Write a brief summary of the textbook Chapters 13 and 14, to include the following paragraphs with headings: an overview, 3 key concepts, and a summary. Each “key concept” must include the textbook page numbers. Each paragraph needs a minimum of 3 sentences and 250 words.  Use the template format provided below.  Refer to the model assignment (sample) following the template.
TEMPLATE:
Overview

Key Concept from Chapter 13

Key Concept from Chapter 14

Key Concept from Chapter 13 or 14

Summary

SAMPLE:
BELOW IS A SAMPLE REFLECTION SUMMARY.  DO NOT COPY THE CONTENTS.  IT IS A SAMPLE ONLY TO ILLUSTRATE THE STRUCTURE.
Course: BRE 139, Real Estate Economics
Student Name: Ima Success
Today’s Date: 04/20/2024
Textbook Author: Huber, et al.
Chapters 13 & 14
Overview
The topic of Chapter 13 is an introduction to real estate principles.  This chapter covers four important concepts for the real estate student.  First, the real estate licensing in California is discussed, along with the real estate market.  Second, the historical influence of real property is examined.  Third, the difference between real property and personal property is spelled out clearly.  And last, the chapter concludes by analyzing various methods of land description.  These concepts are important because they may be on the real estate exam for licensees.
Key Concept from Chapter 13
I learned that real estate can be a profitable professional (p. 4).  One of the reasons it can be profitable is because the compensation to agents is based on the sales price of the house.  In California, real estate values are typically high, which translates into a high commission.  The commission is always paid to the broker, but the real estate salesperson receives a portion.  Many real estate agents are using social media to promote their services.
Key Concept from Chapter 14
The second thing I learned is that property owners have a “bundle of rights” (p. 5).  It means they have control of certain things because they own the real estate.  Generally, people view it as a bundle of sticks, with each one of them being a “right” the owner has.  Their types of rights vary based on their level of ownership.  For example, homeowners have the right to possess (live in) their houses – unless they rent out the house to tenants.  In that case, the tenant now has the right to possess the house.
Key Concept from Chapter 13 or 14
The third concept I learned is the definition of real property (p. 6).  There are four things that define real property:  land, affixed to the land, appurtenant to the land, or immovable.  These items “tests” are what separates real property from personal property.  For example, a refrigerator can be moved out of the house, so it is considered personal property.  However, a fence is permanently dug into the ground so it becomes part of the real property, along with the land and the house.
Summary
This was an interesting chapter and I learned a lot about real estate.  Real estate has a long and colorful history in California.  There are several types of land description methods, which will probably be on the state real estate exam.  I know I will have to study some of the concepts further, such as the MARIA acronym of determining personal versus real property.  In addition to the knowledge of concepts, real estate involves math calculations.
Victor Valley College
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A life is not important
except in the impact it
has on other lives.
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Planning and Land Control
Use
“Educating Generations, Building Communities”
I.
City and County Planning
II.
Environmental Problems
III. Zoning and Planning
IV. Other Planning and Land Control Issues
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Part I.
City and County Planning
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“Educating Generations, Building Communities”
1.
Ancient cities show evidence of complex, planning
2.
In the ancient Roman Empire, when a city became too
crowded, straws were drawn to see who would be chosen to
start a new city at some other location
3.
WILLIAM PENN, a Quaker reformer, was the founder of
Pennsylvania and started systematic land planning in the
United States
4.
As early as 1682, William Penn had commissioned a plan for
Pennsylvania
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“Educating Generations, Building Communities”
1.
PLANNING is the design of the physical environment
2.
The goal of planning is to protect the health and welfare of the
citizens
3.
Planning forces us to ask, “Where are we now? Where do we
appear to be heading?” And, “Where do we want to be
heading?”
4.
Without planning, growth can become chaotic
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“Educating Generations, Building Communities”
1.
Libertarians feel that government solutions to land use have been
political and that unnecessary costs have been imposed on
middle and low-income people
2.
