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.
Fundamental Economic Value (FEV) represents the intrinsic worth of a real estate asset, derived from its ability to generate future income and its underlying economic utility, independent of short-term market fluctuations.
Gentrification is the process of renovating and improving a neighborhood, attracting more affluent residents and businesses, which often leads to the displacement of existing lower-income communities due to rising costs.
Global Food Demand refers to the total worldwide requirement for food, driven by population growth, rising incomes, and dietary shifts. For real estate investors, it signals opportunities in agricultural land, food processing facilities, and logistics infrastructure.
Government intervention in real estate refers to actions taken by public authorities to influence property markets, including monetary and fiscal policies, as well as direct regulations like zoning and rent control, impacting investment viability and market dynamics.
Government securities are debt instruments issued by a national government to finance its spending, representing a low-risk investment for lenders and serving as a benchmark for other interest rates in the economy.
Gross Domestic Product (GDP) is the total monetary value of all finished goods and services produced within a country's borders in a specific time period, typically a year or quarter.
Hedge effectiveness measures the degree to which a hedging instrument offsets changes in the fair value or cash flows of a hedged item, crucial for managing financial risks in real estate portfolios.
Herd mentality in real estate refers to the tendency of investors to follow the actions of a larger group, often ignoring their own analysis or fundamental market indicators, leading to market bubbles or crashes.
A high-interest-rate environment is a period characterized by elevated borrowing costs, typically driven by central bank policies to combat inflation, significantly impacting real estate financing, property values, and investment strategies.
A type of savings account that offers significantly higher interest rates than traditional savings accounts, typically provided by online banks and FDIC-insured.
The Housing Affordability Crisis refers to a market condition where a significant portion of the population struggles to afford adequate housing due to high home prices, rising rents, and stagnant wages relative to housing costs. It impacts both homeowners and renters, creating barriers to entry for new buyers and financial strain for existing residents.
Housing demand refers to the total number of homes that potential buyers or renters are willing and able to purchase or lease at various price points within a specific market and time frame. It's a key indicator of market health.
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Key financial calculations, ratios, and valuation methods used to analyze real estate investments and performance.