Realecon Terminologies

REAL ESTATE ECONOMICS RFT11 (10:00AM-11:45AM)
REALECON TERMINOLOGIES
B
A
Balance of Payments A record of all
Ability to Pay A measure of transactions of the citizens of one
effective demand, more than just an nation with another, or with all other
unrealizable wish. countries.
Accessibility Degree of ease by which Balance of Trade A record of the

a store or business can be reached by merchandise (usually just goods,
employees, customers, and suppliers. but not services) transferred
between one nation and another, or
Affordable Housing Housing that with all other nations.
rents for less than 30% of the
occupants’ annual income; housing for Basic Employment Local companies
low-income families. that produce goods and services to be
shipped outside the community or
After-Tax Cash Flow The before-tax region that is being studied.
cash flow from an investment, plus or
minus the taxes saved or paid as a Basis Refers to the cost of a property
result of that income. to an owner for income tax purposes.
Asset Bubble When prices of Before-Tax Cash Flow Net

assets are over-inflated due to operating income from an
excess demand. It usually occurs investment (net of all operating
when investors all flock to a particular expenses) less loan payments, but
asset class, such as real estate, or before the payment of income taxes,
commodities, such as oil. if any, on the income.
Assessed Value Value placed on Behavioral Effect How people react

real estate or personal property by to different stimuli. For example, if
government assessors for costs go up, you are likely to purchase
determining ad valorem taxes. less and if costs go down you are likely
to purchase more, etc.
Automatic Stabilizers Policies or
institutions that automatically tend Benefits Received Tax A tax that is
to dampen economic cycle imposed on those who benefit from
fluctuations in income, employment, the service that the tax funds. A
etc., without direct government bridge toll is an example.
intervention.
alria.ventanilla@iacademy.ph 1
Big-Box Stores Very large Capitalism An economic system
stand-alone retail stores, either guided by mar-ket forces with little
specializing in a single line of or no government intervention.
merchandise, or else a low-price Generally regarded as a free market
general merchandiser. system.
Capitalization Rate The net

Break-Cargo Point A place where a operating income divided by the
shift in the transportation system or asking or sales price. One method of
route, or an obstacle, requires the determining the relative value of the
unloading and reloading of cargo” investment.
Cash Flow Analysis The process

"Building Construction One of the of estimating the amount of money to
steps in the property development be received from an investment each
process; the construction of year, including the year of resale.
buildings.
Central Business District (CBD) The
Business Cycles The reoccurring center of the community and its retail
expansions and contractions in center, nearly always close to the
general business activity that take physical origins of the community.
place over a period ranging from three
to six years. Central TownA community that
performs a variety of commercial,
Business Cycle PeakThe point at social, religious, and governmental
which the expansion phase of the services for a surrounding area.
business cycle ends and the
contraction phase begins. Change in Demand An increase or
decrease in the number of available
buyers, or in the quantity of goods
and/or services they seek to obtain.
C
Change in Supply An increase or
Capital A factor of production; any decrease in the number of available
manufactured thing, instrument, or suppliers, or in the quantity of
device that is used to increase goods and/or services they are
production, such as machinery, prepared to sell.
tools, and buildings.
Change in Use A sign of converted to a new use, or
neighborhood change, often noticed demolished.
first at one side of the neighborhood.
Consumerism A modern social
Change: Cycle and Trend The movement seek-ing to protect
two types of change; one repeats consumers from inferior or dangerous
regularly and the other is a products and deceptive advertising.
long-term shift in one direction. Shown in real estate by the increase in
landlord-tenant conflict and changes in
Command Economy An economic landlord-tenant law.
system in which a central
authority plans and controls Condo Conversions The conversion of
prices, production levels, and an exist-ing multi-family rental dwelling
distribution. (an “apartment”) to individually-owned
condominiums.
Communism A form of economic or
social structure, typically Cost of Money The amount you
characterized by the abolition of must pay for the use of someone
classes and a community control over else’s money, effectively the amount
all property. of interest paid.”
Community Centers A smaller retail "Counter-Party Risk The risk that a

