RESIDENTIAL MARKET ANALYSIS
CERTIFICATION EVALUATION TEST PAPER
COMPLETE QUESTIONS AND SOLUTIONS
●● Market type: Depressed market
Description: A market in which a drop in demand is accompanied by a
relative oversupply and a decline in prices.
Answer: disequilibrium
●● Market type: Buyer's market
Description: A market in which buyers have the advantage which exists
when market prices are relatively low due to an oversupply of property
or reduced buyer demand.
Answer: disequilibrium
●● Market type: Seller's market
Description: 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.
Answer: disequilibrium
●● Market type: Weak market
,Description: A market characterized by low demand and declining price
levels, also called a soft market.
Answer: disequilibrium
●● The subject is located in a market area with 30 similar homes for sale
now, 15 similar homes under construction, and 10 more planned and/or
permitted. What is the supply factor?
Answer: 55 units
●● Buyers in this market prefer one-story, three-bedroom dwellings, but
the community is small and choices between the designs and number of
bedrooms available is limited. Many buyers have only one or two homes
to choose from on most days. Most homes in this market are two-story
design dwellings. There have been few sales in this market of any design
(one- or two-story). Which term describes the market segment in which
the preferred floor plan exists?
Answer: No market segment can be defined by floor levels or design.
●● The subject is located in a market where a basic industry employer
has just built a new manufacturing facility. This facility will employ 500
people in the town. The salaries will be near minimum wage for 90% of
the employees. The management will have higher salaries, and have
lived in town for two years now. This should cause
Answer: a strong market for low-valued housing, apartments, and maybe
manufactured homes.
,●● The subject is a two-acre parcel located in a rural area with mostly
flat terrain. The parcel is at the corner of two county roads and has
access points on both roads. The population density in this area is about
.025 persons per acre. The subject is zoned commercial. The traffic
counts in front of the subject property averages eight cars per hour. The
traffic counts in front of most commercial improved properties in this
market are more than 4,000 cars per day. The owner insists that since it
is zoned commercial, it is commercial land. The market value for this
property as commercial land is limited by
Answer: the low traffic counts.
●● A developer proposes to develop a subdivision of 50 lots. In this
market, there are three other competing subdivisions. The first is nearly
sold out and has 14 lots remaining and for sale; another has 48 lots still
available for sale; and county records report a third subdivision is
planned with 35 lots. Based on an absorption in this market of five lots
per month, assuming no other new lots are proposed, and that the
subdivisions all sell at similar rates, what is the absorption time for all of
these lots (all four subdivisions) in this market?
Answer: 14 + 48 + 35 = 97 lots ÷ 5 = 19.4
●● Most properties in a market are sold by owners, and not listed with
real estate agents. In some cases, potential buyers knock on doors of this
community to see if the owner is interested in selling. The majority sell
above asking prices. How would this market be described?
Answer: a strong market for sellers
, ●● A market analysis revealed that a specific market segment would be
purchasers of a one-bedroom, one-bathroom, 700-square-foot, first-floor
condominium unit. What would be a reasonable substitute for the
property?
Answer: a similar one-bedroom, first-floor unit in a nearby complex
●● The property to be appraised is a one-story, 2,000-square-foot, 5-
year-old dwelling. In researching, the appraiser found that there is a new
subdivision nearby which is selling homes similar in design and gross
living area (GLA) to the subject. There are 223 homes and lots in this
new subdivision. There are two additional subdivisions currently
beginning construction with 150 and 123 homes and 50 vacant lots in
those subdivisions. The assessor's records show there are 3,1257 homes
in this market area now. Which step of the market analysis can be
performed?
Answer: supply analysis
●● Can a neighborhood include a variety of land uses?
Answer: Yes, a neighborhood is a grouping of complementary land uses,
so there can be many different land uses.
●● Which of the following statements is true?
Answer: There are times when a market area and a neighborhood may be
one and the same, and times when it's possible to have a neighborhood
within a bigger market area.