They feel that:
a) zoning boosts renter costs
b) rent control limits new construction
c) building codes increase costs
d) public housing hurts rather than helps low income individuals
3.
Libertarians feel that if left alone, a free market will solve the
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problems of housing and reasonable land use
9
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“Educating Generations, Building Communities”
1.
The fragmentation of community government hampers effective
area planning
2.
BALKANIZATION is fragmentation from overlapping governmental
controls on state, regional, and local entities
3.
Decisions in one community will affect other communities and
can have irreversible effects on an entire region
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“Educating Generations, Building Communities”
1.
There is NO easy solution to the conflict between growth and
mobility
2.
In most states, transportation planning is the function of the State
Department of Transportation while land use is under local controls
3.
Having multiple planning agencies has resulted in both serious
traffic problems and less than optimum land utilization
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“Educating Generations, Building Communities”
1.
2.
Most states, like California, require municipalities to prepare long-term general
or master plans which must include:
a)
Land use
b)
Circulation (transportation)
c)
Open space
d)
Safety
e)
Housing
f)
Conservation
g)
Noise
The general plan is a vision for the future of the community and serves as a
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guide for improvements and development
“Educating Generations, Building Communities”
1.
This doctrine requires that cities and counties must bring their
zoning into conformity with their general plan
2.
Courts can invalidate zoning inconsistent with a general plan
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Part II.
Environmental Problems
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“Educating Generations, Building Communities”
1.
Environmental problems have slowed development and, in
many cases, stopped it altogether
2.
In periods of high unemployment, environmental concerns
often lose out to economic considerations
3.
Environmental protection can limit growth which in turn creates
higher real estate prices
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“Educating Generations, Building Communities”
1.
States have been requiring developments that are likely to
have an impact on the environment to prepare an
environmental impact report prior to approval
2.
An ENVIRONMENTAL IMPACT REPORT is a study of how a
subdivision will affect the ecology of the subdivision’s
surroundings
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“Educating Generations, Building Communities”
1.
Walt Disney was issued a permit in 1965 to study development of the
Mineral King area.
2.
Disney planned a full-sized ski resort, that like Disneyland, would
never be finished
3.
The Sierra Club showed federal courts that the development would
adversely affect fishing, stream flow, vegetation, soil, and wildlife and
was able to stop the Mineral King development
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“Educating Generations, Building Communities”
1.
Our need for oil has collided with environmental issues and, so far,
we have a deadlock with neither side ready to give up
2.
Oil interests wish to open up the Arctic National Wildlife Refuge in
Alaska to drilling
3.
Over 75% of Alaskans support oil drilling and they each receive an
annual rebate check from the state
4.
Opposition to the drilling claims the tundra is fragile and will see
irreparable harm
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“Educating Generations, Building Communities”
1.
Without expensive cleanup procedures in place, contaminated soil
and water from a variety of causes can make sites unsafe for
development
2.
PERCHLORATE, used as rocket fuel and in munitions, was often
dumped at military bases and at sites of defense contractors
3.
Perchlorate is known to alter hormonal balances and impede
metabolism and brain development
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“Educating Generations, Building Communities”
1.
If a developer discovers archeological remains, the project
can suffer delays and significant increased costs
2.
To prevent this, some areas require an archeological inspection
to take place before a project is started
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Part III.
Zoning and Planning
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“Educating Generations, Building Communities”
1.
While ownership may be exclusive, it is not absolute, and is
subject to use controls for the benefit of the community
2.
Zoning is the most powerful tool that local communities have for
land use control
3.
DOWNZONING is the process of taking the current zoning and
limiting what can be built
4.
UPZONING changes the zoning to allow greater density or a more
intensive use
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“Educating Generations, Building Communities”
1.
Requiring a developer to add something, such as low income
housing to a project, is known as “Inclusionary Zoning”
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“Educating Generations, Building Communities”
1.
