MRP Market Analysis & Trends 2 — Questions and Answers
Question 1: Which metric best indicates whether a military housing market favors buyers or sellers?
- Months of inventory supply (Correct answer)
- Average days on market only
- List-to-sale price ratio only
- Number of active listings only
Correct answer: Months of inventory supply
Months of inventory supply (under 3 = seller's market, over 6 = buyer's market) is the most comprehensive single indicator of market balance.
Question 2: When a military installation announces a significant troop reduction, what is the most likely immediate effect on the surrounding housing market?
- Increased rental vacancy rates and downward pressure on home prices (Correct answer)
- Rapid appreciation driven by speculation
- Increased demand for luxury housing
- No effect until the reduction is complete
Correct answer: Increased rental vacancy rates and downward pressure on home prices
Troop reductions reduce BAH-backed demand, increasing vacancy and softening prices as service members and their families relocate away.
Question 3: An MRP is comparing two military markets. Market A has a 60-day average DOM and Market B has a 12-day average DOM. Which conclusion is most accurate?
- Market B is more competitive and homes sell closer to or above list price (Correct answer)
- Market A has higher-quality housing stock
- Market B likely has fewer military buyers
- Market A is healthier because sellers have more negotiating time
Correct answer: Market B is more competitive and homes sell closer to or above list price
A 12-day DOM signals high demand relative to supply, meaning buyers must act quickly and sellers often receive multiple offers at or above list price.
Question 4: How does the Department of Defense's Basic Allowance for Housing (BAH) rate-setting process influence local real estate markets?
- BAH rates are based on local median rents, creating a feedback loop that can push rents upward in military communities (Correct answer)
- BAH is set nationally and has no local market effect
- BAH only affects rental markets, not home purchase markets
- BAH rates are fixed for five years regardless of market changes
Correct answer: BAH rates are based on local median rents, creating a feedback loop that can push rents upward in military communities
Because BAH is calculated from local rental surveys, high concentrations of BAH recipients can inflate rents, which then raises future BAH calculations.
Question 5: Which data source provides the most reliable, current snapshot of absorption rates in a military housing market?
- Local MLS closed sales data for the past 30-90 days (Correct answer)
- National housing indices published annually
- Census Bureau decennial housing surveys
- Zillow Zestimate trends
Correct answer: Local MLS closed sales data for the past 30-90 days
Local MLS closed sales data gives real-time, market-specific absorption figures that reflect actual transaction pace rather than lagged national estimates.
Question 6: A military community near a large installation has seen a 15% year-over-year increase in home prices. Which factor unique to military markets could BEST explain this trend?
- An increase in BAH rates combined with a new construction moratorium on base housing (Correct answer)
- A decrease in the number of PCS orders issued
- Lower mortgage interest rates nationally
- An increase in VA loan limits
Correct answer: An increase in BAH rates combined with a new construction moratorium on base housing
Rising BAH gives military buyers more purchasing power while restricted base housing forces more service members into the civilian market, compressing supply and driving prices up.
Question 7: When conducting a Comparative Market Analysis for a military client, why is it especially important to filter comparables by date of sale?
- Military market conditions can shift rapidly with PCS season cycles and installation announcements (Correct answer)
- VA appraisers require comps from the same calendar year
- Military buyers always close faster than civilian buyers
- Lenders require comps from the same fiscal year
Correct answer: Military market conditions can shift rapidly with PCS season cycles and installation announcements
Military markets experience sharp seasonal demand spikes (PCS season, spring/summer) and can be disrupted by sudden installation news, making recent comps far more representative than older ones.
MRP Market Analysis & Trends 2
Which metric best indicates whether a military housing market favors buyers or sellers?