U.S. Housing Market Study Questions PDF

Test #1 Study Questions ________________________________________________________________________ U.S. Housing Market Since 1975 1. How would you characterize the behavior of U.S. housing prices during each of the following periods: a. 1975-2000 Steady increase in housing prices - inf...

Test #1 Study Questions ________________________________________________________________________ U.S. Housing Market Since 1975 1. How would you characterize the behavior of U.S. housing prices during each of the following periods: a. 1975-2000 Steady increase in housing prices - inflation and population growth b. 2000-2007 burst/rise of housing prices - subprime lending and speculative buying c. 2007-2012 Collapse d. 2012-2020 Collapse ending and values going up - recovery e. 2020-2025 Widespread boom - pandemic, low interest rates 2. During the housing boom from 2000 to 2006, the metropolitan areas with the largest increases in housing prices were concentrated in which two states? California and Florida These states experienced rapid housing price growth due to high demand, speculative investments, and favorable climate/demographics. 3. During the national housing price collapse from 2006 to 2011, the strongest housing markets in the U.S. were found in what part of the country? What other factor was affecting the housing markets in these states that caused them to be less affected by what are occurring in the rest of the country? Strongest: texas ??? Other factor affecting the housing markets: ??? 4. Over the entire 2000 to 2017 timeframe, which metropolitan housing market in the U.S. had the distinction of experiencing the largest increase in its housing prices? The San Francisco Bay Area (California) 5. From 2000 to 2017, the 10 weakest housing markets were all found in which part of the Country? Midwest ________________________________________________________________________ ________________________________________________________________________ Introduction to Real Estate 1. What are the three different forms that real estate as tangible property can take? Tangible Property forms: -​ Surface- fixtures (intent, attachment, adaptation, relationship) -​ Subsurface -​ Air 2. Which key determinant of real estate value is determined in the user market? -​ user market is focused on the interactions in real estate, determining the value of property rent and market income - supply and demand of space (property cash flow) -​ User markets are segmented meaning they are divided in to different groups, with different demand markets, determined by property type and location 3. Which key determinant of real estate value is determined in the capital market? -​ capital market determines the “financial world” including the investments and expected returns of real estate 4. Which key characteristic of real estate is responsible for location playing such an important role in real estate markets? -​ real estate market is a combination of the capital and user market. It ultimately determines property value/price 5. What does it mean to say that real estate has the following characteristics: a. Long gestation period It takes a long time from when an idea is created to when doors open -​ Risk of market changes in that time b. Lumpiness Real estate is generally created in chunks at a time -​ Significant impact on market conditions c. Durability ​ Real Estate lasts a long time, inelastic supply -​ Cant reduce quantity easily -​ Slumps can last a long time Immobility ( fixed location ), Heterogeneous ( unique ), Interdependent ( affect each other ) Segmented vs Localized markets Private information (costly) ________________________________________________________________________ ________________________________________________________________________ Legal Determinants of Value Legal Dimensions summary: -​ Possessory: property title, occupy property, lasts indefinitely, no limits on rights -​ Freehold estates -​ Fee simple absolute- most complete set of rights -​ Fee simple conditional - limit future owners, condition, not recommended (confusion and disputes) -​ Ordinary life estate - as long as individual is alive (paired with remainder interest) -​ Leasehold estates -​ Tenancy for years -​ Periodic tenancy -​ Tenancy at will -​ Tenancy at sufferance -​ Nonpossessory: do not occupy, non-exclusive possession -​ Easements -​ Liens -​ Deeds -​ 1. What are the three main characteristics of rights? -​ Government obligated to support and enforce rights -​ Non-revocable -​ Enduring- don't go away with change of ownership Property Rights vs Constitutional Rights Physical property and Legal interest 2. What are the three fundamental rights to real property and what does it mean to possess each of them? -​ Right of exclusive possession (determine who can use property) -​ Right of enjoyment (enjoy the benefits) -​ Right of disposition (get rid of as you see fit) 3. What does it mean for something to be a “fixture”? Fixtures: begin as personal property, annexation in to real property - on property, included in real property 4. What are the tests that are used to determine whether something is a fixture? -​ The intent of the seller -​ The attachment to the surrounding property  -​ Adaptation (has it been altered to fit?) -​ The relationship to parties (trade fixtures and installation) 5. What is the difference between a possessory interest and a nonpossessory interest? Possessory- The right to possess, occupy, and use a property. Nonpossessory- The right to use or control a property without occupying or possessing it. 6. What are the key differences between freehold and leasehold estates? Freehold- indefinite Leasehold- period of time 7. What is the most common type of freehold estate? Fee simple absolute 8. What does it mean for someone to possess a fee simple conditional estate? have ownership of a property with conditions or limitations attached to it. The ownership is not absolute, as it depends on fulfilling specific conditions or restrictions set by the grantor (the person transferring the property). If the condition is violated or not met, the property may revert back to the grantor or transfer to another specified party. 