shopping center, typically with a party to an agreement will not
department store, banks, variety perform as agreed; specifically, that an
stores, and some specialty stores, with organization does not pay out on a
restaurants clustered nearby. credit derivative, credit default swap,
credit insurance contract, or other
Comparative Advantage The benefit trade or transaction when it is
of a particular location for a supposed to.
specific business (retail, wholesale,
office, etc.), created by favorable Creative Destruction The process
location characteristics for that where new technology, processes
business, such as good transportation, and jobs replace older or obsolete
adequate utilities, positive government ones.
controls, the proper combination of
stores, and natural land features. Credit Availability The amount of
money that can be borrowed at a
Concentric Growth A town that grows given time.
by gradually expanding, in all
directions, with older buildings being
Crop Markets Markets where Demand Deposits Funds on deposit
farmers and ranchers sell crops, at a commercial bank; checking
often specialized marketing accounts; part of the money
channels, such as stockyards and supply.
grain elevators.
DemographyBreakdown of the
Current Rent Rent levels that are population according to age, sex,
already established, often by lease or occupation, income level, and other
contract.Cycle A change that occurs variables.
again and again, in fairly regular
intervals. Demolition Tearing down a building.
Cyclical Unemployment Density of Use A measure of how

Unemployment caused when the property is used; often a good indicator
economy slips into a recession and of neighborhood change.
jobs are lost because of this
slowdown. Depository Institution Bank, credit
union, or other authorized financial
D institution that solicits and accepts
savings of the general public as
Dealer A person who acquires real demand deposits or time deposits,
estate as inventory, with the intent of and pays a fixed or variable rate of
reselling it to customers in the regular interest.
course of business.
Depreciation An annual
Deficits When spending (usually for bookkeeping deduction, or “paper”
a government) exceeds revenue. A expense, allowed by the tax code as a
loss. cost recovery for the theoretical loss in
value of the property over time.
Deflation When prices and wages are
declining. Depression A period during which
business activity drops significantly,
Demand The total quantity that a serious recession. High
buyers are willing to buy, at a given unemployment rates and deflation
time and location, at certain often accompany a depression.
prices.Demand Composition The mix
of types, ages, and sizes of housing Deterioration or Decay The effects
(or other types of real estate) that are of weather and use as buildings
in demand. get older, absent maintenance and
renovation.
severity, by easing the money
Deleveraging Reducing the amount supply.
or level of debt that a person or
company (or nation) owes. Economic Base Study A study of a
community or region. It forecasts
Discounted Cash Flow Analysis population growth by forecasting basic
An analysis of the value of employment.
estimated future money receipts,
allowing for the time value of money, Economic Highest and Best Use
when computing rates of return for real The legal use of a property that
estate investments. will produce the greatest net
income attributable to the land.
Discount Rate The interest rate
charged when a bank borrows from Economic Life The time period over
the Fed; more broadly, an interest which a building contributes to the
rate.Discretionary Income A market value of the improved
measure of personal income; gross property, after which the improvements
income, less income taxes, and less are likely to be demolished, and a new
necessary expenses. one built, to reflect the new highest
and best use of the land.
Disintermediation The historical
outflow of funds from depository Economic Recovery The phase of
institutions into corporate and an economic cycle when the
government notes or other economy is improving.
investments.
Economic Succession The process
Disposable Income A measure of change of use of a site, from its
of personal income; gross income, prior use to a new use. If there is
less all income taxes” a building on the site, it will be
demolished only when a new use is
"Doubling Up The tendency during profitable enough to pay for the site,
recessions for people to share the old building, the demolition cost,
housing accommodations with their and the cost of the new building.
parents or other people, thus reducing
demand for housing. Economics A social science that is
concerned with how individuals and
E societies choose to allocate scarce
resources in order to produce,
Easy Money Policy Attempting to distribute, and consume goods and
head off a recession, or reduce its services.
Effective Demand The quantity that Environmental Impact The