EXCLUSIONARY ZONING can specifically exclude a stated
use
2.
Zoning can also be exclusionary, where only one use is
authorized such as agriculture
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“Educating Generations, Building Communities”
1.
Sprawl is turning agricultural land into subdivisions at an
alarming rate
2.
Some groups want to preserve the open land for agriculture
3.
Other groups believe that preservation, keeps land prices
high, housing expensive and the poor out
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“Educating Generations, Building Communities”
1.
INCENTIVE ZONING can be a motivation for developers to
improve the quality of life
2.
For example, incentive zoning might allow a developer
greater density if he includes common areas open to the
public
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“Educating Generations, Building Communities”
1.
CUMULATIVE ZONING allows a lesser use
2.
NONCUMULATIVE ZONING allows only the stated use
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“Educating Generations, Building Communities”
1.
Zoning for bulk density is called BULK ZONING
2.
By using setbacks, height limitations, open spaces and
parking requirements as well as minimum lot sizes,
communities can zone to limit or increase structural as well
as population density
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“Educating Generations, Building Communities”
1.
VIEW ZONING is where the zoning regulations of the city
protect such views as the ocean, the mountains or the city
itself
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“Educating Generations, Building Communities”
1.
In 1954, the U.S. Supreme Court indicated that protecting the
general welfare is broad enough to cover preservation of
aesthetic values
2.
We can zone to keep ugly out
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“Educating Generations, Building Communities”
1.
CLUSTER ZONING is open space zoning
2.
Open space zoning does not necessarily result in greater
density, just that there is more open space
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“Educating Generations, Building Communities”
1.
SPOT ZONING is zoning a particular parcel different than
adjacent parcels
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“Educating Generations, Building Communities”
1.
BUFFER ZONES are zones between significantly different uses
such as single-family residential and commercial or industrial
zoning
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“Educating Generations, Building Communities”
1.
UPZONING is a zoning change that allows a more intensive
use, such as more units per acre or a change from residential
to commercial use
2.
Owners don’t object to upzoning although neighbors are
likely to oppose it
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“Educating Generations, Building Communities”
1.
DOWNZONING is zoning that restricts land use by a less
intensive use, such as a change from multi-family to singlefamily usage
2.
Courts have indicated that downzoning may be taking a
property without just compensation
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“Educating Generations, Building Communities”
1.
REZONING is a change in zoning by the zoning board or
commission
2.
A VARIANCE is an exception to the zoning
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“Educating Generations, Building Communities”
1.
A NONCONFORMING USE is a use that existed and was a
legal use prior to zoning
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“Educating Generations, Building Communities”
1.
In New York, zoning limits the amount of space that can be
built according to the size of the lot
2.
The transfer of air rights for development has resulted in a
tremendous market for air rights
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“Educating Generations, Building Communities”
1.
High-density areas with small lots and narrow setbacks will
provide a higher tax roll than would similar lower density
areas
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“Educating Generations, Building Communities”
1.
When land allocated by zoning for specified uses exceeds or
is less than would be delegated for that use in a free market
environment, the zoning will then directly affect value
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“Educating Generations, Building Communities”
1.
Local and state governments, under numerous court rulings,
have little control over what is happening on Native
American land
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Part IV.
Other Planning and Land
Control Issues
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“Educating Generations, Building Communities”
1.
In addition to public zoning restrictions, private restrictive
covenants can be used to control land use
2.
PRIVATE RESTRICTIONS are generally to maintain a quality of
life as well as value by keeping out what the owners or
developers consider undesirable uses
3.
CC&RS limit a property’s use
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“Educating Generations, Building Communities”
1.
Besides zoning and private restrictions, a developer must
meet local and state requirements as well
2.
BUILDING CODES are the basic minimum construction
standards for a structure
3.
State health and constructions standards must also be met
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“Educating Generations, Building Communities”
1.
