ARE144_chap__07_bf13ed

ARE144_chap__07_bf13ed - 1 Managerial Economics (ARE) 144...

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1 Managerial Economics (ARE) 144 University of California, Davis Instructor: John H. Constantine Handout: Chapter 7, Single Family Housing: Pricing, Investment, and Tax Considerations (1) Why is the income approach to value often difficult to use on a single family residential appraisal? (2) What are the differences between the cost and sales comparison approaches to appraising property? (3) What are the capital gains rules as applied to residential property owners? (4) List four important drivers of housing demand and price appreciation. (5) What are public goods? How may they be reflected in house prices? (6) When considering an investment in “distressed” properties, what are the most important areas of research that should be considered? (7) What is the theoretical basis for the direct sales comparison approach to the market valuation? (8) What main difficulty would you foresee in attempting to estimate the value of a 30-year old property by means of the cost approach? (9) The cost approach to market valuation does not work well in markets that are overbuilt. Explain. (10) What is meant by functional obsolescence? Could a new building suffer from functional obsolescence? (11) Why is an estimate of the developer’s fair market profit included in the costs estimate? (12) What is the theoretical basis for the direct sales comparison approach to the market valuation? (13) What main difficulty would you foresee in attempting to estimate the value of a 30-year old property by means of the cost approach? (14) The cost approach to market valuation does not work well in markets that are overbuilt. Explain. (15) What is meant by functional obsolescence? Could a new building suffer from functional obsolescence? (16) Why is an estimate of the developer’s fair market profit included in the costs estimate?
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2 Problem 1 : A table is given at the end of the assignment to fill out. You are trying to estimate the value of property you are interested in buying. The subject property is located at 322 Rock Creek Road in a new suburb of a large metropolitan area. The property is like many others in the area, with three bedrooms, two baths, a living room, a den, a large kitchen, and a two car garage. The residence has about 1,800 square feet of air-conditioned space and is of a traditional design. The property is located on an interior lot with no potential flooding problems. The quality of construction
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This note was uploaded on 10/06/2010 for the course ARE ARE 144 taught by Professor Constantine during the Spring '10 term at UC Davis.

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ARE144_chap__07_bf13ed - 1 Managerial Economics (ARE) 144...

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