Market Analysis & Economic Influences Flashcards

Economic base theory in real estate analysis identifies 'basic' industries as those that:

Answer: Export goods or services and bring income into the local economy

Basic industries export goods or services outside the local economy, bringing new money in and driving demand for real estate.

A declining employment base in a community would most likely cause real estate values to:

Answer: Decrease due to reduced demand and purchasing power

Declining employment reduces household income and purchasing power, diminishing demand for real estate and driving down values.

The multiplier effect in economic base analysis refers to:

Answer: Additional non-basic jobs created in the local economy to support basic industry workers

The multiplier effect describes how each basic industry job supports multiple non-basic (service sector) jobs in the local economy.

Demographic data most useful to a real estate appraiser conducting market analysis includes:

Answer: Age distribution, household formation rates, and migration patterns

Age distribution, household formation rates, and migration patterns directly influence local housing demand and property types needed.

Which indicator would an appraiser most likely examine to assess near-term demand for new residential housing?

Answer: Building permit issuance trends

Building permit trends reflect developers' and builders' expectations about near-term demand and planned future supply additions.

In market analysis, 'linkage' refers to:

Answer: The relationship between a property's location and important destinations such as work, shopping, and schools

Linkage describes how a property's value is influenced by its proximity and accessibility to employment, services, and amenities.

A community heavily dependent on a single employer or industry is said to have a:

Answer: Concentrated or non-diversified economic base

A concentrated economic base poses higher risk because a decline in that single employer or industry can severely impact the entire local real estate market.