Chapter 2 cjo PPT - Chapter 2 Economics And Planning...

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Chapter 2 Economics And Planning
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Learning Objectives List types of changes in general economy affecting real estate market Name and explain four business cycles Develop a management plan Recognize value of comparables Recognize importance of owner’s objectives when formulating the management plan Discusses differences between operating budget and five-year forecast
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The General Business Economy Based on the activity or lack of activity in a market. A market is a situation where willing sellers and willing buyers exchange goods and services. Different types of markets: consumer products, professional services, and commodities, stocks and bonds.
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The General Business Economy Principle of Supply and Demand When supply is limited, demand is high, prices rise When there is greater supply, demand is low, prices decrease Always seeking to balance out, but rarely do in reality Four categories of changes and trends: Seasonal, cylic, long- term or random
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The General Business Economy Seasonal Variations Weather – Construction School Year – College Apartments Seasonal – Retirees Head South Predictable Managers Can Make Adjustments
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The General Business Economy Expansion Recession Contraction Revival Lull Time Activity The Business Cycle
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The General Business Economy Business Cycles – wavelike movements of increasing and decreasing economic prosperity Cyclic Fluctuations – 4 Phases: Expansion Recession Contraction Revival
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The General Business Economy Expansion – Demand and production increase Wages increase Prices increase More money becomes available Recession – supply meets and begins to surpass demand The peak of the cycle
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Chapter 2 cjo PPT - Chapter 2 Economics And Planning...

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