Write a brief summary of the textbook Chapters 9 and 10, 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. NOTE: Spelling and grammar are important, so please spell-check and read your work out loud to catch and correct any errors prior to submitting.TEMPLATE:OverviewKey Concept from Chapter 9Key Concept from Chapter 10Key Concept from Chapter 9 or 10SummarySAMPLE: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 EconomicsStudent Name: Ima SuccessToday’s Date: 04/20/2024Textbook Author: Huber, et al.Chapters 9 & 10OverviewThe topic of Chapter 9 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 9I 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 10The 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 9 or 10The 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.SummaryThis 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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Education without morals
like adding a motor to a
rowboat without a
rudder.
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Housing
“Educating Generations, Building Communities”
I.
II.
Homeownership
The Housing Marketplace
III. The Rental Marketplace
IV. Special Housing Markets
V. Facts About Home Buying
VI. New Home Speculation
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Part I.
BRE – 139 Real Estate Economics
Homeownership
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“Educating Generations, Building Communities”
? In 1940, after the Great Depression, 43.6% of American
households owned their own homes
? Today, homeownership in the U.S. is approximately 64.5% of
all households
? Homeownership rates vary by community
?
?
BRE – 139 Real Estate Economics
Midwest – 68.6%
West
– 58.5%
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“Educating Generations, Building Communities”
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“Educating Generations, Building Communities”
? In 2015, ownership broke down as follows:
? Married couples : 80.8%
? Single male head of household: 49.8%
? Single female head of household : 58.3%
? One person household (male) : 55.2%
? African American households : 42.5%
? Hispanic households : 55%
? Non-Hispanic, White households : 72%
? Asians / others ; 58.9%
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“Educating Generations, Building Communities”
? Age bears a direct relationship to homeownership
? Single person households are on the rise and are expected to
grow faster than all other households
? Homeownership rates fell to 64.5% by 2015 from a high of 69% at
its peak in 2004
? Higher income people are more likely to change their housing
than lower income people
? HOUSING TURNOVER is the number of times the inventory of
housing is sold within a year
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“Educating Generations, Building Communities”
? Confidence
? Stability
? Wealth
? Children
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Part II.
The Housing Marketplace
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“Educating Generations, Building Communities”
? The sale of a house in NOT usually an isolated event, it
is normally part of a chain of real estate transactions
? Housing prices vary greatly across the country
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“Educating Generations, Building Communities”
? The housing market is a segmented market
? The market can be strong in one price range and weak in
another
? The time it takes to sell property is related directly to the
relationship between the list price and the market value
? The economy drives the market
? High area housing costs cause business and schools to offer
incentives to lure employees and teachers who can’t afford
to normally live there
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“Educating Generations, Building Communities”
? The housing FILTERING
DOWN process is much
like hand-me-down
clothing, which passes
to younger family
members
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“Educating Generations, Building Communities”
? Income housing has fixed costs, such as taxes, and variable
costs of operation, which include utilities, maintenance, etc
? If a property’s income cannot at least cover the Average
Variable Costs, the property should be left not rented
? When the rent exceeds the Average Variable Costs, the building
is better off rented than vacant
? If the Average Fixed Costs can be reduced by demolition, then
the building should be demolished
? More buildings are torn down than wear out
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Part III.
