Unit 1: introduction to Real Estate Flashcards
Real Estate
Refers to land and fixed improvements to the land
Personal Property
Items not securely affixed to the land or buildings (moveable)
Industry Member
Any one who is authorized by RECA ( Realtors, mortgage broker, appraiser)
Real Estate Professional
Anyone authorized by RECA in the various classes of Real Estate
Classes of Real Estate
- Associate
- Associate Broker
- Broker
Areas of Real Estate Practice
- Residential
- Commercial
- Rural
- Property management
Economics
Analyzes how individuals, businesses and governments make choices on allocating limited resources such as land, labour, and capital in order to satisfy apparently unlimited wants
Macroeconomics
Analyzes how economy-wide phenomena such as inflation and unemployment affect society. It examines the factors that determine the production, employment and price level’s in a country
Microeconomics
Studies how individuals, households, and firms make decisions to allocate scarce or limited resources where goods or services are being bought and sol examines how these decisions affect supply and demand for goods and services, which determines prices, and prices determine the supply and demand.
Economic Growth
The long term expansion of the productive potential of an economy and is often measured as the percentage change in the gross domestic Product (GDP)
Economic Growth Formula
Accumulating human Capital (Knowledge + skills)
Economic Growth Formula
Accumulating human Capital (Knowledge + skills)
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Investing in physical capital (factories, machinery & equipment)
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New technologies for production
Factors of Production
The factors of production are resources required to produce and distribute goods and services in an economy.
Resource markets facilitate the exchange of the 4 factors of production -
land
labour
capital
entrepreneurship.
Supply
Supply is the amount of good or service the market is willing to provide or can offer at a certain price. The higher the price something can be sold at, the higher the quantity that will be supplied.
*key non-price determinants of supply
- Production costs
- Technology
- Producer expectations
- Number of suppliers in the market
- Government taxes and subsidies
Demand
Demand is the amount of a good or service that consumers are willing to purchase at a certain price over a period of time.
The key non-price determinants of demand
- Market Size
- Consumers’ expectations
- Availability of credit
- Consumers’ disposable income
- Consumers’ tastes and preferences
- Price of substitute or complementary products
Market Equilibrium
Equilibrium is the situation when demand and supply are in balance (demand = supply).
Market Surplus
A Market Surplus occurs when there is excess supply. In other words, the quantity supplied is greater than quantity demanded(supply > demand).
Market Shortage
A Market Shortage occurs when there is excess demand. In other words, the quantity demanded is greater than quantity supplied(demand > supply).
Gross Domestic Product (GDP)
GDP measure the output of the economy. GDP is the monetary value of all finished goods and services produced within the country in a given period.
GDP = Consumer spending + Government spending +Business spending + Exports –Imports
Gross National Product (GNP)
GNP is another method to measure the output of the economy. It is the monetary values of all finished goods produced by a countries citizens and enterprises whether physically located inits borders or abroad.
GNP = GDP + Net Income from abroad –Net income from foreign residents
Changes in Economic Activity
- Seasonal changes:
- Business cycle:
- Secular trends:
Business Cycles
Expansion Prosperity: Peak: Contraction Recession Trough Recovery
Market Bubble
Market bubble is a temporary situation in the business cycle where prices for a product become grossly over inflated beyond its realistic value primarily due to excessive consumer confidence.Consumers believe that prices will keep going up and they will be able to sell at higher prices.
3 types of real estate markets
- Balanced market
- Buyers’ market
- Sellers’ market
Real Estate Assurance Fund
Real Estate Assurance Fund compensates consumers who suffer financial loss as a result of fraud, breach of trust or a failure to disburse or account for money held in trust by an industry professional.
Real Estate Insurance Exchange
In Alberta, all real estate professionals must obtain professional liability insurance which covers claims arising from errors, omissions and negligent acts causing damage or loss as a result of a real estate professional performing services while trading in real estate.
