Which event directly increases the current supply of homes available in a market?
Correct Answer
B) Completion of additional homes now offered for sale
Newly completed additional units offered to the competitive market add current available supply. Demolition removes stock; renovation adds units only if it creates net additional units. Rezoning by itself changes potential capacity rather than completing physical supply.
Why This Is the Correct Answer
Option B is correct because newly completed additional homes offered for sale add units to the current available supply in the competitive market. They are both physically complete and on the market. The other events either remove stock, leave the number of units unchanged, or affect only potential future capacity.
Why the Other Options Are Wrong
Option A: Demolition of existing dwellings in the area
Option A, demolition of existing dwellings in the area, removes homes from the stock, so it reduces supply rather than increasing it.
Option C: Renovation of the same number of existing homes
Option C, renovation of the same number of existing homes, improves existing units without creating net additional units, so it does not increase the number of homes available.
Option D: Rezoning with no construction or new units
Option D, rezoning with no construction or new units, changes only the potential for future development; no physical homes are added to current supply.
Built and offered counts
A home adds to current supply only when it is both built and offered to buyers.
How to use: Use this to separate events that add homes now from events that only allow future building.
Exam Tip
Separate current supply from potential supply; rezoning and permits point to the future, completions point to now.
Common Mistakes to Avoid
- -Treating rezoning as an immediate increase in supply
- -Counting renovations as new supply
- -Forgetting that demolitions reduce supply
Concept Deep Dive
Analysis
This question tests what actually adds to the current available supply of homes. Current supply means units physically available to buyers now. Only an event that creates additional homes and offers them to the market increases that supply directly.
Background Knowledge
Housing supply includes existing units plus new units completed and offered to the market. Factors such as zoning changes, permits and land availability affect future supply but do not add homes until construction is finished. Appraisers distinguish current available supply from potential future supply when analyzing market conditions.
Real-World Application
A builder finishes 30 new homes and lists them for sale in a subdivision where buyer demand is steady. The appraiser notes the added competing inventory in the market analysis, while separately noting a recent rezoning that may allow more homes in later years.
More Market Questions
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