RAA Real Estate Market 2 — Questions and Answers
Question 1: In a buyer's market, which condition is most likely present?
- Low inventory with rising prices
- High inventory with declining prices (Correct answer)
- Balanced supply and demand
- Rapid absorption of new listings
Correct answer: High inventory with declining prices
A buyer's market is characterized by excess supply over demand, resulting in high inventory and downward pressure on prices.
Question 2: The absorption rate in a local market is calculated as the number of sales divided by:
- Total population
- Active listings (Correct answer)
- New listings
- Expired listings
Correct answer: Active listings
Absorption rate equals the number of sales per period divided by active listings, expressed as a percentage or months of supply.
Question 3: A market area experiencing rapid population growth and limited new construction would most likely show:
- Declining rents
- Increasing vacancy rates
- Rising property values (Correct answer)
- Decreasing absorption rates
Correct answer: Rising property values
When demand (population growth) outpaces supply (limited construction), competitive pressure drives property values upward.
Question 4: Which type of market data is considered PRIMARY data for real estate market analysis?
- Published government statistics
- MLS data reports
- Field interviews with buyers and sellers (Correct answer)
- Newspaper real estate sections
Correct answer: Field interviews with buyers and sellers
Primary data is collected firsthand by the researcher directly from the source, such as interviews with market participants.
Question 5: A neighborhood transitioning from single-family residential to mixed commercial use is undergoing:
- Revitalization
- Gentrification
- Filtering
- Transition (Correct answer)
Correct answer: Transition
Transition refers to a neighborhood in the process of changing from one use type to another, affecting market dynamics.
Question 6: Which factor would cause the demand curve for housing to shift LEFT (decrease)?
- Increase in population
- Rise in household income
- Increase in mortgage interest rates (Correct answer)
- Decrease in available land
Correct answer: Increase in mortgage interest rates
Rising mortgage interest rates increase the cost of borrowing, reducing the number of qualified buyers and decreasing housing demand.
Question 7: When analyzing a submarket, an appraiser delineates the competitive market area based primarily on:
- Political boundaries such as city limits
- School district lines
- Where properties compete for the same buyers (Correct answer)
- Zip code boundaries
Correct answer: Where properties compete for the same buyers
A competitive market area is defined by the geographic zone where properties are functionally substitutable and compete for the same pool of buyers.
RAA Real Estate Market 2
In a buyer's market, which condition is most likely present?