A market analysis reveals the following trends over 24 months: Months 1-6: -2% change, Months 7-12: +1% change, Months 13-18: +3% change, Months 19-24: +4% change. This pattern suggests the market is:
Correct Answer
C) Prices rebounded from decline to faster positive growth
The equal-length period changes move from −2% to+1%,+3% and+4%, showing a rebound in the measured series and successively faster positive growth after the first period. Supply, demand, rents and risk evidence are needed to classify a broader cycle or forecast sustainability.
Why This Is the Correct Answer
Option C is correct because the series goes from a -2% change in the first period to +1%, +3% and +4% in later periods. That is a rebound from decline followed by faster positive growth in each successive period.
Why the Other Options Are Wrong
Option A: Unsustainable overheating is proven by the pattern
Option A, that unsustainable overheating is proven by the pattern, is wrong because four period changes cannot prove sustainability or overheating. Supply, demand, rent and risk evidence would be needed to reach such a conclusion.
Option B: Prices were flat at one level across the full 24 months
Option B, that prices were flat at one level across the full 24 months, is wrong because the periods show changes of -2%, +1%, +3% and +4%. Prices clearly moved rather than staying flat.
Option D: Each period in the series had a negative price change
Option D, that each period had a negative price change, is wrong because only months 1-6 were negative at -2%. The other three periods were positive at +1%, +3% and +4%.
Read the signs in order
Track the sign and size of each period change: one minus, then growing pluses, means rebound and acceleration.
How to use: Use this when a question lists period changes and asks what pattern they show.
Exam Tip
Choose the answer that describes the data, and be wary of options claiming the data prove a broader conclusion.
Common Mistakes to Avoid
- -Concluding a market is overheated from price changes alone
- -Ignoring the first negative period when describing the trend
- -Treating a short series as a reliable forecast
Concept Deep Dive
Analysis
This question tests reading a simple series of period price changes. The changes move from -2% to +1%, +3% and +4% over equal six-month periods, showing a decline followed by successively faster positive growth. The data describe the measured series but do not by themselves prove overheating or classify a broader cycle.
Background Knowledge
Appraisers report market condition indicators as of the effective date and describe trends supported by data. A series of period changes shows direction and acceleration, but forecasting or classifying a full cycle requires broader evidence. Descriptions should match what the data actually show.
Real-World Application
An appraiser tracks paired-sale indications by half-year and sees a small decline followed by rising gains. The report describes a recovering market with increasing appreciation in the measured data. The appraiser avoids calling the market overheated without supply and demand evidence.
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