RESIDENTIAL MARKET ANALYSIS AND
HIGHEST AND BEST USE
MSKISSOCK STUDY GUIDE
, Table of Contents
Ch. 1 MARKET FUNDAMENTALS, CHARACTERISTICS, AND DEFINITIONS ........................................... 3-25
MARKET ANALYSIS................................................................................................................................... 3
ANTICIPATION ......................................................................................................................................... 4
BALANCE ................................................................................................................................................. 4
CHANGE .................................................................................................................................................. 5
COMPETITION ......................................................................................................................................... 5
CONFORMITY .......................................................................................................................................... 6
CC & R ..................................................................................................................................................... 6
CONTRIBUTION ....................................................................................................................................... 6
EXTERNALITIES ........................................................................................................................................ 7
FOUR AGENTS OF PRODUCTION .............................................................................................................. 8
INCLINING AND DECLINING PERIODS ...................................................................................................... 9
OPPORTUNITY COSTS .............................................................................................................................. 9
PROGRESSION AND REGRESSION .......................................................................................................... 10
SUBSTITUTION ....................................................................................................................................... 11
SUPPLY AND DEMAND .......................................................................................................................... 11
SURPLUS PRODUCTION ......................................................................................................................... 12
HIGHEST AND BEST USE THEORY ........................................................................................................... 13
CONSISTENT-USE THEORY ..................................................................................................................... 13
TYPES OF VALUE ............................................................................................................................... 14-17
BUNDLE OF RIGHTS ............................................................................................................................... 18
FACTORS THAT CREATE VALUE .............................................................................................................. 19
CHARACTERISTICS OF LAND................................................................................................................... 20
GOVERNMENT RESTRICTIONS ON LAND ............................................................................................... 21
PRIVATE RESTRICTIONS FOR LAND USE ................................................................................................. 22
OTHER FACTORS THAT IMPACT VALUE.................................................................................................. 23
FORMS OF OWNERSHIP......................................................................................................................... 24
BUSINESS OWNERSHIP AND INDIVIDUAL TRUSTS ................................................................................. 25
FORMS OF OWNERSHIP......................................................................................................................... 24
CHAPTER ONE SUMMARY ..................................................................................................................... 25
,Ch. 2 ........................................................................................................................................... 26-34
TYPES OF DATA ....................................................................................................................................... 27
MARKET ANALYSIS.................................................................................................................................. 28
REAL ESTATE MARKET LIFE CYCLE .......................................................................................................... 29
ABSORPTION RATES AND PERIODS.........................................................................................................30
STATISTICS .............................................................................................................................................. 31
USES OF MARKET ANALYSIS ................................................................................................................... 32
MARKET STUDIES AND MARKETABILITY STUDIES ...................................................................................33
CHAPTER 2 SUMMARY ...........................................................................................................................34
Ch. 3 ........................................................................................................................................... 35-42
MARKET IDENTIFICATION AND SEGMENTATION .................................................................................... 35
DISAGGREGATION .................................................................................................................................. 36
LEVELS OF ANALYSIS ............................................................................................................................... 37
STEPS IN THE ANALYSIS PROCESS ..................................................................................................... 38-39
ESTIMATING FUNCTIONAL OBSOLESCENCE ............................................................................................ 40
EFFECTIVE AGE AND ECONOMIC LIFE ..................................................................................................... 41
CHAPTER 3 SUMMARY ........................................................................................................................... 42
Ch. 4 ............................................................................................................................................... 43-
HIGHEST AND BEST USE.......................................................................................................................... 43
HIGHEST AND BEST USE LAND AS IF VACANT ......................................................................................... 44
SPECIAL SITUATIONS ........................................................................................................................ 44-46
CHAPTER 4 SUMMARY ...........................................................................................................................47
, MARKET FUNDAMENTALS,
CHARACTERISTICS, AND DEFINITIONS
Market Analysis
Key Terms &
Definitions
Neighborhood: A group of
complementary land uses; a
congruous grouping of
inhabitants, buildings, or
business enterprises.
Market Area: The geographic
region from which a majority of
demand comes and in which the
majority of competition is
located. Depending on the
market, a market area may be
further subdivided into
components such as primary,
secondary, and tertiary market
areas, or the competitive market
area may be distinguished from
the general market area.
District: A neighborhood
characterized by homogeneous
land use, e.g., apartment,
commercial, industrial,
agricultural.
