In-migration to a metro area increases housing demand primarily by:
Correct Answer
C) Adding households competing for existing stock
Why this is correct: The governing concept is that housing demand is driven by the number of households seeking units. In-migration adds households to the area, increasing competition for the existing housing stock. If construction does not keep pace, this leads to decreased vacancy and upward pressure on prices. Why the other choices are wrong: "Lowering the market's frictional vacancy rate only" is incorrect because while migration may reduce vacancy, its primary impact is on demand, not just the frictional rate. "Raising construction costs for new development" is incorrect because migration affects demand directly; construction costs are a supply-side factor. "Increasing the average age of the housing stock" is incorrect because migration does not directly alter the age of housing stock. Exam tip: Always think of demand in terms of households, not just population, when analyzing housing markets.
Why This Is the Correct Answer
Why this is correct: The governing concept is that housing demand is driven by the number of households seeking units. In-migration adds households to the area, increasing competition for the existing housing stock. If construction does not keep pace, this leads to decreased vacancy and upward pressure on prices. Why the other choices are wrong: "Lowering the market's frictional vacancy rate only" is incorrect because while migration may reduce vacancy, its primary impact is on demand, not just the frictional rate. "Raising construction costs for new development" is incorrect because migration affects demand directly; construction costs are a supply-side factor. "Increasing the average age of the housing stock" is incorrect because migration does not directly alter the age of housing stock. Exam tip: Always think of demand in terms of households, not just population, when analyzing housing markets.
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