Macroeconomic concepts, interest rates, inflation, Federal Reserve policy, and economic cycles.
Master economic fundamentals with our progressive approach
Foundation terms you need to know first (39 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 (39 terms)
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.
Demand elasticity measures the responsiveness of the quantity demanded of a good or service to a change in its price or other influencing factors, crucial for real estate market analysis and investment strategy.
Capital velocity measures how quickly capital is deployed, generates returns, and is redeployed within an investment portfolio or business cycle, indicating the efficiency and growth potential of an investment strategy.
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.
A cash flow hedge is a derivative instrument used to offset the variability in future cash flows attributable to a particular risk, such as interest rate fluctuations or foreign currency exchange rate changes, thereby stabilizing an entity's financial performance.
Cognitive biases are systematic deviations from rational judgment, inherent mental shortcuts that can lead to irrational decisions in real estate investment, impacting valuations, market perceptions, and portfolio performance.
Common stock represents ownership in a company, granting shareholders voting rights and the potential to earn returns through dividends and capital appreciation.
Confirmation bias is a cognitive bias where investors selectively seek, interpret, and recall information that confirms their pre-existing beliefs or hypotheses, often leading to flawed real estate investment decisions by ignoring contradictory evidence.
The Consumer Price Index (CPI) is an economic indicator measuring the average change over time in the prices paid by urban consumers for a market basket of goods and services, serving as a key gauge of inflation and purchasing power.
Consumer spending refers to the total money spent by households on goods and services, serving as a crucial indicator of economic health and directly influencing real estate markets.
A Contingent Convertible (CoCo) Bond is a complex hybrid debt instrument issued by financial institutions, primarily banks, that automatically converts into equity or is written down if a pre-specified trigger event, typically related to the issuer's capital adequacy, occurs.
The contraction phase is a stage in the real estate market cycle characterized by declining property values, reduced sales volume, and increased inventory, typically following a market peak and preceding a trough.
Contrarian investing is an advanced investment strategy where investors intentionally go against prevailing market trends and popular sentiment, buying assets when others are selling and selling when others are buying, believing the market is mispricing assets due to emotional or herd behavior.
Convexity measures the sensitivity of a bond's duration to changes in interest rates, quantifying the non-linear relationship between bond prices and yields, which is crucial for advanced fixed-income portfolio management.
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Key financial calculations, ratios, and valuation methods used to analyze real estate investments and performance.