A fast-growing suburb shows unusually high profits for new apartment construction. Within a year, several developers start similar projects, and asking rents begin to level off. Which principle best explains the new market behavior?
Correct Answer
C) Competition from new market entrants
The principle of competition recognizes that substantial profits attract more market participants. As more developers enter, supply grows and the earlier high profit levels often moderate.
Why This Is the Correct Answer
Why the Other Options Are Wrong
Deep Analysis of This Valuation Market Analysis Question
Background Knowledge for Valuation Market Analysis
Real World Application in Valuation Market Analysis
Common Mistakes to Avoid on Valuation Market Analysis Questions
Related Topics & Key Terms
Key Terms:
More Valuation Market Analysis Questions
A buyer in Rochester is pre-approved for a conventional mortgage and wants to purchase a co-op apartment. What should the buyer's agent explain about financing a co-op purchase in New York?
A parcel is in a desirable retail corridor and buyers want it, but an unresolved title defect and missing legal access make it hard to close. Which element of value is most directly impaired?
When appraising co-op apartments in New York, all of the following factors must be considered due to their unique ownership structure EXCEPT:
A first-time buyer in New York City asks their agent about the difference between owning a co-op versus a condo. What is the fundamental ownership difference the agent should explain?
An agent in Staten Island is explaining maintenance fees to a co-op buyer. The buyer asks what expenses are typically included in a co-op maintenance fee that differ from condo common charges. What should the agent explain?
- → An appraiser is using the income approach to value a 12-unit rental building in Brooklyn. The building generates $180,000 in annual gross rental income. Operating expenses total $54,000 annually. The appraiser determines that a 7.5% capitalization rate is appropriate for this type of property in this location. What is the indicated value using the income approach?
- → An example of functional obsolescence is:
- → The best method to determine fair market value is:
- → Who typically hires the appraiser in a real estate transaction?
- → A depth table is used to estimate property value for:
- → Under federal law, which type of loan typically does NOT require a property appraisal?
- → FIRREA (Financial Institutions Reform, Recovery, and Enforcement Act) requires:
- → For appraising a vacant lot for single-family residence construction, which approach applies?
- → The final appraisal step of weighing different approaches is called:
- → For 1930s buildings, the cost approach is least accurate due to:
People Also Study
Buyer Representation Agreement
8% of exam
Property Ownership
10% of exam
Land Use Controls and Regulations
8% of exam
Valuation and Market Analysis
10% of exam
Previous Question
Appraiser Jordan Lee is reviewing the basic elements that must generally be present for real property to have market value. Which of the following is NOT one of those elements?
Next Question
An appraiser notes that a once-stable neighborhood has gained a commuter rail stop, new employers, and a major streetscape upgrade over the last three years. Which principle reminds the appraiser that value is affected because real estate markets are constantly in flux?