveness of the market.
Gross, 4, 10
As the agent of the owner, the property manager has the power to set rents, to execute, extend, and cancel leases, to make settlements with tenants, to collect rents, to spend money on behalf of the property and to hire, fire, and supervise personnel to operate the property.
What advantages do condominiums and cooperatives offer to a buyer? (Choose ALL answers that apply)
- Condominium and cooperative ownership serves as a hedge against potential inflation and enables the owner to accumulate an equity position
- Condominium and cooperative owners can deduct property taxes and mortgage interest from taxable income for income tax purposes.
Time sharing means that
A single dwelling is sold to a number of buyers, and each receives exclusive ownership of the dwelling for a specified time period each year.
What determines a project's market area? (Choose ALL answers that apply)
- Employment opportunities within the area and in commutable neighboring areas
- The extent of public transportation facilities provided in and around the area.
suppliers in the space market have buildings that were designed for specific uses and are fixed in their locations.
The fact that the use of one parcel of real estate may affect nearby land uses (negative externalities) leads to the necessity of land-use controls.
Infrastructural development such as transportation facilities, water, and sewer facilities are often used as a policy tool to encourage growth.
Neighborhood life cycle includes seven stages. Select the answer with the proper order of the neighborhood life cycle stages:
gestation, youth, maturity, incipient decline, clear decline, accelerating decline, death or abandonment
Gentrification is an effort to rebuild the dwelling and social fabric of a declining neighborhood. This process is considered successful (Choose all that apply)
- When the neighborhood attract middle or upper-income groups
- When community values rise in and increasing pace
Retail space is commonly subdivided into five categories: 1) freestanding retail, 2) neighborhood centers, 3) community centers, 4) regional centers, and 5) super-regional centers.
What is arguably the most important factor that gives a community comparative advantage?
A manufactured home is a dwelling that is manufactured in a factory and then moved to a particular site.
Two major types of house price indices are (select the two that apply):
- Median House Price Index
- Repeat Sales House Price Index
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