consumers are able and willing to long-range direct and indirect
purchase at each conceivable impacts of a proposed land use on
price.Elder Housing Residential units the environment.
designed for seniors. There are
different types, both as to price level, Environmentalism A broad
and as to the degree of assistance philosophy and social movement,
needed by the resident. focused on environmental
conservation and improvement of
Eminent Domain The right of the the state of the environment.
community to buy, for full value, any
site that the community needs to use, Equilibrium Point The price point
regardless of the owner’s willingness where the quantity that buyers are
to sell. willing to purchase equals the quantity
that sellers are willing to sell.
Employment Data Data collected on
workers, including wage levels, hours Expectation A key issue in
worked, breakdowns by job title, investment analysis; the projection of
industry, and location, those who are earnings tomorrow and beyond by
working less hours than desired, investors.
and those who want work but at the
time have stopped looking. Export Jobs Employment that
produces goods and services
Energy Use The amount of energy designed to be sold and/or shipped
used by a home or a business. outside the community or area being
studied.”
Entrepreneurship A factor of
production. The skill of assembling or F
organizing of the other factors of
production, (land, labor, and capital), in Feasibility Study An in-depth
a systematic manner, to produce analysis of the profitability of either
goods or services.Environment All a specific use or alternative uses
social, economic, biological, and for a parcel of land, or improved real
physical surroundings of a place. estate.
Environmental Controls Government Federal Funds Rate The rate of

regulations that are imposed in order interest that one bank charges
to reduce or pre-vent damage to the another, for the overnight use of
environment.
excess reserves on deposit with the Fixed Land Supply The land surface is
Federal Reserve System. fixed, and cannot be increased or
decreased according to the whims of
Federal Open Market Committee of demand. However, the intensity of
the Federal Reserve Makes most use can be changed.
policy decisions regarding monetary
police. Fixed Short-Term Land Use In the
short run, land use and land supply
Federal Reserve System Regulates are fixed, as a change in land use
the supply of money and credit, in generally is a slow process,
order to achieve economic growth requiring many studies and approvals.
without inflation and unemployment.
Footloose Industries Those
Filtering The pattern of most considered capable of locating in any
residential units having a number of number of locations, depending on
occupants, given the long life of personal factors.
dwellings and the changing needs and
tastes of people. Typically, as units Fractional Reserve Banking A
become older, they are occupied by system of bank-ing where member
people of lower incomes. banks in the Federal Reserve
System must maintain a specified
Financial Management Rate of percentage of depositors’ balances
Return (FMRR) A measure of the as reserves, some in cash and
return on invested funds. Adjusts each some on deposit with the regional
year’s cash flows, using a “safe” Federal Reserve Bank.
rate (a rein-vestment rate), to try to
more closely model actual investor Free Trade When many or all
reinvestment practice than does the restrictions, quotas, and tariffs are
dis-count rate. removed, and all goods and services
can flow between countries without
Financial Risk The risk of failure restriction, in an open competitive
to receive income when expected market.
or in the amount that is expected.
G
Fiscal Policy The government’s use
of its taxing and spending power to General Plan A comprehensive
help counteract recession, long-range plan created by a
unemployment, and inflation. community or region, to include all
social, economic, and physical
aspects of the desired future growth.
Growing Season The time of the year,
GentrificationThe cultural changes in or season, in a given location, when
a less prosperous community, farmers grow most of their crops.
resulting from a demo-graphic shift
to wealthier people buying housing. H
Global Warming A form of pollution, Highest and Best Use See