The Rental Marketplace
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“Educating Generations, Building Communities”
? Renters are generally more informed about the current
market than home buyers
? The rental market is only concerned with vacant units
? When single-family homes are rented, it is generally
because the owner could NOT find a buyer
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“Educating Generations, Building Communities”
? The CRITICAL RENT LEVEL is that level at which no new rental
housing will be built
? When interest rates drop, the critical rent level drops and
construction of new units picks up
? In some areas, conversion to cooperatives and condominiums has
significant reduced the rental supply, resulting in higher rents
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“Educating Generations, Building Communities”
? Landlords compete by offering tenants more amenities
? Renters are demanding more and more amenities and are willing
to pay for them, for example, the higher the Internet technology
available, the more tenants a building will attract
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“Educating Generations, Building Communities”
? Many vacancies are NOT really available for rental
? The Department of Housing and Urban Development (HUD)
believes that a city vacancy rate of 5% or less indicates a housing
crisis in that city
? Vacancy rates are customarily obtained from postal authorities
and utility companies
? When there is a low vacancy rate for an area, conversion of
apartments to condominiums generally means a substantial
number of the units will be sold to current tenants
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“Educating Generations, Building Communities”
? Despite court decisions prohibiting rental discrimination against
children, discrimination still exists
? Families with children are the most discriminated against according
to the California Association of Tenants
? The effect of rental discrimination against children is to encourage
families to purchase instead of rent
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“Educating Generations, Building Communities”
? When interest rates are low and down payments are low, more
renters will consider buying a home
? The EFFECTIVE RENT is the rent actually collected
? Most landlords keep their properties well maintained, except where
rent-control is in effect and where units are to be demolished
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“Educating Generations, Building Communities”
? Many tourist friendly areas are converting housing into short-term
rentals (30 days or less)
? AIRBNB is a website for people to rent out lodgings
? These types of businesses will affect local zoning, city ordinances, and
perhaps more importantly to the city, the loss of local hotel taxes
? Neighborhoods with a high density of AIRBNB type rentals are driving up
local rents by over 20%
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Part IV.
Special Housing Markets
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“Educating Generations, Building Communities”
? GENTRIFICATION is the process where inner-city and working
class neighborhoods are converted to housing for upwardly
mobile young people who want the social benefits of living in
the central city
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“Educating Generations, Building Communities”
? Communities with unique real estate marketplaces, like Las
Vegas, are becoming popular
? When a community has special benefits, e.g. no income tax,
it will attract more permanent residents
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“Educating Generations, Building Communities”
? According to the National Association of Realtors® 14% of
sellers sell without an agent
? The median selling price of homes sold without an agent
was reported to be 15.4% less than the median price with
a agent
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“Educating Generations, Building Communities”
? Undocumented aliens are believed to constitute over five
percent of California’s population
? Many property owners take advantage of undocumented
aliens, providing minimum maintenance and repairs and
charging high rents
? Many developers and real estate agents actively seek
undocumented aliens as buyers
? Competition for home loans has encouraged banks to make
loans to undocumented aliens
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“Educating Generations, Building Communities”
? Real estate auctions have been common marketing tools for many years in
England, Ireland, and Australia and are now becoming popular in the United
States
? Foreclosures are frequently auctioned off
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“Educating Generations, Building Communities”
? Today, the reason for separate markets is due more to economic
reasons than racial prejudice
? There is still some racial prejudice, despite legislation making it
illegal
? Discrimination in renting tends to be more common than sale’s
discrimination
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“Educating Generations, Building Communities”
? We have seen foreign buying tours of the U.S. since the 1970’s
? America is considered the safest have for investment
? The percent of foreign buyers in 2015 is:
? China
24%
?
?
?
?
BRE – 139 Real Estate Economics
Canada
India
U.K.
Mexico
15%
6%
6%
5%
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“Educating Generations, Building Communities”
? Builders accumulate lots in periods of building activity and when
they believe there will be a significant activity in the near future
? Private homeowners may buy a lot to build their home on long
before they intend to build
? Some lenders are reluctant to fund lot purchases, so many sellers
will carry the loans
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“Educating Generations, Building Communities”
? Generally, homebuyers want a home ready to be lived in
? FIXER-UPPERS are homes or condos in rundown condition or with
physical problems than can be purchased at a reduced price
? SWEAT EQUITY is the actual, physical work owners do to their house
in order to increase its value
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“Educating Generations, Building Communities”
? CONDOMINIUMS are vertical subdivisions in which the interior space of
units is individually owned and the land and other common areas are
owned in common with other dwellers
? Higher prices for single family homes leads many to consider
condominium ownership a bargain
? During the late 1970’s, many apartments were converted to
condominiums because they sold for more than the multi-unit rental
properties
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Part V.
