Real Estate 306 Midterm 1; Questions and Answers 100% Correct
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Course
Real Estate 306
Institution
Real Estate 306
Real Estate 306 Midterm 1; Questions and
Answers 100% Correct
real estate Correct answer-physical asset
anything that can be owned or possessed; RIGHTS from owning property
if you have right of possession, you own real estate
profession and an industry
real estate as a physical asset Correct...
Real Estate 306 Midterm 1; Questions and
Answers 100% Correct
real estate Correct answer-physical asset
anything that can be owned or possessed; RIGHTS from owning property
if you have right of possession, you own real estate
profession and an industry
real estate as a physical asset Correct answer-is the land and all permanent attachments
to the land and anything it is suitable for; ex. fixed structures or parking garage potential
real estate as a bundle of rights Correct answer-it is the services/benefits real estate
provides ex. shelter, privacy etc
also have air rights, surface rights, mineral, oil and gas rights
can pick an choose sticks in the bundle of "ownership rights"
real property vs personal property Correct answer-real property = anything immovable,
ex land, home, anything attached to the land, permanent
personal property = something that can be moved like RV or furniture
what are the three different markets in RE Correct answer-user markets
capital markets
property markets
, Real Estate 306 Midterm 1; Questions and
Answers 100% Correct
user market Correct answer-competition among users for physical location and space.
competition determines the price of each land parcel
creates supply and demand
user market for physical real estate Correct answer-buyers receive the right to use space
rental rates are determined by supply and demand
demand: individuals, households, and firms who require space for consumption or production
purposes
supply: real estate owners/operators who rent space to tenants
capital markets Correct answer-allocate financial resources among households and firms
requiring funds
ex. stocks, bonds, mortgage contracts... anything that will give a financial return
other characteristics of real estate markets Correct answer-high transaction costs b/c
expensive to enter and exit market (time and $)
real estate is illiquid, fewer buyers
, Real Estate 306 Midterm 1; Questions and
Answers 100% Correct
high asset value - debt financing is needed
long economic life
traditions - symbol of power, stability (people want to won homes, white house)
capitalization rate Correct answer-ratio of property's annual net income from rental
operations to its value
net income/price of property
role of government on real estate Correct answer-local government = most influential,
property taxes, fees, construction restrictions
state government = least influential, sets requirements for local governments
federal government = housing subsidies, income tax policies, environmental policies
explain why real estate is heterogeneous Correct answer-each property has unique
features... even homes that are built exactly the same are different because they're in different
locations
what is a localized market Correct answer-homes are near other homes, apartments are
near other apartments. this increases competition in the market
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