believed to be occurring due to the economic highest and best use.
release of various gases into the air.
Historical Preservation A social
Green Building The practice of movement, seeking to identify and
using materials and processes that preserve buildings that are significant,
are environmentally responsible and due to their architecture or the history
resource-efficient, both during a associated with the building.
build-ing’s construction and throughout
its life cycle. Holding Period The actual or expected
period of time during which an
Gross Domestic Product (GDP) A investment is owned by a particular
measure of the economy of a country investor.
or area. For the United States, this is
compiled by the U.S. Department of Homebuilding Industry The
Commerce and is reported on a segment of the construction
monthly and annual basis. industry that is involved with home
construction.
Gross Rent Multiplier (GRM) A rule of
thumb, or measure, commonly used to Homeownership The state of living in a
estimate the value of housing unit that one owns, as
income-producing properties. The opposed to rents; a person who owns
property price or value divided by the a residence.
gross rent or income, usually on an
annual basis” Homeowner’s Exemption A credit
given to homeowners, to reduce
their property tax.
"Gross Scheduled Income The
maximum potential amount of rents Housing Composition The mix of unit
(and other income) for a building size, age, location, and condition, and
when it is 100% occupied at either whether the units are intended for
cur-rent rents or market rents. owner occupancy or for rent.
Inflation An increase in the level of
Impact Fees Fees charged by local consumer prices or a persistent
governments to developers for a decline in the purchasing power of
development application or building money, caused by an increase in
permit, to help pay for the off-site the supply of money beyond the
capital costs that the development will supply of available goods and
generate, such as schools, parks, services.
roads, and water or sewer system
expansions. Inflation Costs The increase in
material prices and wages that can
occur during construction delays.
Imperfect Markets A market where
a group of buyers or sellers is able Infrastructure The basic physical,
to directly influence the price or legal, and social elements around a
output of a good or service. parcel that make it useful. These
include utilities, transportation
Inclusionary Zoning A legal networks, education systems, police
requirement for developers to and fire, and more. The value of any
provide a percentage of the total parcel of real estate is totally
housing units as subsidized depend-ent on it.
low-income rentals or for sale housing.
Input-Output Study A study of a
Income Money received by a person or community or region that examines
organization because of effort the resources that go into the
(work) or from return on economic activity of the community.
investments.Income Tax Major source
of revenue for the federal government Installment Sales The sale of a
and many states. property where the seller does not
receive all of the sales proceeds at
Industrial Location Theory The study the time of closing the sale, often
of how industries choose site called con-tracts of sale or land
locations. Often, the business seeks contracts.
a location that reduces its costs
and increases its profits.
Intensity of Land Use A measure of
Industrial Parks Modern clusters of neighbor-hood change. A change of
industrial uses, often located well land-use intensity in time will act to
away from historical industrial increase or decrease the supply of real
districts. estate.
Interest The amount of money paid for Labor A factor of production. The
the use of money borrowed.Interest human effort that is used to
Rate Risk The risk that market transform raw materials into finished
interest rates will change, especially products or to perform services.
upwards, resulting in possible loss in
value of an investment. Labor Force Participation Rate The
percentage of the total population that
Internal Rate of Return (IRR) The rate works at a paid job.
of return on the funds invested,
identical to the discount rate, yield Labor-Oriented Industries Those that
rate, or interest rate. Technically, it choose locations primarily to obtain
is the rate that discounts the future access to low-cost lab or.
cash flows to just equal the amount of
money initially invested. Lagging Indicators Economic and
financial-market indicators that tend
Investing The act of giving up present to show a change in the business
consumption, in order to use the cycle only after the economy has
saved funds to generate future already changed.
benefits.
Land A factor of production.
Investment Characteristics Key The natural resources trees,
differences between investments, minerals, air, and water—as well as
setting alternatives for investors to the surface of the earth.
choose from.
Land Development Subdividing and
Investment Choices The important preparing the land for building.
issue in investments: what choices
are available and how to rate them. Land-Use Control ls Laws or
contracts that limit the use of land.
Investor A person who invests
personal funds to buy property for a Law of Demand The lower the
personal investment portfolio price, the more that consumers will
buy. The higher the price, the less they
Investor Trust The amount of will buy.
confidence that investors have with
the information on which they based Law of Supply The lower the price, the
their investment decision. less that producers will produce. The
higher the price, the more they will
L produce.
Leading Indicators Economic and ease of converting the investment into
financial indicators that tend to show cash.
a change in the business cycle before
(ahead of ) the cycle changing. Live-Work Housing Housing that is
designed to serve both as
LEED® Certification A widely residential space and also work
recognized green building space for artists, crafts people, and
certification system, establishing other very small businesses. Often
standards to promote design, developed in old industrial buildings,
construction, and maintenance and industrially zoned sites. These are
practices that reduce negative usually complexes, with a number
environmental impacts of buildings. of units where a dwelling unit is
combined with a ground-floor shop,
Lifestyle How people choose to live. store, or craft area.
Limits on Choice A key investment Local Community Forces The social,

