Discussing five (5) interesting questions relating to "Real Estate".


  1. Explain the role of government in real estate at the federal, state, and local levels. Which has the most significant impact on real estate markets?

 

ANS: 

Federal Government: Income tax is the federal government’s key influence as well as the subsidies programs for housing, financial reporting at the federal level is required, laws for fair housing, as well as any disclosure laws.

          

State Government: When it comes to licensing, housing subsidies for moderate and low-income families, building codes and fair housing and disclosure laws on the state level are within the jurisdiction of the state. Out of the three (federal, state and local), the state appears to have the least significant impact on the real estate markets. The lands within the borders of the states are regulated by the state and the state can decide where one can or cannot build.

 

Local Government: The local government has the most significant impact on real estate markets as far as the federal, state and local levels are concern. Building codes and community infrastructure provided by the local government also has significant influence on the supply and demand of real estate in the community as well as the quality of the real estate business.

 

 

  1. Identify and describe the interaction of the three economic sectors that affect real estate value.

 

ANS: The three economic sectors that influence real estate value are user markets, capital markets, and government. Capital markets consist of suppliers and users of funds. Suppliers of funds include households and institutions serving them, such as pension funds; life insurance companies; charitable foundations such as colleges, hospitals, and religious institutions; and non-financial companies generating cash beyond their needs for investment. Users of funds include home and motor vehicle purchasers; non-financial companies; and governments financing infrastructure investment and operating expenses.

In the light of real estate, the user markets, firms and households are in competition for space and mostly location; depending on the supply and demand as well as the economical atmosphere, one may favor the other. Government is seen to have control over the tax policies, subsidies, financial reporting, laws for fair housing, as well as any disclosure laws

 

  1. The property tax has been criticized as an unfair basis for financing public schools. Areas that have high property values are able to pay for better schools than areas having lower property values. Thus, there is an inequality of educational opportunities that tends to perpetuate educational and social disadvantages for those who live in low-income areas.
    1. Do you agree or disagree?
    2. How could school financing be modified to provide more equal funding among all regions of a state?

 

ANS: If the gist of the statement is entirely true, then I agree to the statement that property tax has been criticized as an unfair basis for financing public schools. Areas that have high property values are able to pay for better schools than areas having lower property values. Thus, there is an inequality of educational opportunities that tends to perpetuate educational and social disadvantages for those who live in low-income areas. Reliance on property tax to fund the public-school system serves as a disadvantage to the poor neighborhoods in that there may be some tax revolts and low-income families cannot afford high priced properties. This may cause disparities between the two communities.

 

School funding could be modified to provide more equal funding among all regions of a state by addressing the complex issue of statewide funding for schools; with a targeted approach—distributing state aid for public education to the neediest school districts, schools, and students. State policy makers should not aim to provide any specific percentage for the state’s share of funding K-12 education, the report concludes. A more targeted effort can achieve fairness and relief, with the greater use of circuit breakers that adjust property tax bills based on ability to pay. Many states do not take full advantage of this policy instrument or limit its application to the elderly.

 

 

  1. The real estate industry has suggested that it is good to require a title insurance commitment as evidence of title for rural property, but that it is satisfactory to use the less costly abstract with attorney’s opinion as evidence of title for a residence in an urban subdivision. Discuss the merits or risks of this policy.

 

ANS: The urban subdivisions may have high probability of short stays and or ownership to the properties. This may cause numerous amount of title information floating in a secured or unsecured way causing it to become more “turbid” or “cloudy”. Once upon a time, there used to be very little to no question about the status of a title with the creation of the subdivision. The history of the real property was the main concern to the outcome of how risky the marketable title may encounter. Title insurance in an unplanted land may not be deemed as valuable as in the planted land.

 

  1. The traditional common law concept of the landlord–tenant relationship was that the landlord’s obligation was simply to stay off the property and the tenant’s obligation was to pay the rent. Explain why this is an obsolete arrangement for apartment residents in an urban society.

ANS: The traditional common law concept of the landlord–tenant relationship is an obsolete arrangement for apartment residents in an urban society because we are in modern society whereby a land lord doesn’t just have to rent his/her home and move away but he/she needs to provide additional services or assistance as needed per the local and statewide regulations/laws. There are clear leasing laws that outlines the relationship of service between the land lord and the tenant such as rights of entry, care and repair obligations of the premises, notification requirements (i.e. 60 days or 90 days), deposits requirements or deposit terms et al.

 

 By Samuel Anderson

 

 

 

 

 

 

References/Sources:

Staff, I. (2018, March 05). Capital Markets. Retrieved March 12, 2018, from https://www.investopedia.com/terms/c/capitalmarkets.asp

 

The Property Tax-School Funding Dilemma. (2007, December 01). Retrieved March 13, 2018, from https://www.lincolninst.edu/publications/policy-focus-reports/property-tax-school-funding-dilemma


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