Why can prices keep rising for months after demand has begun to weaken?
Correct Answer
A) Sellers anchor to recent peaks and volume falls before price does
Why this is correct: In a turning market, sellers often price based on recent peak prices (anchoring), refusing to lower prices initially. This causes sales volume to drop while listed prices remain high, creating a lag before measurable price declines appear. Why the other choices are wrong: Appraisers report market value, not smoothed values. Buyer bargaining power is not season-specific. Land costs do not automatically rise quarterly. Exam tip: Volume often falls before prices in a market turn.
Why This Is the Correct Answer
Why this is correct: In a turning market, sellers often price based on recent peak prices (anchoring), refusing to lower prices initially. This causes sales volume to drop while listed prices remain high, creating a lag before measurable price declines appear. Why the other choices are wrong: Appraisers report market value, not smoothed values. Buyer bargaining power is not season-specific. Land costs do not automatically rise quarterly. Exam tip: Volume often falls before prices in a market turn.
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