FINC 670 || A+ Graded Already.
1. A market where tenants negotiate rent and other terms with property owners or their managers
is referred to as a correct answers user market
2. The market in which required rates of return on available investment opportunities are
determined is referred to as the: correct answers capital market
3. The actions of local, state, and federal governments affect real estate values correct answers all
the above
4. Approximately what portion of U.S. households own their own home? correct answers
Approximately two-thirds
5. Of the following asset categories, which class has the greatest aggregate market value? correct
answers nongovernment real estate
6. Storm water drainage systems are best described as: correct answers improvements to the land
7. What is the single largest asset category, in terms of value, in the portfolio of the typical U.S.
household? correct answers housing
8. Real estate markets differ from other asset classes by having all of the following
characteristics except: correct answers homogeneous product
9. Which of the following is not important to the location of commercial properties? correct
answers access to schools
Which of the following attributes of a home are the most difficult to observe and value? correct
answers location attributes
1. The term real estate can be used in three fundamental ways. List these three alternative uses or
definitions. correct answers Real estate is most commonly defined as land and any improvements
made to or on the land, including fixed structures and infrastructure components. The term is
also used to describe the "bundle of rights" associated with the ownership and use of the physical
characteristics of space and location. Finally, real estate may be described as the business
activities related to the development, construction, acquisition, operation, and disposition of real
property assets.
2. The U.S. represents about 6 percent of the earth's land service, or approximately 2.3 billion
acres. Who actually owns this land? What is the distribution of this land among the various uses
(e.g., developed land, federal, land, forest land). correct answers Developed land, consisting of
residential, industrial, commercial, and institutional land, represents approximately 6 percent of
the total land in the U.S. Federal lands and water areas occupy about 23 percent of the land; crop
land and CRP land represent about 21 percent; and pasture land comprises about 6 percent of the
, land. Finally, the remaining land is divided between range land and forest land, with each
representing 21 percent of all U.S land.
3. Describe the value of U.S. real estate by comparing it to the values of other asset classes (e.g.,
stocks, bonds). correct answers As of September 2005, real estate (including owner-occupied
housing, but excluding real estate held by non-real estate corporations) was the single largest
asset class in the U.S., valued at approximately $23.4 trillion. Publicly traded corporate equities
equated to about $17.2 trillion of the U.S. market. The value of mortgage debt is approximately
$11.1 trillion. This is larger than the existing stock of both corporate and foreign bonds and the
outstanding value of U.S. Treasury Securities.
4. How much of the wealth of a typical U.S. household is tied up in real estate? How does this
compare to the role that assets and investments play in the portfolios of U.S. households? correct
answers Real estate is the single largest asset in the typical U.S. household's portfolio,
representing approximately 30 percent of household wealth in September of 2005. In
comparison, the total value of corporate stocks and mutual fund shares represents 16 percent of
household assets. Pension reserves, excluding stocks, represent 17 percent of household assets.
Deposits and money market funds represent 9 percent of household assets.
5. Real estate assets and markets are unique when compared to other assets or markets. Discuss
the primary ways that real estate markets are different from the markets for other asset that trade
in well-developed public markets. correct answers Real estate is unlike other asset classes
because it is heterogeneous and immobile. Real estate assets have unique and distinctive
characteristics, such as age, building design, and location. Real estate is also immobile; therefore,
location is an important attribute. Because real estate assets are heterogeneous and immobile,
real estate markets are localized. Potential users of real property and competing real estate are
typically located in the same area or region. Additionally, real estate markets are highly
segmented because of their heterogeneous nature. Therefore, potential users of a specific type of
real property generally do not
6. Explain the role of government in real estate at the federal, state, and local level. Which has
the most significant impact on real estate markets? correct answers Local government has the
most influence on real estate markets. It affects the supply and cost of real estate through zoning
and land use regulations, fees on new land development, and restrictive building codes. It also
affects rental rates through the assessment of property taxes. Finally, local government affects
the supply and quality of real estate through the provision of community infrastructure and
through building codes. The Federal government influences real estate through income tax
policy, housing subsidy programs, federal financial reporting requirements, fair housing laws,
and disclosure laws. State government generally has the least
7. Identify and describe the interaction of the three economic sectors that affect real estate value.
correct answers STUDY
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