Alaska replacement costs are high because:
Correct Answer
B) Shipping materials to remote areas, short building season, and permafrost foundation requirements
Construction costs in Alaska are significantly higher than the lower 48 due to material shipping costs, limited construction season (especially in northern areas), specialized foundation requirements for permafrost, and higher labor costs.
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Related Topics & Key Terms
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Related Concepts
The comparable sales approach estimates a property's value by comparing it to similar properties that have recently sold in the same market area. It is the most widely used and reliable approach for appraising residential properties.
The cost approach estimates a property's value by calculating the current cost to rebuild the improvements, subtracting accumulated depreciation, and adding the land value. It is most reliable for new construction and special-purpose properties.
Depreciation is an accounting method of allocating the cost of an asset over its useful life, allowing investors to deduct a portion of the asset's cost each year.
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Previous Question
Carlos recently purchased a home in Huntsville for $250,000 and immediately applied for the Alabama homestead exemption. His neighbor tells him that the homestead exemption will reduce his assessed value to zero because the exemption is larger than the assessed value of his home. Assuming Carlos is an individual homeowner and the property is assessed under the Class IV ratio, which of the following best explains why the neighbor's statement is incorrect?
Next Question
An investment property generates $60,000 in annual net operating income. If the cap rate is 8%, the estimated property value is: