Property Valuation
Economic base analysis in Pennsylvania real estate market analysis examines:
AThe individual property's income potential only
BThe economic drivers of a region — basic industries that bring outside income into the local economy✓ Correct
CThe property tax base of a municipality
DThe credit ratings of local financial institutions
Explanation
Economic base analysis examines the fundamental industries that drive employment and income into a market area. In Pennsylvania, this includes studying manufacturing (Pittsburgh), financial services (Philadelphia), education/healthcare ('eds and meds'), and energy (natural gas in northern PA) as drivers of real estate demand.
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Key Terms to Know
Pre-Approval
A lender's conditional commitment to loan a specific amount to a borrower, based on verified income, credit, and assets.
AppraisalA professional estimate of a property's market value prepared by a licensed or certified appraiser.
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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