The Student Handbook to T HE A PPRAISAL OF R EAL E STATE 1 Real Estate Markets, Money Markets, and Capital Markets Chapter 6

Student Handbook to T HE A PPRAISAL OF R EAL E STATE Chapter 6 2 Relationship to Valuation Process  Sales Comparison Approach  Income Capitalization Approach  Cost Approach Land Value Cost Estimates Depreciation

Student Handbook to T HE A PPRAISAL OF R EAL E STATE Chapter 6 3 Risk  Market Risk  Financial Risk  Capital Market Risk  Inflation Risk  Environmental Risk  Legislative Risk  Management Risk

Student Handbook to T HE A PPRAISAL OF R EAL E STATE Chapter 6 4 Real Estate Markets  Characteristics of Real Estate Markets  Real Estate Cycles  Market Types Money Markets  Fiscal Policy  Money Market Instruments

Student Handbook to T HE A PPRAISAL OF R EAL E STATE Chapter 6 5 Capital Markets  Bonds  Stocks  Mortgages  Deeds of Trust

Student Handbook to T HE A PPRAISAL OF R EAL E STATE Chapter 6 6 Sources of Capital for Real Estate  Equity Real Estate Investment Trusts Partnerships Syndications Joint Ventures Pension Funds Life Insurance Companies International Equity Capital

Student Handbook to T HE A PPRAISAL OF R EAL E STATE Chapter 6 7 Debt  Savings and Loan Associations  Commercial Banks  Life Insurance Companies  Junior Mortgage Originators  Secondary Mortgage Market Fannie Mae (formerly the Federal National Mortgage Association) Freddie Mac (formerly the Federal Home Loan Mortgage Corp.) Ginnie Mae (Government National Mortgage Assn.) Farmer Mac (Farmers Home Loan Mortgage Assn.) Private Sector Transactions

Student Handbook to T HE A PPRAISAL OF R EAL E STATE Chapter 6 8 Securitization of Real Estate Investment Markets  Debt and Equity Relationships Investment Yields Leverage

Student Handbook to T HE A PPRAISAL OF R EAL E STATE Chapter 6 9 Mortgage Exhibit 2

Student Handbook to T HE A PPRAISAL OF R EAL E STATE Chapter 6 10 Mortgage Exhibit 2, continued

Student Handbook to T HE A PPRAISAL OF R EAL E STATE Chapter 6 11 Problems Suggested solutions begin on page 365.