Macroeconomic concepts, interest rates, inflation, Federal Reserve policy, and economic cycles.
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Foundation terms you need to know first (42 terms)
The marginal tax rate is the tax rate applied to your very last dollar of taxable income. It's crucial for real estate investors to understand how additional income or deductions will impact their tax bill.
Real assets are physical, tangible investments such as real estate, commodities, and infrastructure, valued for their intrinsic properties and often used as an inflation hedge and portfolio diversifier.
Building investor confidence is the process of developing a strong belief in one's ability to make sound real estate investment decisions, manage risks, and achieve financial goals through continuous learning and practical experience.
Housing supply and demand refers to the fundamental economic principle that explains how the availability of homes (supply) and the desire for homes (demand) interact to determine housing prices and market conditions.
The fundamental resources—land, labor, capital, and entrepreneurship—used to produce goods and services, including real estate, and are crucial for understanding economic activity and investment potential.
Complex strategies and professional concepts (43 terms)
Tax-exempt debt refers to bonds or other debt instruments issued by governmental entities or qualified private entities, where the interest earned by the bondholder is exempt from federal, and often state and local, income taxes.
A market phenomenon where a declining real estate market appears to reverse and begin an upward trend, only to quickly resume its downward trajectory, trapping investors who bought into the false recovery. It often leads to significant losses for those who misinterpret the temporary rebound as a true market bottom.
The Case-Shiller Home Price Index is a leading measure of U.S. residential real estate values, tracking changes in home prices across 20 major metropolitan areas and nationally using a repeat-sales methodology.
The Accounts Payable Turnover Ratio measures how quickly a company pays off its suppliers and short-term debts, indicating the efficiency of its working capital management and liquidity.
Other Comprehensive Income (OCI) represents revenues, expenses, gains, and losses that are excluded from net income but are recognized in comprehensive income, reflecting changes in equity from non-owner sources. It captures certain unrealized gains and losses that bypass the income statement.
Marginal Propensity to Consume (MPC) is an economic metric that quantifies the proportion of an increase in disposable income that a consumer spends on goods and services, rather than saving it.
The marginal tax rate is the tax rate applied to your very last dollar of taxable income. It's crucial for real estate investors to understand how additional income or deductions will impact their tax bill.
A market bottom in real estate signifies the lowest point in property values within a market cycle, often preceding a period of recovery and appreciation, presenting strategic buying opportunities for investors.
Real estate market conditions describe the current state of property supply and demand, influenced by economic, social, and political factors, guiding investor decisions and property values.
A market correction is a short-term decline of 10% to 20% in the value of a market index or asset prices from their recent peak, often signaling a temporary pause or reversal in an upward trend.
Real estate market cycles are the recurring patterns of supply and demand fluctuations that influence property values, rents, and construction activity over several years.
Market equilibrium in real estate is the state where the quantity of properties supplied by sellers perfectly matches the quantity demanded by buyers at a specific price, leading to a stable market.
Market sustainability in real estate refers to the long-term viability and stability of a market, indicating its capacity to maintain growth, attract investment, and support property values over extended periods without significant volatility or collapse.
Market timing in real estate involves attempting to predict future market movements to buy or sell assets at optimal points, aiming to maximize returns by capitalizing on cyclical trends and economic indicators.
A market trend is the general direction in which a market or asset price is moving over a period, indicating whether prices are generally increasing, decreasing, or staying stable.
Market volatility refers to the rapid and unpredictable changes in real estate prices, interest rates, and investor sentiment, often influenced by economic factors.
The Median Dot represents the midpoint of individual Federal Open Market Committee (FOMC) members' projections for the future path of the federal funds rate, offering a consensus view on monetary policy.
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