focus on neighborhood, community, and market chapter 4
TRANSCRIPT
FOCUS ON NEIGHBORHOOD, COMMUNITY, AND MARKET
Chapter 4
CHAPTER TERMS AND CONCEPTS
Central town
Comparative advantage
Concentric rings
Decline phase
Density of use
Development phase
Economic base
Export production
Imperfect markets
Land-use changes
Land-use patterns
Linkage
Local production
Market activity
Marketing time
Neighborhood
Neighborhood boundary
Neighborhood cycle
Nodes
2
CHAPTER TERMS AND CONCEPTS
Perfect market
Price levels
Price trends
Renaissance phase
Sales volume
Special-function towns
Stable phase
Supply-demand balance
Topography
Town origin
Transportation-service town
3
LEARNING OUTCOMES
1. Describe the neighborhood concept and how neighborhood boundaries are defined.
2. Explain how you can use information from a neighborhood study in the appraisal process.
3. Explain how economics influences community origins and growth.
4. Name four different physical patterns of community land use.
5. Define a perfect market and explain why real estate markets are not perfect.
6. Discuss the real estate market actions that you should study and why.
4
5
NEIGHBORHOOD
Its Boundaries are Defined by:
• Economic Benefits
• PHYSICAL FEATURES
• LEGAL BOUNDARIES
6
NEIGHBORHOOD PROFILE
Location
Development and Growth Rate
Trend of Property Values
Demand/Supply
Exposure Time
Marketing Time
Predominant Occupancy
Single-Family Housing Price and Age
Present Land Uses
Potential Land Use Changes
7
NEIGHBORHOOD QUALITY
May be judged in terms of the needs of standards or its occupants
Factors Affecting Quality
Physical Factors Economic Factors Social Factors Political Factors
8
THE NEIGHBORHOOD CYCLE
1. Development Phase2. Stable Phase3. Decline4. Renaissance
9
EVIDENCE OF NEIGHBORHOOD CHANGE
Decline in Construction
Degree of Maintenance in Existing Buildings
Renovation Activity on Existing Buildings
Land-use changes are key signs of neighborhood change!
10
REASONS FOR STUDYING CHANGE
Value of Property Is Influenced by Neighborhood Change (2004)
The Neighborhood Study Suggests What Forces Are Affecting the Neighborhood and the Subject Property
(2007-Same Property!)
11
WE USE NEIGHBORHOOD INFORMATION
To Define the Geographic Area for Market Data Search
To Estimate Highest and Best Use of the Property
To Assist in the Comparable Sales Adjustments
12
RESIDENTIAL NEIGHBORHOOD
Notice the Golf Course NorthNotice the Dry River on the WestNotice the Main Streets on East and South
13
INDUSTRIAL DISTRICT
Notice Dry River on NorthNotice Freeway on SouthMajor Streets on East and West Borders
14
COMMUNITY ORIGINS
Most American Town sites Were Selected Because of their Commercial Benefits
Town site Selection Factors: Availability of food & water Natural defense against enemies
Religious reasons
Commercial benefits
Topography, raw resources, transportation systems in use.
15
TYPES OF TOWNS
Central Town
Transportation Service Town
Special Function Town
16
THREE CENTRAL TOWNS
Figure 4-5 From Urban Land Use Planning, Copyright 1979 by Board of Trustees. Used with permission of the University of Illinois Press
17
LOCAL PRODUCTION
Aircraft are built by Boeing in Seattle WA.
Some planes are sold to local airlines.
18
EXPORT PRODUCTION
Boeing Aircraft Sells Airplanes all Over the World and Brings in Money to the City, State and Nation.
19
MAJOR FACTORS IN LAND USE
Topography
A Town’s Origins
Transportation System
Existing Cities
20
CONCENTRIC RING GROWTH
Typical Patterns of Land Use: Concentric Rings
Dennis J. McKenzie and Richard M. Betts, The Essentials of Real Estate Economics, 6th ed., Cengage Learning, Mason, Ohio, 2010
21
SEGMENTED RING GROWTH
Segmented RingsCourtesy of the California Department of Real Estate
22
MODERN STAR SHAPED CITY
The Modern Star Shaped CityDennis J. McKenzie and Richard M. Betts, The Essentials of Real Estate
Economics, 6th ed., Cengage Learning, Mason, Ohio, 2010
23
WHAT IS A MARKET?
24
THE PERFECT MARKET
1. There Are Numerous Buyers and Sellers
2. All Parties Are Knowledgeable
3. All Parties Are Free to Trade or Not Trade
4. All Products Are Similar and Interchangeable
5. All Products May be Transported to Better Markets
6. Items Are Small, Inexpensive, and Frequently Purchased
7. The Government Plays A Very Minor Role in Pricing
25
IMPERFECT MARKETS
1. Few Sellers2. Lack Knowledge3. Not All Can Trade4. Products Are Different5. Can Move Product6. Large, Expensive, Rarely Purchased7. Government Has Many Rules
26
MARKET ANALYSIS & INTERPRETATION
Appraisers study market activity for 3 reasons
What kind of data to use
Estimate a reasonable marketing time
Report on current marketing conditions
27
MARKET BEHAVIOR
The three parts of market behavior
Price Levels
Price Trends
Level of Activity
SUMMARY
28
The concept of the neighborhood and its importance to appraisers was reviewed. The neighborhood can be defined in a number of ways. Economically, neighborhood boundaries are set by where the characteristics and benefits of a location change. The neighborhood’s quality depends on how well the neighborhood serves the land uses, and how the occupants maintain the neighborhood.
An appraiser studies real estate markets to help interpret market data. Price levels are compared in order to estimate the price difference between properties of different sizes, ages, and so on. All this information helps the appraiser to correctly understand and adjust market data and to report on market trends and likely marketing time, as required for the appraisal report.