The list-to-sale price ratio in a neighborhood slides from 99% to 93% over two quarters. This indicates:
Correct Answer
C) Weakening demand — buyers negotiating harder
Why this is correct: The list-to-sale price ratio measures the percentage of the asking price that buyers ultimately pay. A decline from 99% to 93% indicates buyers are negotiating larger discounts, which signals weakening demand relative to supply. Why the other choices are wrong: "Sellers have gained meaningful bargaining leverage" is the opposite; a lower ratio means sellers have less leverage. "Listings have become more accurate" would likely lead to a ratio closer to 100%, not a decline. "A data error, since ratios cannot fall" is incorrect; ratios can and do fluctuate with market conditions. Exam tip: A falling ratio is a leading indicator of a softening market, often appearing before median sale prices drop.
Why This Is the Correct Answer
Why this is correct: The list-to-sale price ratio measures the percentage of the asking price that buyers ultimately pay. A decline from 99% to 93% indicates buyers are negotiating larger discounts, which signals weakening demand relative to supply. Why the other choices are wrong: "Sellers have gained meaningful bargaining leverage" is the opposite; a lower ratio means sellers have less leverage. "Listings have become more accurate" would likely lead to a ratio closer to 100%, not a decline. "A data error, since ratios cannot fall" is incorrect; ratios can and do fluctuate with market conditions. Exam tip: A falling ratio is a leading indicator of a softening market, often appearing before median sale prices drop.
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