In which phase of the real estate cycle do rising vacancies first meet a still-growing construction pipeline?
Correct Answer
D) Hypersupply, when starts outrun demand
Why this is correct: Hypersupply occurs when new construction starts, initiated during an expansion, continue to deliver units after demand growth has slowed. This results in rising vacancies despite ongoing delivery, a key phase leading into recession. Why the other choices are wrong: In recovery, absorption improves and vacancies fall. In expansion, rents climb and vacancies are low. In recession, values have typically already fallen. Exam tip: Hypersupply = new supply exceeds absorption, causing vacancy rise.
Why This Is the Correct Answer
Why this is correct: Hypersupply occurs when new construction starts, initiated during an expansion, continue to deliver units after demand growth has slowed. This results in rising vacancies despite ongoing delivery, a key phase leading into recession. Why the other choices are wrong: In recovery, absorption improves and vacancies fall. In expansion, rents climb and vacancies are low. In recession, values have typically already fallen. Exam tip: Hypersupply = new supply exceeds absorption, causing vacancy rise.
More Market Questions
Building permit data is most useful to an appraiser as:
In the neighborhood life cycle, what characterizes the decline stage?
The principle of consistent use prohibits:
Employment in a one-industry town falls 20%. Through what mechanism does housing demand contract?
Frictional vacancy in a rental market refers to:
The principle of opportunity cost applied to real estate means:
A neighborhood with a wide range of property values requires the appraiser to:
In-migration to a metro area increases housing demand primarily by:
Absorption rate expressed in units per month is calculated by:
Two subdivisions share a school district but differ sharply in price point and buyer profile. They are best treated as:
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