Module03 - Outline

Module03 - Outline - Economics and appraisal Objectives...

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1 Economics and appraisal Objectives Property value is most influenced by the neighborhood and community, and by the state of the real estate market. The topics to be covered here include: 4.1 Neighborhood Analysis 4.2 Understanding Communities and How They Grow 4.3 Real Estate Markets and Their Analysis 5.1 The Basic Value Influences 5.2 How Economic Trends Affect Real Estate 5.3 The Economic Principles of Valuation 4.1 NEIGHBORHOOD ANALYSIS In this section, we explain the concept of the neighborhood and show how to use neighborhood information. Defining the Neighborhood 1. A neighborhood is a cluster of properties of similar land use and value. 2. It is a group of complementary land uses; a congruous grouping of inhabitants, buildings, or business enterprises. Boundaries of the Neighborhood Neighborhood boundaries may be set by economic factors, physical features, or legal boundaries. Boundaries may also be set by changes observed in the characteristics of the occupants, buildings, or land uses. Neighborhood Profile Typical features described for a residential neighborhood include: 1. Location . Classified as urban, suburban, or rural. 2. Development and growth rate . The percentage of built up land. Growth rate may be described as rapid, static, or slow. 3. Trend of property values . Whether increasing, stable, or declining. 4. Demand/supply. Whether housing supply is short, in balance, or in oversupply compared with current demand. 5 . Marketing time . The average time needed to sell a reasonably priced property in the neighborhood. 6 . Predominant occupancy . Whether owner or tenant occupancy predominates. The approximate vacancy percentage is described. 7 . Single-family housing price and age . The range of housing prices, the predominant price, and the age- range and typical age of homes. 8. Present land use % . The percentage of each land use in evidence. 9. Land-use change . Whether change is not likely, likely, or in process. Sources of Neighborhood Data 1. Local Building and Planning Agencies 2. Chambers of Commerce 3. Real estate sales and property management agencies 4. Neighborhood demographic services are available on the Internet Factors Affecting Neighborhood Quality The major factors that affect the quality of any neighborhood can be grouped as physical, economic, social, and political in nature. Physical and Locational Factors
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2 The physical factors that affect neighborhood desirability and quality include the natural features of location, as well as those created by people. Other factors include: 1. Convenience to schools, employment, transportation routes, shopping, public health and medical facilities, religious and recreation centers 2. Adequacy of utilities and other public services 3. General appearance and compatibility of properties 4. Appeal to the market 5. Absence of toxic wastes and other adverse environmental conditions Economic Factors 1. The income level and employment stability of the neighborhood occupants 2. Growth rate, trend of property values, supply and demand, marketing time for properties, and land-use
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This note was uploaded on 09/17/2011 for the course CGS 3300 taught by Professor Kaleem during the Spring '08 term at FIU.

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Module03 - Outline - Economics and appraisal Objectives...

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