Final Exam

The final exam will cover chapters 6, 7, 8, 9, 17, 18, 23, and 13 (we will not cover chapter 24). The exam will be primarily objective style questions.

Please don't forget to bring your calculator, pencils, and Scan-tron answer sheet. Thanks!

REAE 5311 students are invited...

If anyone is interested, we have a special event coming up in our real estate program (REAE@UTA). See the blog post at:

http://realestateprogram.blogspot.com/2008/11/soutlake-town-square-november-15th.html

Subdivision - Solution

Solution:

Housing units demanded:

35,000 ¸2.75 x 60% = 7,636 single family units

Housing units per year:

7,636 ¸ 5 years = 1,527 per year

City wide supply:

500 + 100 + 750 = 1,350 lots & houses

Duration of supply:

1,350 / 1,527 = .88 years, or 10.6 months

Home prices in subject:

20,000 / .22 to 35,000 / .22 = $90,900 to $159,000

Incomes to qualify:

[90,900 x 90% x .0881* + (90,900 x .0275**)] / .28 = $34,700 (R)

[159,000 x 90% x .0881* + (159,000 x .0275**)] / .28 = $60,600 (R)

* Rm = 360 N, 8 ¸ 12 I, -1 PV, solve PMT x 12 (.0881)

** Taxes are 2% & insurance .75% of value = 2.75%

% who qualify:

The median income is $35,000 and 75% of the population is

within $25,000 of the median income, or $10,000 to $60,000.

Therefore, ½ of 75% is from $10,000 to $35,000 & ½ is from $35,000 to $60,000. This is translates to 75% divided by 2, or 37.5% of the population is in the range of the subject home value.

Lots/homes demanded:

1,527 per year x .375 = 572 units per year

Capture rate:

20%

Absorption:

572 x 20% = 114 lots per year

Sellout:

400 lots ¸ 114 = 3.5 years

Variations:

1.

If the market study is for apartments, etc. (rental units), then instead of mortgage payments, look at affordability and rental payments that will be made.

2.

Also look for % owner vs. renter, & possibly further segmentation based upon type of subject property (e.g. high amenity apartments, extended care facilities, etc.

3.

The problem above gives the capture rate (20%) for the subject. You may be asked to make a judgment call on the test based upon competitive supply.

Office hours today...

Today is one of the Undergraduate Assembly meeting days (2-3:30 PM+/-). Please note if you were planning to stop in during office hours 2 to 4 PM. Sorry for any inconvenience.

Market Analysis - Retail Solution

Solution:
1. Total income = 11,000 x $35,000 = $385,000,000
2. Retail sales potential = $385,000,000 x (1 - 25% - 45%) = $115,500,000
3. Retail sales by subject type = $115,500,000 x 20% = $23,100,000
4. Sales retention = $23,100,000 x 80% = $18,480,000
5. Primary sales sf required = $18,480,000 / $250 psf = 73,920 sf
6. Plus: Secondary sales = 73,920 x 1.15 = 85,008 sf
7. Plus: Frictional vacancy = 85,008 / (1 – 5%) = 89,482 sf
8. Less: Existing, U.C., propose = 250,000x20% + 50,000x25% + 40,000x15% = 68,500 sf
9. Shortage of space (next 5 years) = 89,482 sf – 68,500 = 20,982 sf

Market Analysis Problem - Industrial

Solutions:
1. Total employment growth = 20,000 / 1.75 = 11,429
2. Total occupying office = 11,429 x 20% = 2,286 persons
3. Office demand = 2,286 persons x 225 sf per person = 514,350 sf
4. Capture in subject market = 514,350 x 25% = 128,588 sf
5. Total demand for Class B in market = 128,588 sf x 50% / (1-5%) = 67,678 sf
6. Less: Existing, UC, proposed = (50,000 sf x 20% vacant) + 25,000 sf = 35,000 sf
7. Residual demand = 67,678 – 35,000 = 32,678 sf needed

Variations:
1. There may not be a frictional vacancy given. Compute demand without making up a vacancy.

Audio/video clips on appraisal posted to 5311 homepage

Four audio/video clips (totaling about 2 hours) have been posted to the REAE 5311 homepage. If you have not viewed this clip already (REAE 5334 students have already), please include these clips with you chapter 8and 9 reading assignments. Please view the clips using MS Explorer (Firefox will not work) and make sure you audio is adjusted to a comfortable level.