CERTIFICATION EVALUATION TEST PAPER
COMPLETE QUESTIONS AND SOLUTIONS
●● Market type: Depressed market
Description: A market in which a drop in demand is accompanied by a
relative oversupply and a decline in prices.
Answer: disequilibrium
●● Market type: Buyer's market
Description: A market in which buyers have the advantage which exists
when market prices are relatively low due to an oversupply of property
or reduced buyer demand.
Answer: disequilibrium
●● Market type: Seller's market
Description: 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.
Answer: disequilibrium
●● Market type: Weak market
,Description: A market characterized by low demand and declining price
levels, also called a soft market.
Answer: disequilibrium
●● The subject is located in a market area with 30 similar homes for sale
now, 15 similar homes under construction, and 10 more planned and/or
permitted. What is the supply factor?
Answer: 55 units
●● Buyers in this market prefer one-story, three-bedroom dwellings, but
the community is small and choices between the designs and number of
bedrooms available is limited. Many buyers have only one or two homes
to choose from on most days. Most homes in this market are two-story
design dwellings. There have been few sales in this market of any design
(one- or two-story). Which term describes the market segment in which
the preferred floor plan exists?
Answer: No market segment can be defined by floor levels or design.
●● The subject is located in a market where a basic industry employer
has just built a new manufacturing facility. This facility will employ 500
people in the town. The salaries will be near minimum wage for 90% of
the employees. The management will have higher salaries, and have
lived in town for two years now. This should cause
Answer: a strong market for low-valued housing, apartments, and maybe
manufactured homes.
,●● The subject is a two-acre parcel located in a rural area with mostly
flat terrain. The parcel is at the corner of two county roads and has
access points on both roads. The population density in this area is about
.025 persons per acre. The subject is zoned commercial. The traffic
counts in front of the subject property averages eight cars per hour. The
traffic counts in front of most commercial improved properties in this
market are more than 4,000 cars per day. The owner insists that since it
is zoned commercial, it is commercial land. The market value for this
property as commercial land is limited by
Answer: the low traffic counts.
●● A developer proposes to develop a subdivision of 50 lots. In this
market, there are three other competing subdivisions. The first is nearly
sold out and has 14 lots remaining and for sale; another has 48 lots still
available for sale; and county records report a third subdivision is
planned with 35 lots. Based on an absorption in this market of five lots
per month, assuming no other new lots are proposed, and that the
subdivisions all sell at similar rates, what is the absorption time for all of
these lots (all four subdivisions) in this market?
Answer: 14 + 48 + 35 = 97 lots ÷ 5 = 19.4
●● Most properties in a market are sold by owners, and not listed with
real estate agents. In some cases, potential buyers knock on doors of this
community to see if the owner is interested in selling. The majority sell
above asking prices. How would this market be described?
Answer: a strong market for sellers
, ●● A market analysis revealed that a specific market segment would be
purchasers of a one-bedroom, one-bathroom, 700-square-foot, first-floor
condominium unit. What would be a reasonable substitute for the
property?
Answer: a similar one-bedroom, first-floor unit in a nearby complex
●● The property to be appraised is a one-story, 2,000-square-foot, 5-
year-old dwelling. In researching, the appraiser found that there is a new
subdivision nearby which is selling homes similar in design and gross
living area (GLA) to the subject. There are 223 homes and lots in this
new subdivision. There are two additional subdivisions currently
beginning construction with 150 and 123 homes and 50 vacant lots in
those subdivisions. The assessor's records show there are 3,1257 homes
in this market area now. Which step of the market analysis can be
performed?
Answer: supply analysis
●● Can a neighborhood include a variety of land uses?
Answer: Yes, a neighborhood is a grouping of complementary land uses,
so there can be many different land uses.
●● Which of the following statements is true?
Answer: There are times when a market area and a neighborhood may be
one and the same, and times when it's possible to have a neighborhood
within a bigger market area.
