McKissock Residential Market Analysis and Highest & Best Use Questions with Correct Solutions, Rated A+

An analysis of the market conditions of supply, demand, and pricing for a specific property type in a specific area. (General) Market Study The study of how a specific property is expected to perform in a specific market. It expands on a market analysis by addressing a specific property. (Specific) Marketability Analysis The study of the supply and demand in a specific area for a specific type of property. Market Analysis The process by which submarkets within a larger market are identified and analyzed. Market Segmentation The geographic region from which a majority of demand comes and in which the majority of competition is located. Depending on the market, this may be further subdivided into components such as primary, secondary, and tertiary, or the competitive one may be distinguished from the general one. Market Area A group of complementary land uses; a congruous grouping of inhabitants, buildings, or business enterprises. Neighborhood A neighborhood characterized by homogeneous land use, e.g., apartment, commercial, industrial, agricultural. District A prediction of the future that is an extension of current and historical trends. Projection A prediction of future market conditions based on inferences drawn from general market information, published data, and historical trends in rents and absorption rates and occupancy for similar property types. Inferred Analysis In market analysis, a prediction of the future based on the fundamental forces of demand. Forecast Real estate exists to house economic activities, supply services, and provide amenities to meet human needs. First Premise (Fundamental Forces of Demand) Identifies the present and forecasts the future demand based on segmentation of broad demographic and economic data to reflect the subject property's specific market. Fundamental Demand Analysis The relationships among these forces of demand are important no matter which type of market analysis is done. Second Premise (Fundamental Forces of Demand) There is a hierarchy to the fundamental forces of demand. Third Premise (Fundamental Forces of Demand) - Employment - Population - Income Fundamental Forces of Demand Characteristics of Levels A and B Marketability Studies Principle that states that the price of real property varies directly, but not necessarily proportionately, with demand and inversely, but not necessarily proportionately, with supply. Supply and Demand (Principle) The study of population and population change. Demography (demographic analysis) The theoretical balance where demand and supply for a property, good, or service are equal, with the only vacant space being space needed to service the market friction of normal tenant movements and space needed to accommodate new demand coming into the market. Over the long run, most markets move toward this, but a balance is seldom achieved for any period of time. **When there is disequilibrium, market forces move supply and demand toward equilibrium.** Market Equilibrium One-unit homes are a ____________ of the residential property market. Submarket When supply and demand are in balance, the market is said to be at ____________? Equilibrium Market analysis is essential to ___________________ , the three _________________ , and the ____________________. highest and best use analysis; approaches to value; reconciliation and final value opinion The demand for real estate is a product of _________________________ , ____________ , and effective purchasing power. demographics (population); income In the minds of probable users of a residential property, the geographic area in which similar properties compete with the subject property is typically called a(n) _______________ . market area