Which set describes economic conditions supporting value in real estate?
Correct Answer
D) Utility, scarcity, desire and effective purchasing power
Utility, relative scarcity and desire backed by effective purchasing power explain economic market value in this framework. They differ from production inputs and physical property attributes. Apply the concepts to relevant rights and market conditions rather than use a mnemonic as a numerical valuation method.
Why This Is the Correct Answer
Utility, relative scarcity and desire backed by effective purchasing power explain economic market value in this framework. They differ from production inputs and physical property attributes. Apply the concepts to relevant rights and market conditions rather than use a mnemonic as a numerical valuation method.
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A seller who must close within two weeks to avoid a lender’s deadline accepts a price below what similar homes bring. Why might this sale not indicate market value?
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Two sales matched in features and terms sold for $400,000 exactly eight months before the effective date and $424,000 at the effective date. Market prices are changing at a constant simple monthly rate, without compounding. What is the monthly rate, and what is the adjusted price of a matched third comparable that contracted six months before the effective date at $450,000?