Market Analysis & Trends Flashcards
7 cards from real FHA 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
In FHA appraisal, what does a declining months of supply statistic most directly indicate about a housing market?
Answer: Increasing buyer demand relative to available inventory
Declining months of supply means homes are selling faster relative to what's listed, signaling stronger buyer demand and a tightening market.
When performing market analysis for an FHA appraisal, an appraiser notices that list-price-to-sale-price ratios have risen from 96% to 101% over six months. This trend most likely indicates:
Answer: A seller's market where buyers are bidding above asking price
Ratios above 100% mean homes are selling above list price, a hallmark of competitive seller's market conditions.
Under USPAP and FHA guidelines, which data source is considered most reliable for identifying market trends in residential appraisals?
Answer: MLS sold data verified through public records
MLS sold data cross-verified with public records provides documented, arms-length transaction evidence that meets USPAP reliability standards.
An FHA appraiser is analyzing a neighborhood where median days on market (DOM) dropped from 45 to 12 days over one year. What adjustment, if any, is most appropriate?
Answer: A positive time adjustment to reflect appreciation during the marketing period
Sharply declining DOM signals increasing demand and typically accompanies price appreciation, warranting a positive time adjustment for comparables sold earlier.
Which FHA form requires the appraiser to specifically check a box indicating whether neighborhood property values are increasing, stable, or declining?
Answer: Fannie Mae Form 1004 (URAR)
The Uniform Residential Appraisal Report (Fannie Mae Form 1004/Freddie Mac Form 70) contains the Neighborhood section where value trend checkboxes are required.
When an FHA appraiser identifies a neighborhood in transition from primarily owner-occupied to predominantly rental housing, this factor is best described as:
Answer: An external obsolescence factor that must be quantified
Neighborhood tenure shifts toward rentals can indicate external obsolescence affecting property values, which appraisers must identify and measure.
In FHA market analysis, the absorption rate is calculated by dividing the number of sales in a period by:
Answer: The total number of active listings at period end
Absorption rate = number of sales ÷ active listings, expressing how quickly the current inventory would sell at the current sales pace.