Module 10 Vocab Flashcards
the production of goods, services, and income depend on the combined effects of four essential economic ingredients commonly referred to as the ______. They are:
- land
- labor
- capital
- entrepreneurial coordination/effort
agents of production
In a real estate project, the 4 agents of production combine to create value in the property. The value is based on a developer’s interest to recoup the cost of the investment plus make a profit.
One of the 4 agents of production. Real estate development requires physical _____ such as equipment (machinery and tools) and buildings and infrastructure (capital goods) that can produce other goods.
capital
One of the 4 forces that influence value. Pertains to the circumstances and trends that affect supply and demand.
economic forces
- national and global level forces (ex: price levels of crude oil, national debt and trade deficit/consumer confidence, terrorist activities, tarrifs and embargos, competition with foreign markets)
- State and local level forces (ex: cost and availability of credit, taxes, housing availability, employment and wage levels
- relationships between current and anticipated supply and demand (local boom and bust cycles)
One of the 4 agents of production. The costs associated with the developer’s ability to combine the other 3 agents of production in a real property development project. This is the investment of time, expertise, and equity by the developer in the project.
entrepreneurial coordination/effort
One of the 4 forces that influence value. Involves the environmental surroundings, both natural and man-made.
environmental and geographic forces
Note:
1) Environmental and geographic issues that affect real estate
- The LEED Green Building Rating System
- Hazardous substances within commercial and residential structures
- hazardous substances in the surrounding environment
2) Superfund Law
3) Geographic issues that influence value such as:
- climate conditions such as snowfall, rainfall, temp, humidity, plus natural disasters
- topography
- natural features that create desirability
- natural barries to future development such as rivers, mountains, lakes, and oceans
- primary transportation systems
- linkages
One of the 4 forces that influence value. Involves controls and regulations.
governmental and legal forces
Note:
1) political and legal activities at all levels of government can have a significant impact on property values
- the legal climate may overshadow the natural market forces of supply and demand
- the government provides many of the necessary facilities and services that affect land use patterns
2) appraisers identify and consider numerous governmental forces that can influence property values
- public services such as fire, police protection, refuse collection, transportation networks.
- local zoning ordinances/building codes/health codes
- national, state, and local fiscal policies
One of the 4 agents of production. This is the cost (both direct and indirect) to construct market improvements on a site. ___ includes project coordination and supervision.
labor
One of the 4 agents of production. The cost of acquiring this begins the process of adding value to real estate. How it is improved and utilized can further add to its value - beyond the cost of acquisition or the cost of the improvements made to it
land
relationship between various distance factors and real estate values. Ex: distance (in time and cost) to schools, public transportation, employment and business centers, shopping, recreational and cultural facilities, and religious centers have a significant influence on real estate values.
linkages
One of the 4 forces that influence value. Focuses on changes in demographics, social trends, and attitudes.
social forces
Environmental law enacted in 1980. The landowner of record had a potential liability when a release of hazardous materials occurred on the property even if the owner did not cause or was not responsible for the contamination. In 2002 the Small Business Liability Relief and Brownfields Revitalization Act was signed into law and expanded the EAP’s Brownfields Program. The law also clarified ______ liability for prospective purchasers, innocent landowners, and contiguous property owners.
superfund law (aka CERCLA)
