An appraiser observes that inventory has fallen 30% year over year while sales volume held steady. The likely implication is:
Correct Answer
D) Upward pressure on prices as competition for listings rises
Why this is correct: A 30% drop in inventory (supply) with steady sales volume (demand) means fewer properties are available for the same number of buyers. This scarcity typically leads to increased competition among buyers, placing upward pressure on prices. Why the other choices are wrong: "A coming increase in construction costs" is not directly indicated by inventory and sales data. "Downward pressure as sellers rush to list" contradicts falling inventory. "No implication at all, since the sales volume did not change" ignores the supply-demand imbalance. Exam tip: Falling inventory + stable or rising demand = upward price pressure. Monitor months of supply for market direction.
Why This Is the Correct Answer
Why this is correct: A 30% drop in inventory (supply) with steady sales volume (demand) means fewer properties are available for the same number of buyers. This scarcity typically leads to increased competition among buyers, placing upward pressure on prices. Why the other choices are wrong: "A coming increase in construction costs" is not directly indicated by inventory and sales data. "Downward pressure as sellers rush to list" contradicts falling inventory. "No implication at all, since the sales volume did not change" ignores the supply-demand imbalance. Exam tip: Falling inventory + stable or rising demand = upward price pressure. Monitor months of supply for market direction.
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In the neighborhood life cycle, what characterizes the decline stage?
'Filtering' describes the process by which:
Under the principle of substitution, the maximum value of a property tends to be set by:
Why does an appraiser analyze the market area before analyzing the subject property?
In which phase of the real estate cycle do rising vacancies first meet a still-growing construction pipeline?
Which measure most directly signals demand strength in a housing market?
The principle of consistent use prohibits:
Frictional vacancy in a rental market refers to:
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