A market where the median sale price is flat but the median price per square foot is rising suggests:
Correct Answer
B) Smaller homes are selling, masking real appreciation
Why this is correct: Smaller homes are selling, masking real appreciation. If the median sale price is flat but the price per square foot is rising, it indicates a 'mix shift'—smaller, less expensive homes are comprising more of the sales, holding the median price down even though individual properties are appreciating. Why the other choices are wrong: The market is definitively declining contradicts the rising price per sq. ft. Local construction costs have fallen is unrelated to these sales price metrics. The two measures always move together is false; they can diverge due to mix shifts. Exam tip: Analyze both median price and price per unit to spot market mix shifts.
Why This Is the Correct Answer
Why this is correct: Smaller homes are selling, masking real appreciation. If the median sale price is flat but the price per square foot is rising, it indicates a 'mix shift'—smaller, less expensive homes are comprising more of the sales, holding the median price down even though individual properties are appreciating. Why the other choices are wrong: The market is definitively declining contradicts the rising price per sq. ft. Local construction costs have fallen is unrelated to these sales price metrics. The two measures always move together is false; they can diverge due to mix shifts. Exam tip: Analyze both median price and price per unit to spot market mix shifts.
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