What technique is appropriate when net operating income and value are expected to change at a constant rate?

The yield change technique is particularly suitable in situations where both net operating income and value are anticipated to change at a constant rate. This technique is based on the premise of making projections about future income and value based on a given rate of growth. It effectively allows appraisers to account for and analyze the expected variability in income over time, ensuring that assessments remain aligned with the anticipated market dynamics.

Using this technique, appraisers can apply a consistent growth rate to project future values and income, which is essential for accurately estimating the value of an income-producing property. The ability to adjust cash flows to reflect a steady growth rate helps in understanding long-term investment potential and assists in making informed decisions based on expected changes in income and property value.

In contrast, other methods like the market comparison method are focused on comparing similar properties to determine value based on sales data, making them less suited for scenarios with expected changes over time. The income capitalization technique also assesses property value based on expected income but may not directly incorporate a constant growth rate model as effectively as the yield change technique. The value analysis method evaluates the components contributing to property value but does not specifically address the growth dynamics in income or value over time.