Which listed consideration describes market supply relative to demand rather than a physical attribute of a parcel?
Correct Answer
C) Scarcity of competing sites relative to buyer demand
Scarcity here compares available competing sites with market demand. Location, slope and dimensions describe the physical site. Physical attributes can affect supply and value, but this does not make scarcity itself a measurement of the parcel or imply that every physical feature is unchangeable.
Why This Is the Correct Answer
Option C is correct because scarcity is the present or anticipated under-supply of an item relative to the demand for it. Scarcity of competing sites relative to buyer demand therefore describes market supply and demand, not a physical feature of the parcel.
Why the Other Options Are Wrong
Option A: The parcel’s fixed geographic location and site area
Option A is wrong because the parcel's fixed geographic location and site area are physical attributes of the land. They describe where the parcel is and how large it is, not market supply relative to demand.
Option B: The parcel’s slope and topography
Option B is wrong because the parcel's slope and topography describe its physical surface. They can affect value, but they are physical characteristics, not a supply and demand relationship.
Option D: The parcel’s dimensions and shape
Option D is wrong because the parcel's dimensions and shape are physical measurements of the site. They are not a comparison of available supply with market demand.
Scarcity lives in the market
You can measure a lot's slope with a level, but you can only measure scarcity by looking at the market's supply and demand.
How to use: Use this to separate economic characteristics from physical ones.
Exam Tip
Ask whether you could observe the feature by standing on the site; if you need market data to know it, it is economic rather than physical.
Common Mistakes to Avoid
- -Classifying scarcity as a physical characteristic
- -Confusing a parcel's fixed physical position (immobility) with situs, the market's preference for a location
- -Assuming physical features have no effect on supply
Concept Deep Dive
Analysis
This question tests the distinction between economic characteristics of real estate and physical attributes of a parcel. Scarcity compares the supply of competing sites with buyer demand, which is a market condition, while location, slope and dimensions describe the land itself.
Background Knowledge
Real estate is often described by physical characteristics, such as immobility and uniqueness, and economic characteristics, such as scarcity and situs. Supply and demand are functions of relative scarcity and utility. Physical features can influence supply and value, but scarcity itself is measured in the market.
Real-World Application
In a built-out coastal town, very few vacant buildable lots remain while buyer demand is strong. The appraiser notes the scarcity of competing sites as a market factor supporting land values, separate from the subject lot's size and topography.
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