Regulations and the approval process are generally
regarded as a bottleneck to development
2.
Developers often feel they are caught in a bureaucratic
flood of paper and red tape
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“Educating Generations, Building Communities”
1.
City and county inspectors inspect construction projects
during many phases of the work
2.
The inspection process results in construction delays and
added labor costs as well as interest expense
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“Educating Generations, Building Communities”
1.
In Florida, the total cost for residential compliance with state
and local development codes was estimated at $4,698 per
unit
2.
Most of the costs are, however, interest expenses dealing
with time delays for approvals
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“Educating Generations, Building Communities”
1.
Premature subdividing and sale of lots will result in
fragmented ownership
2.
PREMATURE SUBDIVISIONS are developments built before
they are economically viable
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“Educating Generations, Building Communities”
1.
Most homeowners are not concerned about the impact of
sprawl on our ecosystems
2.
They simply don’t want growth in their backyards
3.
When there is high unemployment, people are more likely to
support growth than during a period of low unemployment
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“Educating Generations, Building Communities”
1.
In some states, voters can get initiatives on the ballot and
bypass planning commissions, city councils, county boards
and state legislatures
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“Educating Generations, Building Communities”
1.
The smart growth concept is to minimize problems
associated with growth but not to stop it
2.
Examples of smart growth would be:
a)
Redevelopment of inner core areas to provide a higher density
b)
Conversion of unused or under used facilities for productive
purposes
c)
Allowing auxiliary living units on lots with single-family dwellings
d)
In-fill developments for vacant land and lots
e)
Higher density new developments
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“Educating Generations, Building Communities”
1.
Annexation decisions are often based on emotion
2.
ANNEXATION is the process by which a city acquires new,
adjacent land, which will be under the city’s control
3.
Cities should make annexation decisions based on
economic considerations, balancing out the costs
associated with servicing the new area as opposed to the
benefits received
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“Educating Generations, Building Communities”
I.
City and County Planning
II.
Environmental Problems
III. Zoning and Planning
IV. Other Planning and Land Control Issues
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“Educating Generations, Building Communities”
? Read Next Chapter
? Write Reflection Summary
? Study for Quiz
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“Educating Generations, Building Communities”
? Schedule 1 hour of study every day
? Plan to be early!
? Always be ready
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Only what you put into it!
? Take Notes
? Stay Engaged
? Think of How to Apply
? Ask Questions
? Participate / Share
? Do Activities
? Be Grateful
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“Educating Generations, Building Communities”
? Educate yourself by attending class
? Assignments & Activities
? Read every day
? Never stop learning!
“The more you LEARN the more you EARN.”
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Student Learning Objectives met
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Victor Valley College
Victor Valley College
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Never mistake knowledge
for wisdom. One helps you
make a living; the other
helps you make a life.
BRE – 139 Real Estate Economics
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3
The Economics of
Development
“Educating Generations, Building Communities”
I.
II.
III.
IV.
V.
VI.
VII.
VIII.
IX.
I. Basics of Property Development
The Development Industry
The Development Entrepreneur
Dangers of Growth Limitations
Billboards and Development
Speculator’s Risk and Development
Profit
Financing the Development
Recreational Developments
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Part I.
BRE – 139 Real Estate Economics
I. Basics of Property
Development
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6
“Educating Generations, Building Communities”
1.
Development falls into three major categories:
? Residential Development
? Nonresidential Development
? Public Works Development
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“Educating Generations, Building Communities”
1.
REDEVELOPMENT is developing what had previously been
developed by modification, restoration, or by demolition
and new construction
2.
Redevelopment means replacing a property’s current use
with a more profitable one
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“Educating Generations, Building Communities”
1.
A single real estate development can change the
character of a community and the direction of its growth
2.
Industrial growth will thwart better quality homes from
being built but will attract other similar uses to the area
3.
A major new industry will bring in supporting industries
and increase the demand and the price for industrial sites
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“Educating Generations, Building Communities”
1.
