Market Analysis & Trends Flashcards

An FHA appraiser is analyzing a market where investor purchases represent 35% of all transactions. What is the primary concern this raises for market analysis?

Answer: High investor activity may indicate a rental market dynamic that differs from owner-occupant market value

High investor concentration can skew pricing toward cash-buyer investment returns rather than owner-occupant market value, requiring careful analysis of arm's-length conditions.

The concept of 'plottage' in real estate market analysis refers to:

Answer: The additional value created by combining adjacent parcels into a larger, more useful tract

Plottage is the increment of value achieved when two or more adjacent parcels are assembled together, creating a combined value greater than the sum of individual values.

For FHA market trend analysis, 'sale price concessions' are important to identify because they:

Answer: Inflate nominal sale prices above the true arms-length market value if not adjusted

Seller concessions (closing cost assistance, rate buydowns, etc.) can cause the nominal sale price to appear higher than the true net market transaction value, requiring adjustments.

When analyzing condominium market trends for an FHA appraisal, the appraiser should give special attention to the project's:

Answer: Owner-occupancy ratio and its trend over time

FHA requires condominium projects to maintain minimum owner-occupancy ratios; a declining ratio toward rental concentration can affect both project eligibility and unit market value.

A sudden announcement that a major employer is relocating out of a market area would most directly represent what type of influence on real estate values?

Answer: Economic influence reducing employment and purchasing power in the area

Major employer departures are economic influences that reduce local employment, income levels, and consumer confidence, typically exerting downward pressure on property values.

Under FHA guidelines, when an appraiser determines that no market conditions time adjustment is warranted, the appraiser must:

Answer: Support the conclusion with market data demonstrating stable prices over the analysis period

A zero time adjustment is a supportable conclusion only when market data actually confirms price stability; the appraiser must provide evidence, not simply omit the adjustment.

In FHA residential market analysis, 'regression' refers to:

Answer: The tendency of a superior property to lose value due to proximity to inferior properties

The principle of regression holds that a higher-valued property is negatively affected in value by its association with lower-valued surrounding properties.