| A | B |
|---|
| % of the world's economic wealth is in real estate | 50% |
| tangible (physical) asset in Real Estate | Land and its permanent improvements; also includes what's below and above the land |
| raw land | Land without improvements |
| improvements on the land | buildings, fences, walls, decks |
| improvements to the land | components necessary to make the land suitable for building construction or other uses |
| property | anything that can be owned or possessed, tangible or intangible |
| Personal property | anything not affixed to the land or custom built |
| bundle of rights | use; posses; dispose |
| value of a bundle | function of physical, locational, and legal characteristics |
| Real property vs. real estate | real property generally only refers to the tangible aspects of real estate, whereas real estate include the whole bundle of rights |
| convenant | rules in a suburban community, neighborhood associations, etc. |
| liens | a bank's claim on real estate from a mortgage, can be repossessed and sold |
| easement | a right to use someone else's property |
| Markets and Real Estate | User, capital, and government markets all combine to affect real estate value |
| % of developed land in the US? | 6% |
| % of US land owned by the government | 23% |
| Market value of real estate | $25.6 billion |
| Real estate as a % of GDP | 33% |
| % of local government revenue from property taxes | 70% |
| Local government and RE | zoning codes, land use regulations, development fees, local property taxes affect rental rates |
| State government and RE | least affect on RE, can affect values by statewide implementation of laws, fees, codes, etc. |
| Federal government and RE | tax policy, housing subsidy programs, Federal Reserve, FDIC, Freddie Mac & Fannie Mae |
| 8 Special Characteristics of RE | 1. heterogeneity 2. immobility 3. localized market 4. segmented markets (residential, commercial, industrial) 5. interdependence of land use 6. high transaction costs 7. durability of investment 8. long gestation periods |
| What happens to RE value when IR increases? | RE value decreases |
| Equity investors in RE | expect a return through rent and price appreciation |
| Debt investors in RE | hold claims to the interest on borrowed funds |
| RE as a % of household wealth | 27% |
