Property Valuation
Scarcity is a factor in determining real estate value in Minnesota because:
AAll land is equally scarce
BLand supply is limited and cannot be manufactured; unique properties in high-demand locations command premium prices✓ Correct
COnly urban land is scarce; rural land has no scarcity
DScarcity applies only to commercial properties
Explanation
Scarcity is one of the four elements that create value (DUST: Demand, Utility, Scarcity, Transferability). Land is finite—it cannot be produced. Lakefront properties in Minnesota, downtown urban land, and land in prime suburban locations command premium prices partly because of their relative scarcity compared to demand.
Related Minnesota Property Valuation Questions
- In Minnesota, which government agency establishes assessed values for property tax purposes?
- Which type of depreciation in a Minnesota appraisal is caused by factors outside the property, such as a nearby industrial facility?
- A Minnesota appraiser determines that a property's highest and best use as vacant would be multi-family residential, but as improved (with a single-family home), the highest and best use is single-family residential. The property is most likely:
- In Minnesota appraisal practice, the term 'fee simple' value assumes the property is:
- An absorption rate in a Minnesota market analysis represents:
- A Minnesota appraiser is valuing a special-purpose property (church building). Which appraisal approach is typically most applicable?
- A Minnesota appraiser uses the income approach to value a small office building with a NOI of $42,000 and a cap rate of 7%. What is the estimated value?
- In Minnesota, an appraiser's 'narrative report' differs from a 'form report' in that:
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