Ch 9-11 Flashcards
(34 cards)
An active market is defined as:
A market characterized by numerous transactions.
A buyers market is defined as:
A market in which buyers have the advantage; exists when market prices are relatively low
due to an oversupply of property or reduced buyer demand.
A sellers market is defined as:
An active market in which the sellers of available properties can obtain higher prices than those obtainable in the immediately preceding period; a market in which a few available properties are demanded at prevailing prices by many users and potential users.
A depressed market is defined as:
A market in which a drop in demand is accompanied by a relative oversupply and a decline in prices.
A good market, in classic economic theory, exhibits the following characteristics:
- Homogeneous products (toothpaste)
- Prices are relatively low
- Prices are stable
- Products are easily transportable
- Organized market mechanism
- A large number of buyers and sellers
- Buyers and sellers are knowledgeable
- Buyers and sellers act rationally
- Little regulation or government intervention
- Supply and demand operate freely
The real estate market is not a well
-organized market
Real property is one of the most x industries in the United States. Some of these manifestations can be found in:
regulated
- Zoning regulations
- Building codes
- Health and safety codes
- Rent controls
- Mortgage limits
- Building moratoriums
The problem with the real property market is that the amount of supply is very xxx. The demand side of the equation is x and subject to x change.
rigid and slow to change
dynamic
immediate
We could classify the real property market as x
an imperfect market.
We could classify the real property market as x
an imperfect market.
An imperfect market is defined as
A market in which product differentiation exists,
there is a lack of important product or market information, and some of the producers and/or consumers are significant enough to affect the price and quantity of goods by their actions alone.”
A market is defined in terms of x.
competition
Money is a x that is bought and sold on the market, just as is lumber, shares of stock or real estate.
commodity
Money is the standard unit of x.
exchange
The “price of money” is expressed as x
an interest rate.
The supply of money in the U.S is regulated by the Federal Reserve System (the Fed). Founded in x, the Fed consists of x xx. The Board of Governors of the Federal Reserve System is made up of x who are appointed to x terms by the x of the United States; appointees must be confirmed by the U.S. x.
1913
12 regional banks
7 individuals
14-year
President
Senate
Please note that the Fed has and uses two tools. It can influence both the x of money and the x of money.
supply
cost
Difference between Discount rate and prime rate?
The Fed has the power to raise or lower the interest rate it employs when lending money to commercial banks and other depository institutions (called the discount rate).
Prime rate is the rate set by individual banks when lending money to their most highly rated customers.
Difference between Money market and Capital Market?
Money market trades short term and Capital market trades long term instruments like Mortgages, Bonds, Stocks.
Primary sources of mortgage capital in the 1930s-1960s:
- State or federally chartered savings banks
- Savings and loan institutions
- Commercial banks
- Credit unions
In 1968, FNMA was split into two organizations:
- Fannie Mae; a federally chartered corporation owned by private shareholders
- Government National Mortgage Association (Ginnie Mae), a government agency
under the oversight of the Department of Housing and Urban Development (HUD)
Fannie Mae purchases
The mortgages purchased from originators may be held in portfolio or may be securitized and sold to investors as
single family and multifamily FHA, VA and conventional mortgages.
mortgage-backed securities (MBS).
What does Ginnie Mae do?
guarantees securities that are backed by government-guaranteed or government-insured loans (e.g, VA, USDA, and FHA).
Ginnie does not purchase loans.
Difference between Fannie and Ginnie?
Fannie Mae purchases
Ginnie Mae guarantees