concept: at any one time, there is a economic, legal and physical forces
limited choice of available properties, that cause changes in the use and
which affects the investor’s buying value of local properties.
strategy.
Local Market Properties that are
Linear (axial) Growth Growth of cities advertised primarily through the local
in a linear form, drawn by linear newspaper, brokers, or word of
transportation systems, such as mouth, as contrasted with properties
streetcars and subways. that are sold by regional or national
advertising programs.
Linear Strips Retail districts, usually
on both sides of a major arterial road, LocationThe sum of all of the
drawn by exposure to the heavy characteristics of a particular place
traffic.” and its surroundings, including
proximity to transportation,
"Linkage The interrelationship that employment, shop-ping, and desired
exists between some businesses and cultural facilities, and the influence of
others, causing them to benefit from a any nuisance that is found in the area.
location close to one another. Diamond
merchants, auto dealers, and fashion Long-Term Secular Trends
retail stores are each examples. Economic changes that occur over an
extended period of time, per-haps 50
Liquidity An important investment years or more.
characteristic—the speed, cost, and
M without the need to revert to a barter
(or swap) system.
Management The supervision needed
to oversee an investment. Migration The movement of people
from one place to another. The
Market Economy An economic movement might be from town to
system where the majority of town, state to state, or country to
decisions about the production and country. Some migrations are
distribution of goods and services seasonal, some change with the
are made by private individuals in business cycle, and some are more
competitive markets. permanent.
Market Rents What the space or Minerals Natural compounds that are
units would rent for if new tenants formed through geological processes.
were sought.
Mixed Capitalism A system mostly
Market A place where buyers and driven by the free market but
sellers meet to bargain and exchange where some government influence is
goods and services at negotiated exerted.
prices.
Monetary Policy The use of controls on
Market-Clearing Price The price at the supply and cost of money as a
which all of the goods in the means of controlling the economy.
marketplace at one time can be sold. Increased cost of money will slow
down an inflationary economy, while
Market-Oriented Industries low interest rates will stimulate a weak
Industries that seek a location economy.
as close as possible to their
customers. A neighborhood market is Moral Hazard The behavior
an example. exhibited relative to risk or
perceived risk. The more
Measure of Value One of the vulnerable you perceive yourself, the
functions of money; it is used to more cautious you will be and vice
measure or compare the worth of versa. An example is the tendency
unlike items. for investors in an insured
investment to ignore potential risks.
Medium of Exchange One of the Thus, the insurance encourages
functions of money; it allows people riskier behavior.”
to exchange goods and services,
Movement of Goods How and defined by the gradual change in
where products are transported for the properties over several blocks or
ultimate consumption. more.
Multiple Nuclei A model of the Neighborhood Centers A small retail

growth and shape of larger shopping center, usually anchored
communities, with the growing city only by a supermarket, with a few
forming multiple high-value clusters other stores such as a drugstore,
about major intersections and about laundry, and small restaurants.
the former down-towns of suburbs
that are absorbed into the grow-ing Neighborhood Cycle The theory that
city. neighbor-hoods go through a
predictable cycle as they age, and are
Multiplier Effect The ratio of new local regenerated.
jobs that are created for every new
basic job. The ratio varies with the size Neighborhood Obsolescence
of the community.Multi-Year Analysis Neighborhoods that decline to the
An analysis over multiple years of point of properties being abandoned.
the expected income from an
investment. Net Sale Proceeds The amount of
money the investor is estimated to
N net, after close of escrow and
payment of capital gain or income
Negative Declaration A finding by a taxes on the sale, when the
govern-mental body that a proposed property is sold at the end of the
project or action would not have a holding period. Sometimes
significant impact on the environment, calculated on a before-tax basis.
thus eliminating the need to prepare
an environmental impact study. Net Spendable Income See after-tax
cash flow.
Neighborhood A cluster of properties
of relatively similar land use and New Construction A home or other
value. property that hasn’t been occupied,
where the seller is typically the builder.
Neighborhood Boundaries The line
or area where the location starts No-Growth Policy A social or political
to change. Sometimes, a clear line policy to restrict the growth of a
formed by a lake, river, marsh, community’s population, by
free-way, or a similar distinct barrier to restrictions on zoning or availability
development. Other times, only of utilities. Motivated by a desire to
reduce the impacts of growth and vending machine income, storage or
change. parking space income, and so on.
Nodes A point on a transportation Overhead Costs The continuing

