RPA 112 - Chapter 4 (B&ampamp;amp;W).pdf

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1、RealEstateMarketsCHAPTER4CHARACTERISTICSOFREALESTATEMARKETS1RealEstateMarkets•Realestatemarketsaredividedintocategoriesbasedonpropertytype–Residential,Multi-Residential,Commercial,etc.•Theyarefurthersubdividedinsub-marketsthatcorrespondtothepreferences

2、ofbuyersandsellers–Residential=SingleFamilyDetached(SFD),Townhouses,Semi-Detached,Condominiums,etc.RealEstateMarkets•Marketsareinfluencesbyattitudes,motivationsandinteractionsofbuyersandsellers–Whichareaffectedbysocial,economic,governmentalandenvironme

3、ntalinfluences2RealEstateMarketsTheRealestateMarketasanEfficientMarket•AnEfficientMarketissaidtobeonewhereproductsalwaystradeattheirfairmarketvalue–(salepricesarenotinflatedorundervalued)•Theefficiencyofamarketistiedtothebehaviourofthebuyersandsellersa

4、longwiththecharacteristicsoftheproductRealEstateMarketsTheRealestateMarketasanEfficientMarket•Realestatemarketsaregenerallyconsideredtobe“inefficient”dueto:–Incompletetransactioninformationbecauseofconfidentialityandtheinabilityofsupplytoreacttodemandi

5、natimelymanner3RealEstateMarkets•Thestockmarketisconsideredtobe“efficient”becausestocksaretradedregularlyandsalepricesarepublicsothereiscomplete,accurateandtimelyinformationforbuyersandsellerstoacton•Therealestatemarketsuffersfrominfrequenttransactions

6、coupledwithincompletetransactionaldata(i.e.–theaffidavitofsalewontsaythatthebuyeroverpaidbecauseofamotivationfactor)RealEstateMarkets•Becauseoftheinabilityforthesupplyofrealestatetoreactinatimelymannertochangesindemand–themarketisconstantlyinastateofei

7、therunder-supplyorover-supply,andneveroperatingatequilibriumSeeTable4.1foracomparisonofefficientmarketsandrealestatemarkets45RealEstateMarketsMarketSegmentationandDelineation•Examplesofmarketparticipants–BuyersandSellers–LessorsandLesseesApersonorfirmi

8、spartofthemarketif–MortgagorsandMortgageesthatpersonorfirm–DevelopersandBuildersisincontactwith–PropertyManagersanothersubsetof–PropertyOwnersmarketparticipants–RealEstateInvestors–RealEstateAgentsandBrokersRealEstateMarketsMarketSegmen