3
HIGHEST AND BEST USE
MSKISSOCK STUDY GUIDE
, Table of Contents
Ch. 1 MARKET FUNDAMENTALS, CHARACTERISTICS, AND DEFINITIONS ........................................... 3-25
MARKET ANALYSIS................................................................................................................................... 3
ANTICIPATION ......................................................................................................................................... 4
BALANCE ................................................................................................................................................. 4
CHANGE .................................................................................................................................................. 5
COMPETITION ......................................................................................................................................... 5
CONFORMITY .......................................................................................................................................... 6
CC & R ..................................................................................................................................................... 6
CONTRIBUTION ....................................................................................................................................... 6
EXTERNALITIES ........................................................................................................................................ 7
FOUR AGENTS OF PRODUCTION .............................................................................................................. 8
INCLINING AND DECLINING PERIODS ...................................................................................................... 9
OPPORTUNITY COSTS .............................................................................................................................. 9
PROGRESSION AND REGRESSION .......................................................................................................... 10
SUBSTITUTION ....................................................................................................................................... 11
SUPPLY AND DEMAND .......................................................................................................................... 11
SURPLUS PRODUCTION ......................................................................................................................... 12
HIGHEST AND BEST USE THEORY ........................................................................................................... 13
CONSISTENT-USE THEORY ..................................................................................................................... 13
TYPES OF VALUE ............................................................................................................................... 14-17
BUNDLE OF RIGHTS ............................................................................................................................... 18
FACTORS THAT CREATE VALUE .............................................................................................................. 19
CHARACTERISTICS OF LAND................................................................................................................... 20
GOVERNMENT RESTRICTIONS ON LAND ............................................................................................... 21
PRIVATE RESTRICTIONS FOR LAND USE ................................................................................................. 22
OTHER FACTORS THAT IMPACT VALUE.................................................................................................. 23
FORMS OF OWNERSHIP......................................................................................................................... 24
BUSINESS OWNERSHIP AND INDIVIDUAL TRUSTS ................................................................................. 25
FORMS OF OWNERSHIP......................................................................................................................... 24
CHAPTER ONE SUMMARY ..................................................................................................................... 25
,Ch. 2 ........................................................................................................................................... 26-34
TYPES OF DATA ....................................................................................................................................... 27
MARKET ANALYSIS.................................................................................................................................. 28
REAL ESTATE MARKET LIFE CYCLE .......................................................................................................... 29
ABSORPTION RATES AND PERIODS.........................................................................................................30
STATISTICS .............................................................................................................................................. 31
USES OF MARKET ANALYSIS ................................................................................................................... 32
MARKET STUDIES AND MARKETABILITY STUDIES ...................................................................................33
CHAPTER 2 SUMMARY ...........................................................................................................................34
Ch. 3 ........................................................................................................................................... 35-42
MARKET IDENTIFICATION AND SEGMENTATION .................................................................................... 35
DISAGGREGATION .................................................................................................................................. 36
LEVELS OF ANALYSIS ............................................................................................................................... 37
STEPS IN THE ANALYSIS PROCESS ..................................................................................................... 38-39
ESTIMATING FUNCTIONAL OBSOLESCENCE ............................................................................................ 40
EFFECTIVE AGE AND ECONOMIC LIFE ..................................................................................................... 41
CHAPTER 3 SUMMARY ........................................................................................................................... 42
Ch. 4 ............................................................................................................................................... 43-
HIGHEST AND BEST USE.......................................................................................................................... 43
HIGHEST AND BEST USE LAND AS IF VACANT ......................................................................................... 44
SPECIAL SITUATIONS ........................................................................................................................ 44-46
CHAPTER 4 SUMMARY ...........................................................................................................................47
, MARKET FUNDAMENTALS,
CHARACTERISTICS, AND DEFINITIONS
Market Analysis
Key Terms &
Definitions
Neighborhood: A group of
complementary land uses; a
congruous grouping of
inhabitants, buildings, or
business enterprises.
Market Area: The geographic
region from which a majority of
demand comes and in which the
majority of competition is
located. Depending on the
market, a market area may be
further subdivided into
components such as primary,
secondary, and tertiary market
areas, or the competitive market
area may be distinguished from
the general market area.
District: A neighborhood
characterized by homogeneous
land use, e.g., apartment,
commercial, industrial,
agricultural.
3
