Market Analysis and Economics Flashcards
7 cards from real Real Estate Investing 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 and Economics flashcards as text
Which economic indicator most directly signals an INCREASE in housing demand in the short term?
Answer: Falling unemployment rate
A falling unemployment rate means more people have stable incomes, increasing their ability and willingness to purchase homes.
In real estate market analysis, 'months of supply' is calculated as:
Answer: Active listings divided by monthly closed sales
Months of supply = active listings ÷ average monthly closed sales, indicating how long it would take to sell all current inventory at the current pace.
A neighborhood with a high 'walk score' and proximity to mass transit is most closely associated with which market trend?
Answer: 18-hour city growth
18-hour cities are mid-size metros offering urban amenities like walkability and transit that attract residents seeking alternatives to expensive gateway cities.
What does a negative net migration figure in a metro area suggest for local real estate investors?
Answer: Potential softening of rents and home values
Negative net migration means more people are leaving than arriving, reducing housing demand and putting downward pressure on rents and prices.
Which phase of the real estate cycle is characterized by rising rents, low vacancy, and increasing new construction starts?
Answer: Expansion
The expansion phase features strong demand outpacing supply, driving rents up and vacancy down, which incentivizes developers to start new construction.
An investor tracks the 'price-to-rent ratio' in a market. A ratio above 20 generally suggests:
Answer: Home prices may be overvalued relative to rental income
A price-to-rent ratio above 20 indicates homes are expensive relative to rental income, suggesting potential overvaluation or a market that favors renters.
Which of the following best describes a 'buyer's market' in residential real estate?
Answer: 6+ months of inventory giving buyers negotiating leverage
A buyer's market exists when supply exceeds demand (typically 6+ months of inventory), giving buyers more negotiating power on price and terms.