Property
Anything that can be owned or possessed
Tangible asset
Physical things such as buildings or land
Intangible assets
Non-physical things such as stocks, bonds, patents, lease agreements
Real estate
Land and any permanent improvements
Improvements on land
Any fixed structures such as buildings, fences, walks and decks
Improvements to land
Components necessary to make the land suitable for building construction or other uses
Real property
Used interchangeably with Real Estate
Bundle of rights
Rights to the services or benefits that the real estate provides to its users. Example rights are shelter, security, privacy, location for business activities
Limitations to bundle of rights
Land use restrictions, multiple owner interest, and utility access grant
User markets
Potential occupants, both owner-occupants and tenants, or renters competing for physical location and space
Capital market
The financial sector of the economy that serves to allocate financial resources among households and firms requiring funds.
Property markets
Determine the required property specific investment returns, property values, capitalization rates, and construction feasibility
Capitalization rate
The percentage that is obtained when the income produced by a property is divided by the value or sale price of the property
Equity owners in private markets list of 5
Individuals, partnerships, limited liability corporations, private equity funds, and hedge funds
Equity owners in public markets
Publicly traded real estate investment trusts (REITs) and real estate companies
Debt lenders in private market list of 5
Banks, thrifts, insurance companies, finance companies, and private lenders
Debt lenders in public markets
Commercial mortgage-backed securities (CMBS) and mortgage real estate investment trusts
R E I T
Real estate investment trusts
A corporation or trust that uses the pooled capital of many investors to purchase and manage income property (equity REIT) and or mortgage loans (mortgage REIT)
C M B S
Commercial mortgage-backed securities
Characteristics of real estate markets
Heterogeneous, immobile, localized, segmented (very specific), highly complex transaction
Investment or institutional grade property
Large and relatively new fully leased commercial properties located in major metropolitan areas, generally over $10 million. targeted by institutional investors, such as pension funds and foreign investors
Acre
43,560 square feet
Land
Commonly used to refer to a parcel that does not include structures but may include some improvements to the land
Personal property
Objects that are movable and not permanently affixed to the land or structure, including tenant furniture and fixtures
Raw land
Land that doesn't include structures or any improvements
A market where tenants negotiate rent and other terms with property owners or their
managers is referred to as a
User market
The market in which required rates of return on available investment opportunities are
determined is referred to as the
Capital market
The actions of local, state, and federal governments affect real estate values through
Users markets, the capital market, and their taxation policy
Approximately what portion of U.S. households own their own home
Approximately two-thirds
Of corporate equities, mortgage debt, government debt, or non-government real estate, which class has the greatest aggregate market value
Real estate
Storm water drainage systems are best described as
Improvements to the land
What is the single largest asset category, in terms of value, in the portfolio of the typical
U.S. household
Real estate
4 ways real estate markets differ from other asset classes
Local market, high transaction costs, segmented markets, and heterogeneous
3 important factor with regard to the location of commercial properties
Access to customers, visibility, and availability of communications infrastructure
Which attribute of a home is the most difficult to observe and value
Location attribute
The term real estate can be used in three fundamental ways. List these three alternative uses or definitions
Land and any improvements made to or on the land, the "bundle of rights" associated with the ownership, the business activities related to the development, construction, acquisition, operation, and disposition of real property assets
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
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
Describe the value of U.S. real estate by comparing it to the values of other asset classes (e.g., stocks, bonds)
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
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?
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 perc
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.
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 importa
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?
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 a
Identify and describe the interaction of the three economic sectors that affect real estate value.
The three economic sectors that influence real estate value are user markets, capital markets, and government. In real estate user markets, households and firms compete for physical location and space. This competition determines who will obtain the use o
Real estate construction is a volatile process determined by the interaction of the user and capital markets. What signals do real estate producers use to manage this process? What other factors affect the volatility of real estate production?
When real estate market prices exceed the cost of production, this signals producers to build, or add additional supply. As the supply of real estate increases, rental rates decline in the user market, which lowers property values and signals the real est