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.
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.
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.
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.
Treasury yields represent the return an investor receives on U.S. government debt securities, serving as a critical benchmark for interest rates across the economy, including mortgages and other real estate financing.
The unemployment rate is a key economic indicator that measures the percentage of the total labor force that is actively seeking employment but unable to find a job.
Volatility in finance measures the degree of variation of a trading price series over time, indicating the rate and magnitude of price changes for an asset or market, crucial for assessing investment risk.
Wage growth refers to the increase in the average earnings of workers over a specific period, reflecting changes in labor market conditions and economic productivity. It significantly influences consumer spending, inflation, and real estate market dynamics.
A wire transfer is an electronic payment service for transferring funds by wire, typically between banks or financial institutions. It is a fast, secure, and irreversible method often used for large real estate transactions.
Year-over-Year (YoY) change measures the percentage change in a specific metric, like property values or rental income, compared to the same period in the previous year. It helps investors understand trends by smoothing out seasonal fluctuations.
The yield curve is a graphical representation of the yields of bonds with equal credit quality but differing maturity dates, providing critical insights into market expectations for future interest rates and economic growth, which are vital for real estate investment decisions.
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Key financial calculations, ratios, and valuation methods used to analyze real estate investments and performance.