Market Analysis & Trends Flashcards
7 cards from real CRU 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 & Trends flashcards as text
Which of the following is an example of external obsolescence affecting a neighborhood market?
Answer: A new highway ramp creating traffic noise near homes
External obsolescence arises from forces outside the property itself — such as new infrastructure creating noise or traffic — and is typically not curable by the property owner.
A CRU underwriter notices that the list-to-sale price ratio in a market has fallen from 99% to 94% over 12 months. This trend most strongly suggests:
Answer: Buyer demand is weakening relative to supply
A declining list-to-sale price ratio means buyers are successfully negotiating larger discounts, indicating softening demand or growing supply.
Under Fannie Mae guidelines, a market trend analysis must cover a minimum look-back period of:
Answer: 12 months
Fannie Mae requires market trend analysis to cover the prior 12 months to capture seasonal patterns and directional trends in a subject property's market.
What does a 'concentric ring' approach to market analysis help an underwriter determine?
Answer: The geographic extent of the competitive market area
Expanding rings from the subject property outward help identify where similar buyers and sellers transact, defining the competitive market area used for trend analysis.
A market where median days on market has increased from 18 to 67 days over two quarters signals which underwriting concern?
Answer: Declining liquidity and potential collateral value risk
Sharply rising days on market signals slowing demand and reduced market liquidity, which increases the risk that collateral value may decline if the lender must liquidate.
Which factor would most directly cause a residential market to shift from declining to stabilizing, according to market cycle theory?
Answer: Inventory drawdown to demand-supply equilibrium
Market stabilization typically occurs when excess inventory is absorbed and supply and demand reach equilibrium, halting further price declines.
A CRU underwriter is evaluating a property in a market with significant short-term rental (STR) activity. The primary collateral concern is:
Answer: Regulatory risk that could eliminate STR income and reduce demand
STR markets face regulatory risk — local ordinances restricting short-term rentals can quickly reduce investor demand and suppress property values in affected areas.