Ch 12 Flashcards
For any economic good to have value it must possess four elements:
- Desire
- Utility
- Scarcity
- Effective purchasing power
What are demand factors and what are supply factors for any economic good?
Desire and effective purchasing power are demand factors.
Utility and scarcity are supply factors.
Desire definition
A purchaser’s wish for an item to satisfy human needs (e.g. shelter, clothing, food,
companionship) or individual wants beyond essential life-support needs.”
Utility is defined as
In economics, the ability of a product to satisfy a human want, need, or desire.”
Functional utility is defined as
“The ability of a property or building to be useful and to perform the function for which it is intended according to current market tastes and standards; the efficiency of a building’s use in terms of architectural style, design and layout, traffic patterns, and the size and type of rooms.”
Scarcity is defined as
“The present or anticipated undersupply of an item relative to the demand for it. Conditions of scarcity contribute to value.”
Effective purchasing power is defined as
“The ability of an individual or group to participate in a market, i.e., to acquire goods and services with cash or its equivalent. “
= Effective Demand
To have value, a thing must possess xxx
all four characteristics:
Desire, Utility, Scarcity, Effective Purchase Power.
Value is created and sustained by xx
Value is not created by xxx
external market forces (Governmental, Economic, Social, Environmental)
appraisers, buyer or a seller
What are Governmental Forces that might affect real property value?
- Planning
- Zoning
- Building Codes
- Environmental restrictions
- Taxes
- Utilities
- Transportation
- Education
- Cultural
- Parks and recreation
- Police
- Fire protection
- Public safety
It has generally been proven that planned communities sustain x real estate values.
higher
It takes away some of the uncertainty for residents and gives them peace of mind knowing what can (and cannot) be developed nearby.
A property’s zoning is one of the x determinants of its value.
strongest
NOAA stands for:
National Oceanic & Atmospheric Administration
Mission of NOAA
monitoring coastal habitats
Mission of US Army Corps of Engineers
Their mission is planning, designing, building and operating water resources and other civil works projects including:
* Navigation
* Flood control
* Environmental protection
* Disaster response
* Ecosystem restoration
* Wetlands and waterways regulation & permitting
Who to contact when damming up a stream on private lands or dredging any wetland areas?
U.S. Army Corps of Engineers
Of course the largest and most prominent federal agency in this area is the
Environmental Protection Agency (EPA)
Environmental Protection Agency (EPA) duties:
- Developing and enforcing regulations
- Offering financial assistance
- Performing environmental research
- Sponsoring voluntary programs and partnerships
- Furthering environmental education
- Publishing information
Economic forces tend to be the most x and exert the most x on value of any of the four categories of External Market forces. This includes:
powerful
influence
* National economy
* Consumer Price Index
* Interest rates
* Availability of financing
* Wage rates
* Types of employment
* Unemployment rates
* Cost of construction
* Rental rates
* Rental vacancies
* Expense levels
There is a multiplier effect in that each job in a basic industry supports x in the service industries.
two to three jobs
Unemployment rates are another general measure of the health of the economy. In the United States, an optimal unemployment rate is around xx; this would represent “x”.
3% to 4%
full employment
Cost of construction depends on:
- Land costs
- Materials costs
- Labor costs
Rental rates, rental vacancies, and expense levels apply
primarily to
commercial properties
because these types of properties are often valued based on their income and expenses.
Retail space is usually compared on the basis of x
dollars per square foot per year.
A relatively normal and healthy rental vacancy rate might be in the range of x for a year.
4% to 5%
The prime source for population demographics is the x .
The formal census is only taken every 10 years, but it does an x update for the in-between years. This information is usually available on a regional or local basis, as well, through various planning agencies and x.
U.S. Bureau of the Census
annual
chambers of commerce
Natural Hazards are
- Hurricanes
- Tornados
- Floods
- Forest fires
- Earthquakes
- Volcanic eruptions
Natural Hazards are
- Hurricanes
- Tornados
- Floods
- Forest fires
- Earthquakes
- Volcanic eruptions
Man-made Hazards are
- Landfills
- Chemical plants
- Superfund sites
- Toxic waste storage facilities * Refineries