Facts About Home Buying
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“Educating Generations, Building Communities”
? Two-income families have become the norm
? Many families have opted to spend a large portion of a
second income toward better housing
? Two jobs provide greater protection against job loss and
income loss
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“Educating Generations, Building Communities”
? Low prices plus a tax credit and low interest equals
opportunity for first-time homebuyers
? First-time buyers are more likely to purchase housing
units with two or fewer bedrooms than are repeat buyers
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“Educating Generations, Building Communities”
? Lenders were once using all kinds of creative financing such as:
? 40-Year Loan
? Adjustable Rate Loans
? 5-25 Loans
? Interest Only Loans
? Option-Adjustable Rate Mortgage
? After the latest recession and foreclosure debacle, lenders are now
avoiding all of the above except the extended term loan
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“Educating Generations, Building Communities”
? An old rule of thumb is a person should NOT pay more than 2
½ times his or her annual income for a home
? Another rule is housing costs should NOT exceed 30% of gross
income
? In recent times, many families were paying as much as 50%
or more of their income to live in desirable areas
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“Educating Generations, Building Communities”
? In general, white-collar workers have higher housing priorities
than blue-collar workers of similar homes
? SCHWABE’S LAW states that lower income people pay a
higher percentage of their income for housing than higher
income people
? AFFORDABILITY INDEX is based on the median price of homes
in a area as well as the median income
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“Educating Generations, Building Communities”
? In a period of rapid real estate inflation, lenders feel safe in
making high loan-to-value (LTV) ratio home loans
? When real estate prices fall, subdivisions where buyers had
low down payments will suffer abandonments and
foreclosures
? Larger down payment requirements particularly affect first
time home buyers
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“Educating Generations, Building Communities”
? In a market that accommodates both small, moderately priced home
AND large, expensive homes, builders who are economically motivated
will build the more expensive, larger homes
? More expensive homes offer greater profit, but can also offer higher risk
? STRIPPED-DOWN HOMES are homes with a few amenities
? The median size of new homes is approximately 2,438 square feet
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“Educating Generations, Building Communities”
? 90% of consumers prefer single-family, detached homes
? Builders have been reducing lot sizes in many areas of the country
? ZERO BUILDING SETBACK means a building is built on the property
line
? Z-SHAPED LOTS resemble a “Z shape” compared to normal,
rectangle-shaped lot
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Part VI.
New Home Speculation
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“Educating Generations, Building Communities”
? Whenever buying and selling any commodity offers profit
potential, you will find speculators
? When speculators purchase new homes, they also create a
hidden supply of housing
? This can hurt developers when the hidden supply is placed on
the market
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BRE – 139 Real Estate Economics
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“Educating Generations, Building Communities”
I. Homeownership
II. The Housing Marketplace
III. The Rental Marketplace
IV. Special Housing Markets
V. Facts About Home Buying
VI. New Home Speculation
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“Educating Generations, Building Communities”
? Read Next Chapter
? Write Reflection Summary
? Study for Quiz
BRE – 139 Real Estate Economics
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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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BRE – 139 Real Estate Economics
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Victor Valley College
Victor Valley College
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Education is not the filling
of a pail, but the lighting
of a fire.
BRE – 139 Real Estate Economics
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3
Nontraditional Housing
“Educating Generations, Building Communities”
I.
II.
Manufactured Homes
Modular Homes
III.
IV.
V.
VI.
Prefabricated Homes
Precut Homes
Shell Homes
Green Homes
VII.
Accessory Dwelling Units
VIII.
Elder Cottage Housing Opportunity
IX.
Multigenerational Housing
X.
Co-Housing
XI.
Group Homes
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“Educating Generations, Building Communities”
XIII.
Build-Up Units
XIV.
Shared Housing
XV.
Single Room Occupancy
XVI.
Recreational Vehicle Homes
XVII.
Rental Rooms
XVIII.
Retirement Housing
XIX.
Assisted Care Facilities
XX.
Life Care Facilities
XXI.
Vacation Homes
XXII.
Condotels
XXIII.
Timeshares
XXIV.
Marina Living
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Part I.
Manufactured Homes
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“Educating Generations, Building Communities”
1.
Manufactured housing is what the public often refers to as
“mobile home”
2.
A MANUFACTURED HOME is built in a factory and has a steel
chassis frame that is an integral part of the structure
3.
Manufactured homes must be built to the Federal
Manufactured Home Construction and Safety Standard
4.
A disadvantage of manufactured homes is that they don’t
experience the appreciation conventional housing does
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Part II.
BRE – 139 Real Estate Economics
Modular Homes
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“Educating Generations, Building Communities”
1.
