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Intro To Real Estate RE 250 (Chapter 5)

Terms in this set (47)

True or false: If a real estate development turns out to suffer from a failure of market demand, the developer normally can find ways of correcting or escaping the problem.
False
Approaches to managing or mitigating market risk in real estate include:
affirm with market analysis that a property's current use is durable
avoid properties where use or user change might occur
be sure a tenant or user is "locked in" for a long period
Historically, a compelling location for cities has been at the ____ of different transportation modes.
intersection
The central economic characteristic of a city's base activities is that they:
bring in income from the larger world
The base multiplier effect in a city is larger as
the city is larger
In the past, an example of real estate market success in the midst of wide-spread real estate market failure was:
apartments during the Great Recession
Examples of export or base activities include:
an aircraft factory
retirement income
a large state university
The locational needs of a particular type of land use are referred to as its
linkages
The growth of a particular industry within a local area can create specialized resources for that industry leading to a production cost advantage in that locality. This advantage is known a
industry
Many cities have been born at a site of resource
extraction
In a one dimensional city with all economic activity at a single point (the CBD), an increase in hourly earnings per worker will cause the slope of the rent "curve" to be ______.
steeper
The economic base of a city is the set of economic activities that a city provides to the
world beyond its boundaries
In a one dimensional city with all economic activity at a single point (CBD), if there are two types of workers, drivers and walkers, and both types have the same hourly earnings, how will the two types become arranged in the city?
All walkers will be closer to the center of the city
Base activities bring money into a city, which then recirculates within the city, creating
multiplier
Residential lots tend to be smaller in larger population cities. A bid-rent model of rent would predict this because smaller lots tend to reduce:
average commuting time
average commuting cost
The money brought into a city by base activities is recirculated within the city through _____ economic activities or secondary activities
local
A main reason that a simple bid-rent model cannot fully describe urban locational patterns is that it is based on a single linkage (commuting for one worker) while in reality every household and firm has ____ linkages, or demands for ____.
multiple, access
Supply factors that affect a city's long-term potential for growth include
quality and character of its labor force
its quality of life and environment
Its leadership
Factors before the 1930s that contributed to a concentric ring pattern of urban form included
transportation was radial, focused on the CBD
business and production depended almost completely on face-to-face communication
In a one dimensional city with all economic activity at a single point (the CBD) if more households/workers arrive, the edge of settlement is pushed outward; so rent levels _____ and the slope of the rent curve is ______.
rise, unchanged
Reasons that the Hoyt sector model of urban form ceased to describe cities well after the 1920s include:
Rise of the automobile in place of rail.
Decline of heavy manufacturing.
Suppose in a one dimensional city with all economic activity at a single point there are two types of driver households that are identical except that one type makes one commute per day and the other makes two commutes per day. How will these households arrange themselves?
Two-commute drivers will be closest to the CBD.
Since 1940 new forms of offices, separate from production facilities were enabled by, among other factors:
air-conditioning
fluorescent lighting
improved communications and data processing
As locational rent is higher the density (height) of buildings tends to increase. This is because:
higher rent is incentive to build more rentable space on a site, even with higher construction cost
Whereas almost all employment was in the CBD in 1900, today even the most centralized private economic function, ____ employment, typically has less than 20 percent in the CBD.
offices
Which of these factors influencing where households and firms locate within a city is ignored in a bid-rent model?
Variation in types of housing
In patterns of urban location, grocery anchored shopping centers, coffee shops, and sandwich shops, all of which tend to spread out evenly over a city, are referred to as ____ activities.
convenience
The concentric circle model of urban form contradicted the bid-rent model of urban land value by describing a city where wealthier households tended to live farther from the CBD. Economists have explained this as follows:
It was too costly to convert older houses to modern, larger ones.
Wealthier households valued larger lots more than commute savings.
The central idea of industry economies of scale and clustering is that by locating in proximity firms in the same industry achieve mutual ____.
efficiencies
The sector model of urban form, based on data from 50 years up to 1928, likely reflected
the same influences that shaped the concentric ring model
the dominance of radial rail commuter lines in intra urban travel
Technological changes after World War I that contributed to extensive change in urban form include:
arrival of motor vehicles
arrival of air-conditioning and fluorescent lighting
assembly line manufacturing
rapid evolution of communication electronics and data processing
True or false: The effect of technological change upon urban form historically has followed quickly after the change has been introduced.
False
In patterns of urban location, new car dealers, night clubs and the stores in shopping malls represent activities that tend to gather together rather than disperse over the city. This type of location pattern is know
clustering
Examples of industry economies of scale that result in clustering include:
suburban office parks
research universities
Location Quotient
% of employment in an industry with in th local community / % of employment in an industry with in a country
In supporting their local economic base, cities may at times incur expenses from doing business with entities located outside of their local community (e.g., in cities with high tourist activity, souvenirs are likely to come from low-wage countries). These expenses are an example of ______ from the local economy.
leakages
Which of the following models of urban form is characterized by radial corridors or wedges representing the pattern of residential land use in relation to the location of the central business district (CBD)?
sector model
An early model of land use is the concentric ring model of urban form developed by E.W. Burgess. Of the following land uses, which would be closest to the downtown area of the central business district (CBD) according to Burgess' model?
a zone of transition containing warehousing and other industrial land uses exists between the downtown area and the residential area
Services and products that users seek to obtain from the closest available source are more commonly referred to as
convenience activities.
A city's potential for growth or its susceptibility to decline is determined by a set of economic activities that the city provides for the world beyond its boundaries. Economists refer to this set of activities as a city's:
economic base.
The demand for access between land uses is considered the "gravity" that holds a city together. These relationships between land uses are commonly referred to as:
linkages.
Which of the following models of urban form is characterized by smaller central business districts (CBDs) located on the outskirt of the city?
multi-nuclei model
Cities such as New York are able to host a variety of complex industries because of the development of specialized resources that support their growth. When specialized resources emerge in response to demand from multiple industries, this is referred to as:
agglomeration economies.
Using the following information, determine the location quotient for this industry:
Percentage of employment in financial services industry within the local community: 15%
Percentage of employment in financial services industry for the entire U.S.: 4.4%
3.4
Understanding the revenue generating ability of the core export activities of a local area has important implications on the market value of real estate. When the income that these activities generate is re-spent within the community on other local goods and services, the community is benefiting through a:
multiplier process.
Activities in a city that serve local businesses and households will recirculate the income derived through a city's economic base. These types of activities are more commonly referred to as:
secondary (or local economic) activities.
The growth of the motion picture industry in Los Angeles, the petrochemical industry in Houston, the software industry in "Silicon Valley," are all examples of how the growth of an industry within a city can create cost advantages for future growth. Economists refer to this phenomenon as:
industry economies of scale.
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