Market trends, demographic analysis, economic indicators, and research methods for real estate markets.
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Foundation terms you need to know first (38 terms)
A retail center is a commercial property designed for various retail businesses, ranging from small strip malls to large shopping centers, providing goods and services to consumers.
Price Per Square Foot (PPSF) is a real estate metric calculated by dividing a property's total price by its finished square footage, used to compare property values on a standardized basis.
An industrial warehouse is a large commercial building used for storing, manufacturing, or distributing goods and materials, serving as a critical link in the supply chain for various industries.
Market value in real estate is the most probable price a property should bring in a competitive and open market under all conditions requisite to a fair sale, with the buyer and seller acting prudently, knowledgeably, and typically uninfluenced by undue stimulus.
Walk Score is a numerical rating from 0 to 100 that measures the walkability of any address, indicating how easy it is to live car-free based on proximity to amenities.
Complex strategies and professional concepts (11 terms)
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 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.
Quantitative Tightening (QT) is a monetary policy where a central bank reduces its balance sheet by allowing maturing assets to expire without reinvestment, thereby decreasing the money supply and tightening financial conditions to combat inflation.
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.
Anchoring bias is a cognitive heuristic where an individual's decisions are overly influenced by an initial piece of information (the anchor), leading to skewed valuations, negotiations, and market analyses in real estate investment.
The 10-Year U.S. Treasury Note is a government debt security with a 10-year maturity, whose yield serves as a critical benchmark for long-term interest rates, including mortgage rates, and reflects broader economic expectations.
The absorption rate measures the pace at which available properties are sold or leased in a specific market over a given period, indicating the balance between supply and demand.
A critical financial assessment for real estate investors to determine if a property's costs, including mortgage, taxes, insurance, and operating expenses, are sustainable relative to their income and other financial obligations, ensuring positive cash flow and mitigating risk.
The Affordability Index measures whether a typical family earns enough income to qualify for a mortgage loan on a median-priced home. An index value of 100 means the median family income is exactly enough to qualify, while values above 100 indicate greater affordability.
Anchoring bias is a cognitive heuristic where an individual's decisions are overly influenced by an initial piece of information (the anchor), leading to skewed valuations, negotiations, and market analyses in real estate investment.
An appraisal is an unbiased, professional opinion of a property's market value, conducted by a licensed appraiser, primarily used for lending, buying, and selling decisions.
An appraisal gap is the difference that occurs when a property's appraised value is lower than the agreed-upon purchase price, requiring the buyer to cover the shortfall in cash or renegotiate the deal.
Appreciation in real estate is the increase in a property's market value over time, leading to a profit for the owner when sold or refinanced. It is driven by market forces, economic growth, and property improvements.
An asset bubble occurs when the price of an asset, such as real estate, rises rapidly and significantly above its intrinsic value, driven by speculative demand rather than fundamental economic factors, eventually leading to a sharp price decline.
Assumptions in real estate investing are educated guesses about future variables, such as rent growth, expenses, and market appreciation, used to build financial models and project investment performance.
Augmented Reality (AR) is a technology that overlays digital information onto the real-world environment, enhancing a user's perception of physical surroundings through devices like smartphones or smart glasses. In real estate, it's used for virtual staging, interactive property tours, and visualizing future developments.
An Automated Valuation Model (AVM) is a computer-generated real estate valuation based on mathematical modeling combined with a database of existing property and market information. It provides an estimated property value quickly and cost-effectively, often used for preliminary analysis.
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