Market Analysis & Economic Influences Flashcards

In a real estate market analysis, the absorption rate is best defined as:

Answer: The rate at which available properties are sold or leased over a specific period

Absorption rate measures how quickly available supply is being taken up by demand (sales or leases) over a defined period.

Which economic concept refers to the point at which the supply of real estate equals the demand, resulting in a stable price level?

Answer: Equilibrium

Equilibrium is the condition where supply and demand are balanced, producing a stable market price.

A market with rising vacancy rates and declining rents is most likely in which phase of the real estate cycle?

Answer: Hypersupply

Hypersupply occurs when new construction outpaces demand, causing vacancies to rise and rents to soften.

In market analysis, 'months of supply' is calculated by dividing:

Answer: Total active listings by average monthly sales

Months of supply equals total active listings divided by the average number of sales per month, indicating how long current inventory would last.

Which condition most directly indicates a seller's market in residential real estate?

Answer: Months of supply below 3 months

A seller's market is typically indicated by fewer than 3 months of supply, meaning demand exceeds available inventory.

Price elasticity of demand in real estate refers to:

Answer: The sensitivity of quantity demanded to changes in price

Price elasticity of demand measures how much the quantity demanded changes in response to a change in price.

When analyzing competing supply for a subject property, an appraiser should focus primarily on properties that are:

Answer: Functionally similar and serve the same market segment

Competing supply analysis must include properties that are functionally similar and appeal to the same pool of buyers or tenants.