Economic conditions analysis
Goals of economic conditions analysis
To delineate the operational economic forces at work in the market-place
To identify the trends of such forces
To alert the client to possible shifts in such trends of such forces.
Forces may be operational at
The task of the appraiser is to identify only those factors which are operational or perceived by the marketplace as being operational on the subject property.
Economic base of a community
Non-basic or service employment
Governmental, Legal, and Political analysis
Treaties (NV treaties)
Land use controls
Income taxation laws
Land use control laws
Tax demands and forms (Growth in Delaware)
Land use controls
Social composition in the area
Family formation patterns
Household size patterns
Technological change in transportation and work environments.
Neighborhoods life cycle
Neighborhoods are developed (born) and grow.
Neighborhood experiences stability and maturity.
Neighborhood then begins a period of decline.
Values drop sufficiently to encourage redevelopment
Desirability may be determined by relative marketing times
Locational economic relationship determined (linkage)
Neighborhood Analysis: Demand supply relationship for the property
Typical financing available
Average marketing times of properties in the neighborhood relative to that of the general community
Turnover in occupancy and/or ownership
An analysis of these factors over a period of years can often identify neighborhoods in transition.
Condition of adjacent properties
Doctors, police personnel, and even politicians
High power electrical lines
Types of market studies
General market study
Appraisal Market Analysis
Highest and Best Use Studies
Market conditions study (successive sales)
Location (paired sales)
Financing (cash equivalency)