route where movement slows or costs that a developer incurs,
branches. This often allows easier regardless of project delays.
access to cargo than elsewhere, These include such items as rent on
leading to community growth. Some the develop-er’s office, bank
nodes form solely to service the payments, maintenance expenses on
transportation system, as with the office equipment, and fixed salaries
rail-road watering stops that became for office workers.
towns.
P
Nonresidential Construction Consists
of retail and office buildings, Passive Loss Rules An income
industrial plants, and institutional tax law that states that real estate
buildings such as hospitals, schools, losses can only offset what is defined
and libraries. in the tax code as passive income.
Permits and Quotas Permissions

o required from the government to
grow some crops, including tobacco,
cotton, and sugar beets, and to
Open-Market Operations The produce fresh milk.
actions of the Open Market
Committee of the Fed, in buying Personal Income A measure of
and selling government securities in personal income; total income earned
the open market, in order to expand by all individuals, after business taxes
or reduce the amount of money in the have been paid, but before
banking system. personal taxes are paid.
Opportunity Costs The unrealized, Physical Forces The physical forces

potential earnings that money tied up that impact real estate values. These
and not earning revenue, such as an include the effects of time and the
investment in unimproved land, might elements, including the
have earned if invested elsewhere. weather—from routine fading and
settling to the sudden tornado or
Other Income Sources of property flood—as well as earthquakes, slides,
income, other than rent, such as soil creep, and fault creep.
Police Power The constitutional right of Preservation The process of reducing
the government to regulate private neighbor-hood deterioration, by
activity, in order to promote the encouraging maintenance, remodeling,
general health, welfare, and safety of and renovation of existing buildings.
society.
Price Supports A government
Political Conflict An unresolved subsidy used to maintain prices at a
disagreement between two groups certain level. Usually applied to
over some policy issue. agricultural products, in order to
stabilize or support farm
Political Forces The political forces income.Prime Rate The rate of interest
that impact real estate values. These that a bank charges its best, large
range from taxation to edu-cation and customers, such as major
include the effects of a radical city corporations.
council on a conservative
neighborhood, and a traditional city Private Benefits The rewards of a
council on an unorthodox decision or event that are enjoyed
neighborhood. only by a particular individual or
business and not by society as a
Pollution Introduction of harmful whole.
substances or products into the
environment. Private Costs Those expenses of a
project that are paid by the project
Population Composition The mix of investor(s).
ages, edu-cation or income levels,
ethnicity, religion, etc, among a Private Deed Restrictions Restrictions
group of people. on the use of private property that are
agreed to by the owner(s) of a property
Population GrowthThe increase in the or a group of properties.
population of a defined
area.PovertyToo little income to be Product Market In economics, a
able to pay for safe and sanitary market where businesses sell goods
housing and a nutritious diet. and services to individuals and
households.
Power Center A retail shopping
center, usually with a cluster of Productivity Growth The growth in
separate retail buildings, often output, over time, for a given labor
big-box stores, with adjacent parking force.
areas.
Progressive Tax A tax that takes a appurtenant to the land, and that which
larger percent-age of income as is immovable by law.
income increases.
Real Estate Economics The study
Property Rights The collection of rights of how the actions of people affect
to own, use, sell, etc. property. The real estate use and value.Real GDP
government retains some rights. Gross domestic product adjusted for
inflation.
Property Tax A tax that is collected
from the owner or user of each Recession A period of general
privately owned parcel of land” economic decline; typically defined as
a decline in GDP for two or more
Proportional Tax A tax where the consecutive quarters.
percentage of tax remains the same
when the taxpayer’s income increases. Recreational Subdivisions A
residential subdivision located in a
Proximity One of the two main recreational area, rather than as
forces, along with accessibility, that housing for workers or for retirees.
influence where businesses try to
locate in a community. Regional Centers Retail shopping
centers that are large, planned
Public Works Construction The projects with enclosed malls and
building of streets, sewer systems, several major “anchor” department or
highways, bridges, and public big box retail stores.
projects other than buildings.
Regressive Tax A tax that charges
Purchasing Power Risk The risk of a declining percentage of income, as
possible loss in the purchasing power income increases.Regional Planning
of investment funds due to inflation. Urban planning executed by a regional
government agency.
Pure Capitalism A system driven
completely by free and fair exchange Regulatory Change A change in
with no government influence.rRate of government regulations affecting
Exchange The rate or price at which real estate. One of the risks of
the currency of one nation can be investing in real estate.
converted into the currency of another.
Rehabilitation Cycle The phase in
Real Estate Land, plus that which is the neighbor-hood cycle where the
affixed to the land, that which is legally neighborhood comes back into favor,
with increasing renovation and bulky, low-valued materials are being
remodeling. processed, the plant needs to be
located close to the mine or origin of
Rent Controls Governmental controls the raw materials, to minimize
on the rents for residential housing or transport cost.Resource Use How
mobile home sites. Usually also and where raw materials or finished
restrict most evictions of tenants to goods are used in production or
allow owner-occupancy. con-sumption.
Rent Growth Rate of growth, both Return of Investment The recapture or

