Property Rights and Interests

Chapter 1

Property Rights and Interests

Course: Texas Real Estate Exam Prep
Subject: Texas State Salesperson Exam Prep
Chapter: Appraisal And Valuation Of Texas Real Estate Salesperson Exam Prep

Economic Principles Affecting Value

1. Supply and Demand

• More demand + limited supply = higher prices
• Excess supply + low demand = lower prices

Texas Example: Austin housing market

• Tech boom increased demand
• Limited new construction (geography, regulations)
• Result: Rapid price appreciation

2. Substitution

• Buyer won't pay more than cost of equally desirable alternative
• Foundation of Sales Comparison Approach

3. Anticipation

• Value based on expected future benefits
• Foundation of Income Approach

4. Conformity

• Properties similar to surroundings maintain value better
• Maximum value when reasonable conformity exists

5. Progression and Regression

• Progression: Lesser property benefits from better neighbors
• Regression: Better property hurt by lesser neighbors

Texas Example: $300,000 home in neighborhood of$500,000 homes: Benefits from progression $500,000 home in neighborhood of$300,000 homes: Suffers from regression