Property Valuation
A Mississippi appraiser notes that a property's neighborhood is experiencing 'gentrification.' For appraisal purposes, gentrification typically indicates:
ADeclining property values due to displacement
BA revitalization phase where increasing investment and improving conditions are driving property value increases✓ Correct
CStable values with no market activity
DAn overbuilt market with declining demand
Explanation
Gentrification represents neighborhood revitalization — increasing investment, renovation of older housing stock, in-migration of higher-income residents, and rising property values. While it can have complex social impacts (displacement of existing residents), from a pure appraisal standpoint, gentrification is associated with increasing property values and market activity.
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Key Terms to Know
Appraisal
A professional estimate of a property's market value prepared by a licensed or certified appraiser.
Comparable Sales (Comps)Recently sold properties similar in size, condition, and location used by appraisers and agents to estimate a property's market value.
Capitalization Rate (Cap Rate)A rate used to estimate the value of income-producing property, calculated as Net Operating Income divided by property value.
Gross Rent Multiplier (GRM)A quick valuation metric for income properties calculated by dividing the property price by gross annual rental income.
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