positive and negative, for rental recovery of the original investment
prices in a given area. funds. Contrast with return on
investment.
Rent, Wages, Interest, Profits The
payments made to individuals for the Return on Investment The profit on
use of the factors of production: land, the original invested funds, the
labor, capital, and entrepreneurship. payment for the use of the funds and
the risk of the investment. The ratio
Reserve Requirements The amount of of the money gained or lost on an
funds that banks that are members investment relative to the amount of
of the Federal Reserve System money invested, adjusted for the time
must hold in reserve against the period of the investment.
deposits made by their customers.
This money must be in the bank’s Reversion See net sale proceeds.
vaults or at the closest regional
Federal Reserve Bank. Ride Hailing In its original form,
taxicabs. Now, expanded by
Residential ConstructionConstruction electronics and the internet to
of single-family dwellings, include private cars, bicycles, and
condominiums, and multi- family scooters.
apartments.
Risk The danger that the expected
Resource Market In economics, a benefits of an investment will not be
market where sellers of land, labor, obtained; a result more negative
capital, and business management than what was expected.
or entrepreneurial skills meet buyers.
Risk of Legal Change The risk that
Resource Processing Plant A plant new laws might be passed, with a
to process raw materials in order to negative impact on an investment’s
obtain valuable ores or products. If ability to produce income.
use by people within the community or
Risk of Social Change The risk that region being studied.
social changes could influence supply
or demand and have a negative effect Secondary Employment
on the earnings of an investment. Employment at secondary
industries.
s
Secondary Markets In real estate
Sales Tax A tax levied on a sale of finance, mar-kets where existing
goods or services, as a percentage of loans are sold, from the
the sales price. originator to an investor, or from one
investor to another.
Scientific Method A structured process
of defining a question, developing Sensitivity Analysis An investment
data that is relevant to the analysis in which the estimates of
question, testing the data to see future income, expenses, financing,
what light it sheds on the question, or other investment variables are
and concluding whether the data changed, one at a time or in
collected answer the question as combination, usually in order to see
posed. If necessary, reword the the effect on the expected profits
question, seek added data, and from the investment. Can be done
repeat. manually, or as a statistical technique,
varying many inputs.
Sea Level Rise The rise in the sea
level, relative to the land, whenever Single Tax Theory A theory of taxation,
the glaciers increase their melting where it is proposed that the full value
rate. A result of global warming. of the land should be taxed, which it is
There have been many documented argued generates enough revenue so
cycles of sea level rise and fall over that no other form of taxation
the millennia. would be required. Improvements to
the land would not be taxed.
Seasonal Fluctuations Short-term
changes in business and economic Slow Growth Policy See no growth
activity that generally repeat at about policy.
the same time each year, resulting
from either weather or custom. Social Benefits Rewards from a
project or private investment that
Secondary Industries Local companies accrue to all of society, not just to
that produce goods and services for the individual or businesses that
invested in the project.
a specific area, to be paid off by
Social Costs The expenses generated special assessments against the
by a private project that are paid by benefitted property.
society as a whole rather than by the
individual or business investors. Specialization The degree to which
a particular building is adapted to one
Social Forces The social forces that specific use. Also, the trend in the real
influence the use and value of real estate industry to narrow one’s efforts
estate, including a variety of lifestyle to a specific category of work, rather
and age factors.Social Unrest A than trying to cover all of the different
general condition of a group of fields of real estate work.
people, expressing opposition to
authority or socially accepted Standard of Deferred Payment One of
behavior, often in disruptive ways” the functions of money; used to
describe what a debtor owes a
"Socialism A theory or system of creditor. If you buy now and pay later,
social or economic organization that the amount that you owe is expressed
advocates the vesting of the in money.
ownership and control of the means
of production and distribution, of Store of ValueOne of the functions of
capital, land, etc., in the community money; a way to store or save up
as a whole. wealth.
Soil Banking The government pays Structural Unemployment

