Market Research & Analysis Flashcards
7 cards from real REA 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 Research & Analysis flashcards as text
In real estate market analysis, 'net absorption' is defined as:
Answer: The change in occupied space over a period, reflecting new occupancy minus space vacated
Net absorption measures the net change in physically occupied space — new move-ins less move-outs — indicating whether the market is gaining or losing occupancy.
A real estate market analyst uses a Herfindahl-Hirschman Index (HHI) analysis of a local office market. What is the analyst most likely measuring?
Answer: Market concentration among office landlords or tenants to assess competitive dynamics
The HHI measures market concentration — a high score indicates dominance by a few players, which affects competitive leasing dynamics and market pricing power.
When analysts describe a real estate market as being in the 'expansion phase' of the market cycle, they expect:
Answer: Falling vacancy, rising rents, and increasing new construction activity
The expansion phase is characterized by tightening vacancy, upward rent pressure, and growing developer confidence that stimulates new construction pipelines.
A highest and best use study for a vacant downtown parcel should analyze the site both 'as vacant' and 'as improved' because:
Answer: 'As vacant' identifies the optimal new development while 'as improved' determines whether existing structures add or detract value
The 'as vacant' analysis determines ideal future development while 'as improved' tests whether any existing structure contributes value or should be demolished.
Which of the following is an example of 'primary research' in a real estate market study?
Answer: Surveying apartment managers to collect current asking rents and vacancy data directly
Primary research involves collecting original data directly from the source, such as field surveys of property managers, versus using existing published datasets.
A capitalization rate (cap rate) trend declining from 6% to 4.5% in a market over three years most directly indicates:
Answer: Investors are paying higher prices relative to income, signaling increased demand and/or compressed yields
Declining cap rates mean investors are paying more per dollar of NOI — reflecting heightened demand, capital inflows, or lower perceived risk in that market.
In a real estate feasibility study, a 'sensitivity analysis' is conducted to:
Answer: Test how changes in key assumptions (rents, vacancy, construction costs) affect projected returns
Sensitivity analysis stress-tests a financial model by varying key inputs to understand which assumptions most affect viability and where the project's risk lies.