Market Analysis and Economics Flashcards
7 cards from real CRECI practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Market Analysis and Economics flashcards as text
Which economic indicator measures the total value of goods and services produced within a country's borders over a specific period?
Answer: Gross Domestic Product
GDP (Gross Domestic Product) measures the total monetary value of all finished goods and services produced within a country's borders in a specific time period.
In commercial real estate, a 'buyer's market' is characterized by:
Answer: Excess supply relative to demand, favoring buyers
A buyer's market occurs when supply exceeds demand, giving buyers more negotiating power and typically resulting in lower prices and more concessions.
What does the 'absorption rate' measure in commercial real estate market analysis?
Answer: The pace at which available space is leased or sold in a market
Absorption rate measures how quickly available commercial space is leased or sold in a given market over a specific time period.
The concept of 'highest and best use' in real estate economics requires that a use must be:
Answer: Legally permissible, physically possible, financially feasible, and maximally productive
Highest and best use must satisfy all four criteria: legally permissible, physically possible, financially feasible, and maximally productive.
When interest rates rise, what typically happens to commercial real estate cap rates?
Answer: Cap rates tend to rise, putting downward pressure on property values
Rising interest rates generally push cap rates higher because investors require greater returns to compensate for increased borrowing costs, which compresses property values.
In market analysis, 'net absorption' differs from 'gross absorption' because net absorption:
Answer: Subtracts space vacated during the period from total space leased
Net absorption equals total space leased minus total space vacated during the same period, providing a clearer picture of true market demand.
Which analysis method examines how changes in key assumptions (e.g., vacancy rate or rent growth) affect a property's projected returns?
Answer: Sensitivity analysis
Sensitivity analysis tests how changes in individual variables—such as vacancy, rent growth, or cap rates—impact projected investment returns or value.