9. What is the difference between a reverter interest and a remainder interest? Reverter interest- back to original owner if condition broken Remainder interest- who will receive property if owner dies in life estate 10. What are the four primary types of leasehold interests and how do they differ from each other? Leasehold interests: -​ Tenancy for years- fixed amount of time (ends when expired) -​ Periodic tenancy- automatically renews after a period of time -​ Tenancy at will - no fixed duration - terminated with proper notice -​ Tenancy at sufferance - tenant overstayed without consent Easements: (nonpossessory interest) - right to use for specific purpose 11. What is the difference between an easement appurtenant and an easement in gross? Easement appurtenant - two adjacent properties (dominant and servient parcels) Easement in gross - no dominant estate (government) grants a specific person or entity the right to use someone else's property for a particular purpose, but it is not tied to any particular piece of land. benefits an individual or organization, rather than a piece of land. 12. What is the difference between the dominant parcel and the servient parcel? Dominant parcel- benefits from the estate - (dominate the land) Servient parcel- burdened by the easement 13. What is the difference between an affirmative easement and a negative easement? Affirmative easement: allows someone to use the property- enter servient estate negative easement: restricts the servient estate from doing something that could affect the dominant estate ex) scenic easements and sunlight easements 14. What are the different ways that an easement can be created? -​ Express grant -​ Implication -​ Prescription - Requires: -​ Open use (act as if entitled to be there, openly) -​ Hostile use (treat land as if they were the true owner) - easiest to revise just by stating you don't want them to have ownership -​ Continuous use for statutory time (5/7-20 years) - up to states 15. What are the three different ways that easements can be terminated? -​ Agreement -​ Merger -​ Abandonment 16. What purpose do deed restrictions serve? Deed restrictions place limits on how the property can be used ex) no alcohol, no commercial use -​ Isolated deed restriction : Write in to the deed certain restrictions of the property -​ Feasible conditional estate does the same thing but is not recommended -​ Subdivision covenants : apply to whole subdivision - ex) HOA 17. What is the difference between a general and a specific lien? Lien: Filed document claiming financial claim of a property, if property sold, lien gets payed off before sale of property -​ “This owner owes me” Difference between general and specific lien is the scope property it affects General lien- all of debtors property Specific lien- a specific property rather than debtors entire assets 18. When there are multiple liens on a property, how is the order that the liens get paid determined? First- property tax liens/ special assessments (government charges) Second- mortgages Third- judgement (as the result of a court ruling when you owe someone money from a lawsuit) Then chronologically ________________________________________________________________________ ________________________________________________________________________ Deeds and Property Descriptions 1. What is a deed? Contract to convey ownership of real property (consideration is not required) -​ Must have words of conveyance (confirming intention and defining the type of deed), signature of grantor, covenants, Habendum clause, legal descriptions of property (unambiguous and enduring), acknowledgment (witness), and delivery (signing) 2. How do the requirements for a grantor differ from those for a grantee? Grantor- the one conveying property -​ Must be of age -​ Legally competent -​ Must sign the deed Grantee- recipient of property -​ Must simply be identifiable 3. What role do covenants play when it comes to deeds? Covenants- Legally binding promises that end up being not true -​ Provide the basis for legal action by the grantee against the grantor if something goes wrong with the legal part of the transaction 4. What are the three primary covenants found in deeds and what does each one mean? Covenant of Seizin- the grantor has the title and the right to convey it Covenant Against Encumbrances- there are no encumbrances (liens, easements etc.) that the grantee has not already been made aware of Covenant of Quiet Enjoyment- promise that there is no one with a superior claim to the property 5. What role does the habendum clause play in a deed? Habendum Clause- Defines the type of interest that the grantor is conveying to the grantee -​ “For use as”” implies easement -​ “So long as” implies fee simple conditional -​ “And his/her heirs and assigns forever” implies fee simple absolute 6. What does it mean for a deed to be acknowledged and delivered? Observable, verifiable intent that the deed is to be given to the grantee 7. What is the difference between a general warranty deed and a special warranty deed? General Warranty Deed:  -​ Most comprehensive protection, The seller (grantor) guarantees that the title is free from defects and encumbrances, regardless of when they occurred (even before the seller owned the property). If one arises, grantor is responsible Special Warranty Deed: The seller guarantees that no title defects or encumbrances arose only during their period of ownership. 8. What is the purpose of a judicial deed? Judicial Deed: Transfers Ownership in Court-Ordered Sales Used when a property is sold under court supervision, such as in foreclosures, tax sales, or estate settlements. Ensures the legal transfer of ownership when the original owner cannot or will not sign a deed. 9. What is the primary purpose of a quitclaim deed? Quitclaim Deed: Does not convey or guarantee ownership of property- simply for paper trail Common Uses: Family transfers, divorce, trusts, title corrections Conveyance of Real Estate Voluntary vs involuntary chart: -​ Voluntary conveyances without a deed (easements only) Implied easement -​ Involuntary conveyance without deed (Easement by prescription and Title by adverse possession) 10. What conditions must be met for property to be acquired via adverse possession? Adverse Possession- -​ Actual (physically use), Open and Notorious (not secretive), Exclusive (not share), Hostile (without the true owners permission), and continuous possession Legal Descriptions of Land -​ Metes and bounds (point of beginning and describe area, difficult to interpret) -​ Subdivision Plat Book and Lot Number (Based on subdivisions Every lot has a unique and identifying number) -​ Government Rectangular Survey System 11. What is the term used for the oldest and most flexible form of property description? Metes and Bounds: This system describes property boundaries using physical landmarks, distances, and compass directions. 12. How do you identify the following components of the government rectangular survey System: Measurement based on point of beginning TOWNSHIPS- -​ Divides map in to a series of 6n by 6 miles townships -​ 36 mile squared area townships (T1N, T1S, R1E, R2W, etc) T2SR2E -​ 640 acres!! SECTIONS -​ Every township is then divided into 36 sections that are each 1x1 mile squares -​ 1-36 east to west (1 = eastern side of map) Section 22 ​ QUARTER SECTIONS -​ divided into 4 quarter-sections -​ NE quarter, NW quarter, SW quarter, SE quarter -​ NW ¼