A single development can have a significant effect on the
economy of a community by itself, as well as a
cumulative effect with other developments
2.
Besides affecting jobs and population growth directly,
there is an indirect benefit as to support businesses and
personnel
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Part II.
The Development Industry
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“Educating Generations, Building Communities”
1.
The DEVELOPMENT INDUSTRY is made up of builders and
subcontractors who are often in and out of business due to changes
in the market
2.
Many firms operate as limited liability companies (LLCs) or
corporations so that bankruptcy will not affect the principal’s other
assets
3.
Due to the proliferation of small builders, costs are higher than they
would be if there were just a handful of large builders and a more
standardized product
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“Educating Generations, Building Communities”
1.
Some builders are giant corporations listed on the New York
Stock Exchange
2.
These large building firms, however, are NOT so much a
revolution in technology as they are in management
3.
A VERTICAL CONGLOMERATE is a very large company that
owns the companies that supply it and that it supplies
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“Educating Generations, Building Communities”
1.
Political Risks
2.
Economics Risks
3.
Risks of Nature
4.
Physical Risks
5.
Labor Risks
6.
Material Risks
7.
Judgmental Risks
BRE – 139 Real Estate Economics
Developer risk is greater in
small and midsize cities
because the marketplace
will be more easily
saturated than in a larger
community
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15
“Educating Generations, Building Communities”
1.
High property taxes on land encourage development
2.
High holding costs force owners to either develop land or sell it
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“Educating Generations, Building Communities”
1.
Many developers must dedicate land for community use and
pay many types of fees, which benefit the community
2.
The tax burden borne by new homes is proportionately higher
than borne by existing property
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Part III.
BRE – 139 Real Estate Economics
The Development
Entrepreneur
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“Educating Generations, Building Communities”
1.
An ENTERPRENEUR is a person who builds and owns his or her
own business
2.
An entrepreneur makes things happen
3.
When a project is developed, the possibility of profit or loss is
accepted by the builder/developer
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Part IV.
BRE – 139 Real Estate Economics
Dangers of Growth
Limitations
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20
“Educating Generations, Building Communities”
1.
In some cities, voter initiatives can put limits on the number of
building permits allowed for an entire city
2.
Growth limitation rulings can be economically disastrous for
developers
3.
No growth ordinances can make economic developments of
large parcels impossible
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Part V.
BRE – 139 Real Estate Economics
Billboards and
Development
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22
“Educating Generations, Building Communities”
1.
Strong public sentiment exists against billboards
2.
Many communities are working to eliminate billboards, which
they equate with blight
3.
Besides aesthetics, billboards create a safety problem by
distracting drivers
4.
Developers are now incorporating billboards into their
redevelopment projects
5.
Without the millions of dollars from billboard advertising, many
redevelopment projects would not be feasible
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Part VI.
Speculator’s Risk and
Development
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“Educating Generations, Building Communities”
1.
SPECULATORS are people who take on large risks with real estate
investments and developments
2.
During boom periods, many new subdivisions were sold out by
speculators, even before the models were completed
3.
Builders customarily take reservations before completion
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Part VII.
BRE – 139 Real Estate Economics
Profit
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“Educating Generations, Building Communities”
1.
Developers utilize:
a)
Capital
b)
Labor
c)
Land, and
d)
Management
? to develop a finished product for which the selling price will hopefully
exceed the total required expenditures, equaling PROFIT
2.
A developer’s profit must NOT only provide for a reasonable
return on the investment of time and money, it must also be
enough to offset the risks involved
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“Educating Generations, Building Communities”
1.
MARKUP is the percentage added to cost to determine sale price
2.
“10,10, and 10” system is used by many small builders
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“Educating Generations, Building Communities”
1.
The more time it takes to complete a project, the more money it
takes
2.
Unexpected political delays cause builders to plan higher
markups
3.