the farmer for not planting an allotted Unemployment caused by some
number of acres. fundamental changes in the economy
rather than the normal ebb and surge
Soil ProductivityThe capability of the of the business cycle.
soil for producing a specified quantity
of particular types of plant produce per Subdivision Regulations Regulations
unit area. that real estate developers must
follow to obtain approval for a new
Solar Power The use of the rays of the subdivision.
sun to produce either electric power, or
hot water. Supply The total quantity that sellers
are willing to sell at a given time at
Special Assessment Bonds Bonds certain prices.
that are sold by a government
agency, in order to make T
infra-structure improvements to benefit
Telemobility The ability to use Transportation Service Towns
electronics and technology to bring Communities that perform services for
the experience to the person, rather transportation systems, along
than requiring the person to go to the transportation routes.
experience. Examples include online
shopping, work-ing from home, and Travel Times The time that it takes to
video-conferencing. travel from one place to another. Time
of day and what transportation system
Tight-Money Policy A course of is used are among the major
action under-taken by the Federal influences.
Reserve to constrict spend-ing in
an economy that is seen to be Trend A continuing movement or
growing too quickly, or to curb change in one direction of some
inflation when it is rising too fast. physical, economic, or social
measurement.
Time Value of Money An economic
concept. A dollar in hand today is Turnover Rate The percentage of
worth more than a dollar in hand housing units that change occupants
tomorrow. each year, or, alternatively, the
percentage that change owners each
Topography The surface features of year
a place or region, perhaps on a
map, that would indicate their
relative positions and elevations. U
Traditional Economy In economics, Unemployment The state of a person

a society that chooses to continue who is not employed, but wants to be.
doing things as they have been done
in the past.Transfer Tax A state or Unemployment Rate The percentage
local tax that is paid when property of the total workforce that is
is sold, usually as a percentage of the unemployed and is looking for a
sales price. paid job.
Transportation The movement of Urban Planning To plan or study

people and goods from one location how to anticipate and achieve
to another, a major influence on the community goals in light of social,
location, shape, and economic economic, and physical resources and
success of communities. needs.
Visibility An investment that, because

of the build-ing, the occupants, or
the co-owners, is likely to receive
more attention from the public or the
press.
Wages Compensation received for

labor provided.
Water A clear liquid, essential for

most plant and animal life and the
most widely used of all solvents.
Wind Power The use of the wind

to generate electricity, or to pump
water.
Zoning The use of the police power

by governments, to restrict how
land can be used. Often, zoning
ordinances divide land into designated
use districts. In zoning’s simplest form,
these districts are divided into ones for
residential, commercial, or industrial
use."

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REAL ESTATE ECONOMICS RFT11 (10:00AM-11:45AM)

Accessibility Degree of ease by which Balance of Trade A record of the

Asset Bubble When prices of Before-Tax Cash Flow Net

Assessed Value Value placed on Behavioral Effect How people react

Capitalization Rate The net

Cash Flow Analysis The process

Community Centers A smaller retail "Counter-Party Risk The risk that a

Cyclical Unemployment Density of Use A measure of how

Effective Demand The quantity that Environmental Impact The

Environmental Controls Government Federal Funds Rate The rate of

Global Warming A form of pollution, Highest and Best Use See

Limits on Choice A key investment Local Community Forces The social,

Multiple Nuclei A model of the Neighborhood Centers A small retail

Nodes A point on a transportation Overhead Costs The continuing

Permits and Quotas Permissions

Opportunity Costs The unrealized, Physical Forces The physical forces

Rent Growth Rate of growth, both Return of Investment The recapture or

Soil Banking The government pays Structural Unemployment

Traditional Economy In economics, Unemployment The state of a person

Transportation The movement of Urban Planning To plan or study

Visibility An investment that, because

Wages Compensation received for

Water A clear liquid, essential for

Wind Power The use of the wind

Zoning The use of the police power

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