COS Market Analysis & Trends 2 — Questions and Answers
Question 1: Which economic indicator is most directly used to assess the demand side of a local rental housing market?
- Unemployment rate (Correct answer)
- Federal funds rate
- Municipal bond yield
- Wholesale price index
Correct answer: Unemployment rate
The unemployment rate reflects local residents' ability to pay rent, directly impacting rental housing demand.
Question 2: A market study shows that a competing property's concessions include two months free rent on a 12-month lease. What is the effective monthly rent if asking rent is $1,200?
- $1,000 (Correct answer)
- $1,100
- $1,050
- $1,200
Correct answer: $1,000
Two months free on a 12-month lease means tenants pay 10 months out of 12, so $1,200 × 10/12 = $1,000 effective monthly rent.
Question 3: In a market analysis for affordable housing, what does 'AMI' stand for?
- Area Median Income (Correct answer)
- Adjusted Market Index
- Annual Market Indicator
- Average Monthly Income
Correct answer: Area Median Income
AMI stands for Area Median Income, the benchmark used to determine affordability thresholds for HUD-assisted housing programs.
Question 4: When performing a competitive market analysis, a COS specialist should primarily compare units based on:
- Unit size, amenities, location, and net effective rents (Correct answer)
- Gross potential rent only
- Tenant demographics and income levels
- Landlord reputation and management style
Correct answer: Unit size, amenities, location, and net effective rents
A valid competitive comparison requires evaluating equivalent unit characteristics alongside the true cost to tenants after concessions.
Question 5: A submarket experiencing rapid employment growth but stagnant housing inventory is likely to see:
- Rising occupancy rates and increasing rents (Correct answer)
- Falling rents due to reduced demand
- Stable rents with higher vacancy
- Declining occupancy due to affordability issues
Correct answer: Rising occupancy rates and increasing rents
When job growth outpaces housing supply, competition for units increases, driving both occupancy and rents upward.
Question 6: Which document type best summarizes competitive positioning of a specific affordable housing property within its market?
- Market study (Correct answer)
- Rent schedule
- Annual operating budget
- HUD-50059 form
Correct answer: Market study
A market study evaluates competing properties, vacancy rates, demographic trends, and demand to position the subject property competitively.
Question 7: A property has 100 units with 6 vacant. What is the physical vacancy rate?
- 6% (Correct answer)
- 94%
- 6.4%
- 10%
Correct answer: 6%
Physical vacancy rate = vacant units ÷ total units = 6 ÷ 100 = 6%.
COS Market Analysis & Trends 2
Which economic indicator is most directly used to assess the demand side of a local rental housing market?