Unit 15
Which statement is FALSE regarding the relationship between price and demand?
An increase in price causes an increase in demand.
To calculate the occupancy rate, divide the number of occupied units by the total number of units in the building. Give me an example:
Assume that 200 apartments are rented in a 250-unit apartment building. What is the building's occupancy rate? 200 rented units ÷ 250 total units = .80 or 80% occupancy rate
The real estate market is unusually slow to respond to changes in supply and demand. T/F
True
When the equilibrium between supply and demand is upset, it can be years before the imbalance is corrected. T/F
True
The land use that generates the MOST income to the land and improvements is called
highest and best use
One individual, or a group of individuals, living in one dwelling unit.
household
One person or a group of persons occupying a separate housing space is technically defined as a
household
What type of relationship is said to exist between price and supply?
inverse
Investments in real estate tend to be long term, primarily due to the immobility and indestructibility of the land. T/F
true
No two tracts of land are identical. Real estate is not standardized. Real estate, therefore, is unique or nonhomogeneous because even two lots side by side have different geographic locations. T/F
true
The percentage of rental units that are not occupied.
vacancy rate
Which data is the LEAST helpful as a real estate market indicator?
zoning regulations
________________ controls influence the market through zoning, building codes, taxes, monetary policy, and so forth.
Government
Which characteristic does NOT describe the real estate market?
Land is homogeneous.
What is a building's vacancy rate if 621 units are rented in a 690-unit building?
10%
There are 315 apartments rented in a 350-unit apartment building. What is the building's occupancy rate?
90%
Of a 430-unit apartment building, 387 units have been rented out. The building's occupancy rate is 85%. T/F
FALSE; 90%
A seller's market develops when the supply and demand equilibrium is upset by excess demand. T/F
TRUE
Consumer taste or preferences is a variable that influences demand. T/F
TRUE
Demographics refers to the characteristics of the population: age distribution, family size, and population movements. Demographics affect not only the total demand for real estate but also the type of housing demanded. T/F
TRUE
One of the first indications of a revived real estate market is an increase in rental occupancies that cannot be attributed to reduced rents or giveaway programs. High occupancy rates lead to increased rents. Increased rents lead to new construction and a revived real estate market. T/F
TRUE
The amortized (principal) portion of a monthly payment can be increased or decreased by (1) the amount of the down payment made on the property and (2) the term of the loan. Both of these have a direct bearing on demand for housing. T/F
TRUE
The availability of land influences supply. T/F
TRUE
When prices rise, demand goes down. When prices decrease, demand goes up. T/F
TRUE
Market indicators include price levels, vacancy rates, and sales volume.
TRUE; Price levels are indicators of new housing supply and demand for certain price ranges, vacancy rates indicate the need and demand for housing in a certain market, and sales volume can be used in estimating the direction and rate of growth.
A database system arranged by subdivision, by streets, or alphabetically can be of great value in building a current sales data file. T/F
TRUE; SALES DATA MAP
Which characteristic is NOT a physical characteristic of real estate?
The market is slow to respond to change in supply and demand.
Although land seems physically plentiful, the supply of the type and location of land most in demand is always scarce. Two factors influence the availability of land: (1) the scarcity of readily usable land and (2) the regulations affecting its use and cost of development.T/f
True
Nonhomogeneous is a term that refers to the uniqueness of land. T/F
True
To calculate the vacancy rate, divide the number of vacant units by the total number of units in the building. Give me an example:
What is the building's vacancy rate if 225 units are rented in a 300-unit apartment building? 300 total units - 225 rented units = 75 vacant units 75 vacant units ÷ 300 total units = .25 or 25% vacancy rate
When the equilibrium of the real estate market is upset by excess demand,
a seller's market exists
The supply of available properties exceeds the demand.
buyer's market
When fewer buyers are competing for a large supply of homes what type of market results?
buyer's market
The barometer of the real estate market is considered to be the
cost and availability of credit.
The quantity of goods or services wanted by consumers.
demand
The demand for available properties exceeds the supply.
seller's market
Relationships and influences created by location of a property that affect value (e.g., accessibility, personal preference).
situs
The quantity of goods or services offered for sale to consumers.
supply