Chapter 5 Locational Characteristics

Chapter 5 Locational Characteristics - Chapter 5 Property...

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Unformatted text preview: Chapter 5 Property Descriptions Locational Characteristics Market Area & Neighborhood Important Words & Key Concepts l Growth Period l Period of Stability l Revitalization l Economic Forces l Urban Renewal l Market Area l Planned Unit Development (PUD) l Special Amenities l Period of Equilibrium l Period of Decline l Rejuvenation l Gentrification l Detrimental Conditions l Linkages l Predominant Land Use 4/20/13 Chapter 5 ~ Property Descriptions - Locational 2 Social, economic, Governmental and Environmental Influences l Value of property is determined by the significant social, economic, governmental, and environmental influences that affect property values in the propertys market area. l Appraisers gather information from general and specialized publications or services. Then considering current economic conditions, interest rates, purchasing power, construction costs and available financing conclude a value. 4/20/13 Chapter 5 ~ Property Descriptions - Locational Characteristics 3 Social, economic, Governmental and Environmental Influences- Page 2 Information changes on a regular basis. Mortgage interest rate changes have an immediate effect on the value of real estate. News affects value, news of environmental regulations, employment news, stock drops or increases all have an effect on the value of real estate. Additionally appraisers need to keep current on national, international, regional, and local news. Current events have to be viewed because they have an effect on real estate values. 4/20/13 Chapter 5 ~ Property Descriptions - Locational Characteristics 4 Regional, Community and Market Area Data l When events change the economic forces outside of real estate they change its value. For this reason appraisals include information about the region, community and market area, such as population characteristics, price levels, employment opportunities, economic base analysis, etc. In this chapter 5 we will concentrate on the market area and neighborhood of the subject property. 4/20/13 Chapter 5 ~ Property Descriptions - Locational Characteristics 5 Market Area Analysis l Market Area Analysis analyzes the area in which the property is located used to start with an analysis of the immediate neighborhood. This approach was broadened by appraisers to include a district, some appraisers used the community as the next larger area to describe and analyze. Consequently the term Market Area was introduced recently in the hopes that it would clarify this broader area analysis. 4/20/13 Chapter 5 ~ Property Descriptions - Locational Characteristics 6 Market Area Definition Market area then is described and defined as a geographic area in which the subject property competes for the attention of market participants; the term usually broadly defines an area containing diverse land uses. The boundaries of a market area are defined by the appraiser and reasonably may vary from appraiser to appraiser....
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Chapter 5 Locational Characteristics - Chapter 5 Property...

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