Inflation during the approval process can result in a significant
increase in the final costs
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29
“Educating Generations, Building Communities”
1.
Projects can fall behind schedule when there is an inadequate
supply of skilled labor available
2.
When increases in costs can be readily passed on to purchasers,
builders will pay higher wages
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“Educating Generations, Building Communities”
1.
The value of land is directly related to the future use of that land
and the agricultural use sets the floor on land value
2.
EXCESS LAND is land that does not contribute to the value of the
project
3.
A GORE is a triangular-shaped lot
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“Educating Generations, Building Communities”
1.
When selecting a site, a developer will analyze the location and
add up the costs of development for the proposed use
2.
If it is not profitable, the developer will sell that site and purchase
one more suitable for the intended use
3.
LOCATION ANALYSIS is an individual economic study to
determine the profitability of a development by considering
proximity of buyers to their markets, services, employment,
transportation routes, shopping, customers and parking1/30/2020
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32
“Educating Generations, Building Communities”
1.
A poor location (bargain) could mean that a property will take
many more months to sell or rent than a property in a better
location
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“Educating Generations, Building Communities”
1.
The principle of contribution is that an amenity should NOT be
included unless the increase in rents or value justifies the expense
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“Educating Generations, Building Communities”
1.
A developer should aim the project at those who the developer
believes will be the eventual renters or buyers
2.
This applies to likely needs and economics
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“Educating Generations, Building Communities”
1.
Generally, people like cutting-edge designed homes, but they
feel more comfortable buying something that looks more like
what they are used to
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“Educating Generations, Building Communities”
1.
The FEASIBILITY STUDY is essential in the decision process for a
successful developer
2.
The study ties together in a single document the economic
considerations of development including:
a)
The site
f)
b)
Design/engineering
g) Time
c)
Approvals
h) Cash Flow Analysis
d)
Improvement costs
i)
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Financing
Marketing, Competition, Profit
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Part VIII.
Financing the Development
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“Educating Generations, Building Communities”
1.
The availability and cost of credit have far more lasting effects
than simply affecting development decisions
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“Educating Generations, Building Communities”
1.
Developers must analyze their cash needs for the total time
period of each project
2.
CASH FLOW ANALYSIS is the analysis of when cash is received
and paid so cash loans can be arranged if there is a temporary
deficit
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“Educating Generations, Building Communities”
1.
Developers of projects for sale should consider permanent
financing as well as construction loans
2.
Having permanent financing allows a developer to keep title to a
project, and hold or later resell, rather than be forced to sell in an
unfavorable market
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“Educating Generations, Building Communities”
1.
Approvals are often difficult to obtain so some entrepreneurs
have taken to packaging projects with approvals for developers
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Part IX.
Recreational Developments
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“Educating Generations, Building Communities”
1.
RECREATIONAL DEVELOPMENTS are projects that consist of
recreation facilities
2.
Boating developments have terrific demand
3.
One of the easiest ways to create value is to build a lake
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“Educating Generations, Building Communities”
I.
I. Basics of Property Development
II.
The Development Industry
III.
The Development Entrepreneur
IV. Dangers of Growth Limitations
V.
Billboards and Development
VI. Speculator’s Risk and Development
VII. Profit
VIII. Financing the Development
IX. Recreational Developments
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“Educating Generations, Building Communities”
? Read Next Chapter
? Write Reflection Summary
? Study for Quiz
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“Educating Generations, Building Communities”
? Schedule 1 hour of study every day
? Plan to be early!
? Always be ready
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Only what you put into it!
? Take Notes
? Stay Engaged
? Think of How to Apply
? Ask Questions
? Participate / Share
? Do Activities
? Be Grateful
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“Educating Generations, Building Communities”
? Educate yourself by attending class
? Assignments & Activities
? Read every day
? Never stop learning!
“The more you LEARN the more you EARN.”
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Student Learning Objectives met
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Victor Valley College