Deck 6: Forecasting Ownership Benefits and Value: Market Research

Question 1

Development of subdivisions,apartments,offices,or other commercial structures can have a lead time of two years or more.In general,the longer the construction lead time:

A)the lower the construction cost
B)the greater the supply of units
C)the lower the market value
D)the greater the amplitude of real estate cycles

Answer 1

D

Question 2

In constructing a market-defining "story," it is helpful to answer a series of fundamental questions around which analysis can be built.Which of the following questions is designed to identify the target market?

A)What is the real estate product under consideration?
B)Who are the customers?
C)What aspects of the product do the customers care about?
D)Who are the competitors?

Answer 2

B

Question 3

Survey research has been applied to real estate markets at many levels.Despite its frequent application,analysts must be cautious with survey use because:

A)it is difficult to implement
B)interviews and questionnaires are not received well by consumers
C)it cannot be used in a small sample area
D)it can be fraught with abortive errors

Answer 3

D

Question 4

In the Elysian Forest example,the planned unit development was destined to be an unsuccessful venture from its inception because:

A)There was a comparable project in the community that was successful.
B)The site and location of the project was atypical of the area as there were significant disadvantages in terms of location and visual appeal.
C)The prices were higher than most homes in the area and the target market was a nontraditional segment that relied heavily on a small portion of the local University City population.
D)University City was a big,high density city that could not support such development.

Question 5

A tool used by real estate analysts to relate a consumer's activities,interests,opinions,and values to a consumer's demographics is referred to as:

A)geographical information systems (GIS)
B)psychographics
C)survey research
D)census mapping

Question 6

The presence of real estate cycles presents a major challenge when forecasting real estate market parameters.If the market value of a residential developer's project exceeds its construction costs,an increase in the supply of units will occur,which will most likely be followed by:

A)an increase in occupancy levels
B)an increase in market values
C)a decrease in real rental rates
D)a decrease in construction costs

Question 7

Real estate market research is an important process used by analysts to facilitate a better understanding of a property's future profit potential.All of the following statements regarding market research are true EXCEPT:

A)Real estate market research should always be flexible since the research depends directly on the problem at hand.
B)Most data about general real estate is relevant to a given market study.
C)Most important data for a given market study often is not publicly available.
D)Market research should focus specifically on market segments for the property involved,rather than on the aggregate real estate market.

Question 8

The most common definition of a city used for government data collection and reporting,identified as a single labor market area centered around a city with a population of at least 50,000 people,is referred to as a:

A)township
B)central business district
C)metropolitan statistical area
D)county

Question 9

Since most data for a given market study is not readily available,analysts must be creative in their use of data that they are able to obtain.The primary source for detailed household demographic information is:

A)the U.S.Bureau of the Census
B)the Federal Reserve
C)the local tax collector's office
D)not available publicly

Question 10

While predicting real estate cycles is difficult,a key indicator used to evaluate where a property is within the cycle is:

A)the level of household income
B)the form of land use
C)the size of the property
D)the number of building permits issued

Question 11

Computer software systems that enable one to manipulate and "map" information with great flexibility and speed are referred to as:

A)geographical information systems (GIS)
B)psychographics
C)survey research
D)census mapping

Question 12

In the Palm Grove Office Complex example,the project was destined to be ill-fated venture from its inception for all of the following reasons EXCEPT:

A)University City did not traditionally provide occupancy to tenants interested in office space.
B)University City was not well-suited for large office space geared toward firms with greater than 25 employees.
C)Palm Grove Office Complex lacked the visual exposure,convenient access,and parking that its competitors held significant comparative advantages in.
D)The structures were primarily designed as general-purpose office space,which excluded potential occupants such as laboratories or medical offices.

Question 13

A new residential development will face competition from other new developments,other builders,and sales of existing homes.To determine if demand in that market segment will be sufficient to justify proceeding with the project,a developer would be most interested in estimating a:

A)capture rate
B)capitalization rate
C)risk-free rate
D)risk premium

Question 14

A planned unit development (PUD)is a residential development that differs from traditional residential subdivisions in all of the following ways EXCEPT:

A)It encompasses a blend of detached single family,attached single family,townhouses and apartments.
B)It typically has larger individual lots with extensive side-yards on the property.
C)It typically includes a variety of common areas.
D)It typically includes a variety of recreational facilities.

Question 15

Preferences of households can vary with time,prosperity,and context.The nuances in the preferences or needs of market subgroups are commonly referred to as:

A)market segmentation
B)market parameters
C)market projection
D)market cycles

Question 16

A popular adage in real estate is that property value is all about "location,location,location." However,for most property types in nonresidential realms,nonlocational requirements are equally or even more important.All of the following are examples of nonlocational factors EXCEPT:

A)Floor plate size
B)Amount of parking
C)Nature of current tenants
D)Proximity to modes of public transportation

Question 17

In the initial round of market analysis,analysts will attempt to provide key numbers that characterize the current condition and trend in the market.For rental retail space,the key market parameters in question would most likely include all of the following EXCEPT:

A)Projected occupancy growth
B)Projected rental rate growth
C)Currency occupancy levels
D)Projected sales rates

Question 18

In collecting data for nonresidential property analysis,it is helpful to understand the business community that currently exists in the specific area in question.A preliminary approach for ascertaining the number of firms by size,industry,and location is to obtain data from:

A)the Bureau of Labor Statistics
B)the National Transportation Service
C)the U.S.Bureau of the Census: County Business Patterns
D)the Federal Reserve

Question 19

Professor James Graaskamp often asserted that when one buys real estate,what one is buying is a set of assumptions about the future.Therefore,it is not surprising that the beginning point of the market research process is to:

A)collect relevant data to examine the market and test initial definitions
B)evaluate the results of market analysis
C)construct a market-defining "story"
D)refine market definitions and collect additional data

Question 20

In contrast to conventional market analysis,the "story" approach to market research starts with an analysis of:

A)conditions in global real estate markets
B)conditions in national real estate markets
C)conditions in state real estate markets
D)conditions in the property specific market