Market Analysis & Trends Flashcards
7 cards from real CRU 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 & Trends flashcards as text
Which economic indicator is most directly tied to housing demand in a residential market?
Answer: Household formation rate
Household formation — the rate at which new households are created — is the fundamental driver of housing demand, as each new household needs a place to live.
A CRU underwriter is reviewing a market where investor-purchased homes account for 35% of transactions. The primary risk this concentration creates is:
Answer: Inflated comparable sales if investors overpay
High investor activity can inflate comparable sales if investors pay premiums or include non-arm's-length terms, potentially overstating market value for owner-occupied financing.
What is the primary purpose of the FHFA House Price Index (HPI) in residential underwriting?
Answer: Tracking price appreciation trends for use in collateral risk assessment
The FHFA HPI tracks repeat-sales price changes, giving underwriters a standardized measure of appreciation or depreciation trends to assess collateral risk.
In market trend analysis, 'price per square foot' trends are most useful when:
Answer: Segmented by property type, size range, and location submarket
Price per square foot varies significantly by size range, property type, and location; meaningful trend analysis segments these variables to avoid distorted conclusions.
When a market exhibits high price volatility with wide standard deviation in sales prices, an underwriter should respond by:
Answer: Requiring a larger number of comparable sales for analysis
High price variability means fewer comparables could produce unreliable value conclusions; requiring more data points improves statistical reliability of the analysis.
A residential market where new listings immediately generate multiple offers above asking price is best characterized as:
Answer: A demand-constrained market with high absorption
Immediate multiple offers above asking price indicate demand significantly exceeds supply, resulting in high absorption rates and rapid price discovery above list prices.
Which concept describes the risk that an appraisal reflects a temporary market peak rather than a sustainable long-term value?
Answer: Market conditions risk / temporal obsolescence
Market conditions risk recognizes that values at cycle peaks may not be sustainable; underwriters must assess whether current prices reflect durable demand or temporary speculation.