The difference between manufactured homes and
modular homes is the HUD Code and the use of a steel
chassis
2.
MODULAR HOMES are constructed to comply only with
state and local building codes
3.
Modular homes are factory built without a chassis and
shipped on flatbed trucks
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Part III.
Prefabricated Homes
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“Educating Generations, Building Communities”
1.
PREFABRICATED HOMES are generally referred to as “panelized
housing components built in factories and assembled on-site”
2.
In some states, prefabricated housing is inspected at the
factory so it does NOT have to be torn apart for local on-site
inspections
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Part IV.
BRE – 139 Real Estate Economics
Precut Homes
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“Educating Generations, Building Communities”
1.
In the late 1800s, home pattern books were in vogue and precut
home kits could be ordered
2.
The PRECUT HOME KITS included all materials and directions
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Part V.
BRE – 139 Real Estate Economics
Shell Homes
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16
“Educating Generations, Building Communities”
1.
The SHELL HOME has an exterior that is generally completed
with windows, siding, and roofing, which is set on a foundation,
but the interior in incomplete
2.
Many buyers “camp” in their shell homes while they do the
finishing work
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Part VI.
BRE – 139 Real Estate Economics
Green Homes
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“Educating Generations, Building Communities”
1.
GREEN HOMES are homes that result in a minimum carbon
footprint on the environment
2.
They use renewable materials in construction, with little waste
for landfills, use less land, and reduce consumption of energy
and do little to pollute
a)
Passive solar
b)
Active solar
c)
Gray water
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Part VII.
Accessory Dwelling Units
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“Educating Generations, Building Communities”
1.
ACCESSORY DWELLING UNITS are built on land already
containing a housing unit
2.
ADUs can be attached or detached units
3.
Don’t confuse ADU with a room rental
4.
In California, every city must have an ADU ordinance
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Part VIII.
Elder Cottage Housing
Opportunity
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“Educating Generations, Building Communities”
1.
ECHO housing is an accessory dwelling unit for seniors
2.
Also called “granny flats,” ECHO housing is an affordable
option for seniors
3.
Occupants need to be 62 years of age or older and must meet
relationship requirements
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Part IX.
Multigenerational Housing
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“Educating Generations, Building Communities”
1.
Today we are seeing more multigenerational housing,
especially in areas where there are many immigrants and firstgeneration Americans
2.
Multigenerational families often seek large homes with guest
houses or suites
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Part X.
BRE – 139 Real Estate Economics
Co-Housing
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“Educating Generations, Building Communities”
1.
A CO-HOUSING unit consists of a common building with a large
dining area, commercial kitchen, childcare area, library,
recreational areas, and workshop
2.
Residents live in separate small buildings and own and run the
facility making decisions in common
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Part XI.
BRE – 139 Real Estate Economics
Group Homes
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“Educating Generations, Building Communities”
1.
2.
3.
GROUP HOMES are supervised housing units for a number of
unrelated individuals who have a common problem
Group homes exist for some of the following:
a)
Mentally challenged
b)
c)
d)
e)
Alcohol or drug abuse
Troubled teenagers
Abused children
Batter wives
f)
Released prisoners
Group homes are run as businesses by individuals as well as by
nonprofit groups
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Part XII.
BRE – 139 Real Estate Economics
Lofts
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“Educating Generations, Building Communities”
1.
The economics of converting a sound structure into loft units for
rent or sale as condominiums makes sense
2.
Loft units can be produced at far less cost than a conventional
apartment
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Part XIII.
BRE – 139 Real Estate Economics
Build-Up Units
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“Educating Generations, Building Communities”
1.
Adding a rental as a second story, is far less costly than
building a rental unit elsewhere
2.
Many of these build-up units are sought after because they
offer privacy, and in some cases, amenities such as roof
gardens
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Part XIV.
BRE – 139 Real Estate Economics
Shared Housing
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“Educating Generations, Building Communities”
1.
Having a room mate is a popular way of sharing housing and
housing costs
2.
Single persons are more likely to share a home with another
single person than with a family unit
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Part XV.
Single Room Occupancy
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“Educating Generations, Building Communities”
1.
The lack of single room housing is likely a contributing factor to
the homeless problem in our cities
2.
