Chapter 2: Physical and Economic Characteristics of Land S1

Chapter 2: Physical and Economic Characteristics of Land (S1)

Flashcards

• physical characteristics of landImmobility, Indestructibility, Nonhomogeneic (unique)

Nonhomogeneity (herterogeneity)land and improvements are NOT standardized or homogeneous.Parcels of land differ in size, shape, location, and appearanceImprovements to the land may be similar, but are never exactly the samedifferent owners may have different bundle of rights ProductionReal estate production refers to the development of land and the construction of improvementsSLOW process, so as a result, the real estate market is slow to respond to changes in demand Situs consists of 2 factors. What are they? 1. certain locations are more preferable than others2. real estate is immobile - it cannot be moved scarcitylimited supply of land*** concept derives from the fact that the supply of land is fixed and can never be increased Area preference or SitusSitus = an economic term that refers to the economic quality of a parcel of real estate (consists of 2 factors)SITUS is the most important economic characteristic of land Permanence of ImprovementsThe permanence of improvements, combined with the immobility of the underlying land, makes the real estate market less flexible than other markets.Investments in land, and improvements to land, tend to be long-term. (As a result the real estate market is slow to respond to changes in supply.) Assemblagerefers to the concept of combining 2 or more contiguous parcels of real estate into a single parcel under one ownershipUsually done when the combined party will be more valuable than the sum of the individual parcels IndestructibilityLand cannot be destroyed. Its value may be destroyed by changing conditions, but physically land goes on forever.Ex: ACCRETION: where the action of water causes land to build up on one parcel, thereby subtracting from

another parcel; EROSION: where land is eaten away by

the action of water and weather Land has several distinguishing economic characteristics that include... (5) scarcityarea preference or situspermanency of improvementsproductionassemblage Plottage valueAny increase in value resulting from assemblage ImmobilityLand is physically immobile, cannot be moved from one geographical location to another. The real estate market is local in nature.Due to immobility, the value of a piece of

real estate is directly affected by its surroundings (things external to itself)