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.
A housing market crash is a severe and rapid decline in real estate property values across a broad market, often triggered by economic downturns, excessive speculation, or unsustainable lending practices, leading to widespread financial distress.
Housing market risk refers to the potential for adverse changes in the value, demand, or liquidity of real estate assets, impacting investors' returns and capital. It encompasses various factors, from economic downturns to localized market shifts, that can undermine investment performance.
Housing market trends refer to the general direction in which the real estate market is moving, influenced by factors like supply, demand, interest rates, and economic conditions. Understanding these trends is crucial for making informed investment decisions.
Housing supply refers to the total number of homes available for sale or rent in a specific market at a given time, indicating the availability of properties for buyers and renters.
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.
Illiquidity refers to the difficulty of converting an asset into cash quickly without significantly impacting its market price. Real estate is inherently illiquid due to high transaction costs, lengthy sales processes, and market dependencies.
Income tax is a mandatory payment levied by governments on an individual's or entity's earnings, including salaries, wages, and profits from investments like real estate.
Inflation is the rate at which the general level of prices for goods and services is rising, leading to a decrease in the purchasing power of currency over time.
An inflation hedge is an investment, such as real estate, that is expected to retain or increase its value and purchasing power during periods of rising inflation, protecting wealth from currency devaluation.
Inflation hedging is an investment strategy designed to protect the purchasing power of capital from the eroding effects of rising inflation. It involves allocating assets that are expected to increase in value or generate higher income during inflationary periods.
The inflation rate measures the percentage increase in the general price level of goods and services over time, indicating the rate at which purchasing power declines.
Infrastructure refers to the fundamental facilities and systems, such as roads, utilities, and public services, that support a community and are crucial for real estate development and property value.
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Key financial calculations, ratios, and valuation methods used to analyze real estate investments and performance.