A market in which sellers substantially outnumber buyers is characterized by:
Correct Answer
C) Rising inventory and lengthening marketing times
Persistent inventory growth relative to sales and lengthening marketing times can indicate weaker seller bargaining conditions. Confirm with comparable-segment prices, concessions and demand evidence. Raw participant counts or one statistic alone do not prove a universal market classification.
Why This Is the Correct Answer
Option C is correct because rising inventory and lengthening marketing times are the typical signs of excess supply. When supply exceeds demand, listings accumulate faster than they are absorbed and sellers lose bargaining power, which puts downward pressure on price. An appraiser would still confirm the signal with comparable-segment prices, concessions and demand evidence.
Why the Other Options Are Wrong
Option A: Falling months of supply
Option A, falling months of supply, points the wrong way. Months of supply is active listings divided by monthly sales, so it falls when sales are high relative to the number of listings, a sign of strong demand. When sellers substantially outnumber buyers, listings build up and months of supply tends to rise.
Option B: Multiple competing offers on most of the listings
Option B, multiple competing offers on most listings, describes buyers competing for scarce supply. That is the opposite of a market where sellers substantially outnumber buyers.
Option D: Prices rising above asking
Option D, prices rising above asking, reflects buyers bidding up scarce listings. Excess supply tends to push prices down, so above-asking sales do not fit a market with far more sellers than buyers.
Too many sellers, things pile up
Picture a store shelf overflowing with unsold goods: more stock and slower turnover. A buyer's market looks the same, with listings piling up and sitting longer.
How to use: Use this image whenever a question asks which indicators fit an oversupplied market.
Exam Tip
Match each indicator to the direction it signals: rising inventory and longer marketing times point to oversupply, while bidding wars and falling supply point to strong demand.
Common Mistakes to Avoid
- -Treating falling months of supply as a sign of a buyer's market
- -Relying on a single statistic to classify the market without confirming with prices and concessions
- -Confusing multiple-offer activity with weak demand
Concept Deep Dive
Analysis
This question tests whether you can recognize the market signals that appear when supply outpaces demand. When sellers substantially outnumber buyers, unsold listings build up and properties take longer to sell. Look for the option that describes excess supply rather than strong demand.
Background Knowledge
Supply and demand interact to set price: when market supply is greater than market demand, the excess supply tends to cause prices to decrease. Appraisers track inventory, absorption, marketing time and concessions to judge whether a segment favors buyers or sellers.
Real-World Application
An appraiser reviewing a suburban segment sees active listings up sharply over six months while closed sales stay flat and days on market lengthen. She also checks concessions and sale-to-list ratios before reporting that the segment shows signs of oversupply.
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