Other relevant conditions equal, an increase in effective buyer demand relative to unchanged available listings tends to create which pressure?
Correct Answer
D) Upward price pressure and potentially faster sales
With other conditions equal and available competitive supply unchanged, greater effective demand tends to increase competition and upward price pressure and can quicken sales. Actual quantities, pricing decisions and timing still require market evidence; this is not an unconditional prediction.
Why This Is the Correct Answer
Option D is correct because, other conditions equal, an increase in effective demand with unchanged available listings tends to increase competition among buyers, producing upward price pressure and potentially faster sales. When demand exceeds supply, there is excess demand that tends to push price up.
Why the Other Options Are Wrong
Option A: Lower price pressure and slower sales
Option A is wrong because lower price pressure and slower sales describe weakening demand or excess supply. Rising demand against unchanged listings points the other way, toward upward price pressure and potentially faster sales.
Option B: Lower price pressure with no added competition
Option B is wrong because lower price pressure with no added competition contradicts what rising demand does. More buyers chasing the same listings adds competition and tends to push price up.
Option C: A fixed price level with slower sales
Option C is wrong because a fixed price level with slower sales does not follow from rising demand. Excess demand tends to raise price and can quicken sales rather than slow them.
Excess demand pushes up
When demand outruns supply, prices feel upward pressure and homes tend to sell faster.
How to use: Use this to choose the direction of price and pace when demand rises against fixed supply.
Exam Tip
When demand rises and supply holds, look for the option pairing upward price pressure with faster sales.
Common Mistakes to Avoid
- -Assuming prices stay fixed when demand rises
- -Linking higher demand to slower sales
- -Treating the expected effect as an unconditional prediction without market evidence
Concept Deep Dive
Analysis
This question tests the effect of rising effective demand against unchanged supply. With other conditions equal, more buyers competing for the same listings tends to create upward price pressure and can speed up sales.
Background Knowledge
When market demand is greater than market supply, excess demand tends to cause price to increase. In housing, this often shows up as more offers, shorter marketing times and higher sale-to-list ratios. Actual outcomes still depend on pricing decisions and timing and should be confirmed with market evidence.
Real-World Application
After mortgage rates dip, more buyers enter a market where listing counts have not changed. The appraiser sees multiple offers, shorter days on market and rising sale-to-list ratios, and documents an increasing market trend.
More Market Questions
Market analysis confirms that seller financing at 3%, versus a 6% market rate, increased a comparable sale price. What adjustment removes that financing premium?
At the same effective date, reliable value indications support $800,000 for continued use of a property as improved and $500,000 for its cleared site. Immediate demolition costs $100,000. These are the only feasible alternatives, with no other costs or timing differences. Which alternative has the higher net value?
Other relevant conditions equal, growth in the number of households with effective purchasing power in a market tends to have which effect?
In a lakefront market, paired sales show that direct water frontage has the largest price effect of any feature. Which approach to comparable selection best follows from this evidence?
Which circumstance can cause highest and best use as improved to differ from highest and best use as though vacant?
A small group of buyers in a market looks for specialized features that are uncommon in the broader housing supply. What term describes this group?
A neighborhood analysis should include all of the following EXCEPT:
A site legally permits at most 40 units and can physically support 50. Supported comparable analyses find 30 and 40 units financially feasible, with 40 units producing the highest net land value after costs, timing and required return. Which use is maximally productive among these alternatives?
Market evidence isolates a subject value loss from off-site landfill odors. Which listed cause is an external-obsolescence influence?
Which proposed use cannot pass the legal-permissibility screen without evidence that the necessary permission is reasonably probable?
People Also Study
Property Description
11.8% of exam
Land or Site Valuation
4.5% of exam
Sales Comparison Approach
16.4% of exam
Cost Approach
13.6% of exam
Income Approach
8.2% of exam
Previous Question
An office market segment has 50,000 square feet available. Absorption has been stable at 120,000 square feet per year, and no new or returning supply is expected. At that pace, how long will it take to absorb the available space?
Next Question
A market analysis shows the following quarterly absorption rates for condominiums: Q1: 45 units, Q2: 52 units, Q3: 38 units, Q4: 41 units. What is the average quarterly absorption rate?