real estate 420 exam questions with well elaborated answers.

hedonic house price method - correct answer Zipf's Law - correct answer The idea that places or things that are farther apart will have less interaction between them. real estate demand for housing is - correct answer a derived demand, what factors determine the demand elasticity? - correct answer- whether the good is a necessity or luxury good -the availability of close substitutes -share of income spent on the good -time elapsed since the price change What factors determine the supply elasticity? - correct answer- the availability of inputs -the ease of shifting inputs into and out of alternative use -time elapsed since the price change elastically supplied markets - correct answer little or no constraints on builders supplying new housing units whenever they can cover their fundamental production costs - Atlanta, Houston, Dallas etc. inelastically supplied markets - correct answer substantial constraints on builders prevent them from supplying new housing units whenever they can cover their fundamental production costs - land values are very high in these markets Declining Markets - correct answer prices below fundamental production costs - no economic incentive to build -most common in rustbelt region of the world - land is very cheap in these markets why is elasticity an important economic indicator? - correct answer can be useful exogenously determined instrument - geographical determined land supply how does durability of housing impact urban dynamics? - correct answer facts from glaeser paper - correct answer- cities grow more quickly than they decline -urban decline is highly persistent -positive shocks increase population more than they increase housing prices -is housing prices are below construction prices, then the city declines - combination of cheap housing and weak labor demand attracts individuals with low levels of human capital to declining cities two ways that urban real estate plays an integral role in us economy (GDP) - correct answer- residential investment -consumption spending on residential services (rents, utilities) etc . residential real estate is often the greatest source of wealth - correct answer and savings for many families china's constant quality real residential land price index - correct answer- due to land value appreciation rosenback roback model - correct answer1) measure effect of amenities on wages and house prices across cities 2)build econometric framework for empirically valuing non-traded amenities (hedonics) - roback extend rosen theory to add roback model - correct answer The Roback model provides an analytical tool to predict how wages and housing prices adjust to differences in amenities across urban areas. • It provides a framework to develop indexes for both the quality of life and the quality of the business environment. - correct answer Thus, if a city has amenities that make it a good place to live, it will attract households until some combination of higher house prices and lower wages eliminates the incentive to move there. • Similarly, a good business environment will lead to a combination of higher land rents and increased wages for firms. average index - correct answer most straightforward method for constructing house price indices The data requirements for this method are minimal: simply collect the prices at which all (or a representative sample of) properties transacted during the time period. Can also be grouped by a designed sub-sample. limitation of average or median price index - correct answer- fails to account for changes in the quality, or mix of properties that were observed in each time period representative property-price method - correct answer second most straightforward method for constructing house price indexes -