In Los Angeles, a private nonprofit organization called, Single
Room Occupancy Housing Corporation, has been purchasing
old transient hotels and renovating them for permanent housing
for the homeless
3.
The organization rents the rooms for $150 to $240 per month
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Part XVI.
Recreational Vehicle
Homes
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“Educating Generations, Building Communities”
1.
RECREATIONAL VEHICLE HOMES are campers, small trailers and
motor homes
2.
A growing number of RV owners have no permanent home and
live in their RV
3.
While for some this a lifestyle choice, it is believed that the
majority choose this way of life out of pure economic necessity
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Part XVII.
BRE – 139 Real Estate Economics
Rental Rooms
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“Educating Generations, Building Communities”
1.
At one time, rooms to rent were more readily available in
boarding houses and private residences
2.
Privacy issues are one of the reasons that fewer people are
willing to rent unused space in their homes
3.
Most owners will NOT share their homes with others
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“Educating Generations, Building Communities”
1.
Children of baby boomers are now hitting colleges in record
numbers, resulting in housing shortages on campus
2.
Students have been spilling over into nearby communities,
which has resulted in increased rents
3.
Landlords favor students over families since they can rent a unit
to a number of students at double the rent a family could pay
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Part XVIII.
BRE – 139 Real Estate Economics
Retirement Housing
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“Educating Generations, Building Communities”
1.
Most retirees remain in their home communities
2.
Residents of retirement communities tend to be white, middle
and upper-class couples
3.
Large retirement communities sell a way of life, as well as
housing
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Part XIX.
Assisted Care Facilities
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“Educating Generations, Building Communities”
1.
Assisted care facilities offer residents their own dwelling unit,
which might have a kitchen
2.
The facilities offers meal, planned daily activities and
transportation for shopping
3.
Rents are often twice what a similar sized unit would rent for in
an apartment building
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Part XX.
BRE – 139 Real Estate Economics
Life Care Facilities
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“Educating Generations, Building Communities”
1.
Life care facilities guarantee residents that they will be taken
care of for life
2.
Most life care facilities are being built by private developers
who are encouraged by demographics showing the aging
population
3.
The average buyer of a life care unit either has serious health
problems or is worried about health problems and does NOT
wish to become a burden to family members
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Part XXI.
BRE – 139 Real Estate Economics
Vacation Homes
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49
“Educating Generations, Building Communities”
1.
VACATION HOMES are second homes for seasonal or
occasional use
2.
The majority of vacation homeowners also own their primary
residence
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Part XXII.
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Condotels
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“Educating Generations, Building Communities”
1.
CONDOTELS are hotels that have been converted or built as
condominiums
2.
Individual rooms are sold to private owners and a
management company rents the unit when the owner is not
present
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Part XXIII.
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Timeshares
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“Educating Generations, Building Communities”
1.
Timeshares are exclusive occupancy rights in a vacation
property for a set period of time each year
2.
Timeshares are NOT to be regarded as sound investments
3.
Because of depressed resale prices, many owners of
timeshares have donated them to charities to be auctioned off
or given as prizes at charitable events
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Part XXIV.
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Marina Living
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“Educating Generations, Building Communities”
1.
Many boat owners live on their boats year round
2.
It is quite an expensive way to live with:
3.
a)
High maintenance costs
b)
High berthing costs
Many communities have stopped all marina construction
making it difficult to find a spot to berth your boat
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“Educating Generations, Building Communities”
I.
II.
Manufactured Homes
Modular Homes
III.
IV.
V.
VI.
Prefabricated Homes
Precut Homes
Shell Homes
Green Homes
VII.
Accessory Dwelling Units
VIII.
Elder Cottage Housing Opportunity
IX.
Multigenerational Housing
X.
Co-Housing
Group Homes
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Estate Economics
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“Educating Generations, Building Communities”
XIII.
Build-Up Units
XIV.
Shared Housing
XV.
Single Room Occupancy
XVI.
Recreational Vehicle Homes
XVII.
Rental Rooms
XVIII.
Retirement Housing
XIX.
Assisted Care Facilities
XX.
Life Care Facilities
XXI.
Vacation Homes
XXII.
Condotels
XXIII.
Timeshares
XXIV.
Marina Living
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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