Study Questions: Chapter 20 1

Study Questions

CHAPTER 20: PROPERTY DEVELOPMENT & MARKET ANALYSIS

True/False

  1. Smart growth regulations require that developers pass a written test that demonstrates their real estate development skills prior to starting a development.
  1. According to CERCLA, a party that previously owned a property found to contain an environmental hazard may be required to pay site cleanup costs even though the previous owner had nothing to do with causing the problem.
  1. Market analysts prefer to use primary data in conducting a market study because it is less expensive than secondary data.
  1. A base industry is one that produces goods and services that are used exclusively within the market area.
  1. Nominal income figures are those that have been adjusted to account for inflation.
  1. In the short-run, increased demand for real property improvements is likely to result in increased prices rather than increased supply.

7. Which of the following statements about real estate developers is TRUE?

  1. they are not subject to government regulation.
  2. they convert raw land into an operating property by adding improvements to it.

C. they are no longer required to pay impact fees.

D. they no longer have to dedicate some of the property to the government in order to get their plans approved.

E. they must be licensed as a real estate broker.

8. What are the two basic parts of a feasibility study?

  1. market study and financial analysis.
  2. market study and economic analysis.

C. market study and equilibrium analysis.

D. site specific and general market.

E. market study and absorption analysis.

9. Sometimes the value of real property will be increased by combining separate tracts into a single unit. What is the term used to describe this phenomena?

A. Channeling.

B. Absorption.

C. Consolidation.

D. Plottage.

E. Plattage.

10. Which of the following would result in an increase in the number of households?

A. Marriage.

B. Joint living arrangements.

C. Divorce.

D. Children moving back into their parents homes.

E. Larger prison facilities.

11. Which of the following would be consistent with a favorable real estate project?

A. Low vacancy rates.

B. High foreclosure rates.

C. A decrease in the rate at which the number of households is increasing.

D. Increased construction levels for the same type of property under consideration.

E. Decreasing population.

12. Which of the following statements about absorption rates is TRUE?

  1. Minimum rates are prescribed by state
  2. They describe how much time it takes before a property becomes economically obsolete.

C. They describe how much time it has taken for new units to be rented or sold.

D. They describe the percentage of the population that owns rather than rents their dwelling

E. Maximum rates are prescribed by state law.

ANSWERS

1. False

2. True

3. False

4. False

5. False

6. True

7. B

8. E

9. D

10. C

11. A

12. C

Larsen • Real Estate Principles and Practices