Ch 9 Quiz Real Property Markets Flashcards
True or False? Real property is typically purchased with cash.
FALSE
“A set of arrangements in which buyers and sellers are brought together through the price mechanism; the aggregate of possible buyers and sellers and the transactions between them” is the definition of
market
“The area associated with a subject property that contains its direct competition” is the definition of a
market area
“A neighborhood characterized by homogeneous land use, e.g., apartment, commercial, industrial, agricultural” is the definition of
district
All the following are characteristics of a good market EXCEPT
small number of buyers and sellers
All of the following would be participants in the real property market
• Buyers
• Sellers
• Landlords
• Tenants
• Real estate agents
• Appraisers
• Mortgage officers
• Underwriters
• Title company officials
• Attorneys
• Surveyors
• Home inspectors
• Engineers
• Developers
“A market in which a drop in demand is accompanied by a relative oversupply and a decline in prices” is the definition of a(n) ____________ market.
depressed
True or False? A farmer’s market is an example of a market at work.
TRUE
The principle of supply and demand states, in part, that the price of real property varies directly with ________ and inversely with __________.
demand, supply
All the following are characteristics of a good market
• Homogeneous products
• Prices are relatively low
• Prices are stable
• Products are easily transportable
• Organized market mechanism
• A large number of buyers and sellers
• Buyers and sellers are knowledgeable
• Buyers and sellers act rationally
• Little regulation or government intervention
• Supply and demand operate freely
Which type of market is MOST likely to be characterized by higher prices and a shortage of homes for sale?
seller’s market
“A market characterized by numerous transactions.” is the definition of a(n) _________ market.
active
Which would NOT be an example of strong demand in a real property market?
decreasing building starts
Which of these would be considered the most INEFFICIENT market?
the real property market
Real property is unique as an economic good in that it is
immovable
When supply and demand are out of balance, they tend to move towards
equilibrium
In real property, a market is defined in terms of
competition. Market Boundaries. A market is an area in which properties are located that would be truly comparable or competitive in the mind of a typical purchaser.
A real estate market is defined in terms of __________.
competition
Which would NOT be an example of a homogenous product?
a building lot
In a real property market, which factor of the supply and demand equation is dynamic and subject to immediate change?
demand
“An active market in which the sellers of available properties can obtain higher prices than those obtainable in the immediately preceding period; a market in which a few available properties are demanded at prevailing prices by many users and potential users” is the definition of a(n) __________ market.
seller’s
A neighborhood consists of ____________ land uses, while a district consists of __________ land uses.
complementary, homogeneous
“The area associated with a subject property that contains its direct competition” is the definition of
market area
True or False? The principle of supply and demand applies to consumer goods and services, but not real property.
FALSE
“A market in which product differentiation exists, there is a lack of important product or market information, and some of the producers and/or consumers are significant enough to affect the price and quantity of goods by their actions alone” is the definition of a(n) ____________ market.
imperfect
Which is usually larger?
market area
Which would NOT be an example of strong demand in a real property market?
decreasing building starts
What is the supply of real estate in a market?
the existing stock of parcels of real estate
The principle of supply and demand states that the price of a commodity varies ________ with demand.
directly. Supply and demand is defined as “In economic theory, the principle that states that the price of a commodity, good, or service varies directly, but not necessarily proportionately, with demand, and inversely, but not necessarily proportionately, with supply. In a real estate appraisal context, the principle of supply and demand states that the price of real property varies directly, but not necessarily proportionately, with demand and inversely, but not necessarily proportionately, with supply.”
