Property Valuation
A capitalization rate decreasing over time in a market generally indicates:
AProperty values are declining
BInvestor confidence is growing and property values are rising relative to income✓ Correct
CRental rates are falling
DVacancies are increasing
Explanation
A declining cap rate (lower return relative to price) typically indicates that investors are willing to accept lower returns because they expect appreciation — usually a sign of a rising market.
Related Alabama Property Valuation Questions
- Functional obsolescence due to a feature that costs more to cure than the value it adds to the property is called:
- Which organization sets minimum qualification standards for state-certified and licensed real estate appraisers?
- An appraiser notes a comparable property sold for $300,000. The comparable has a pool, but the subject does not. The pool is estimated to contribute $15,000 in value. The appraiser should:
- An appraiser who uses paired sales analysis is attempting to:
- Depreciation in an appraisal context refers to:
- The principle of substitution states that a buyer will pay no more for a property than:
- An operating expense for an investment property that is NOT included when calculating NOI is:
- The income approach to value is most commonly used to appraise:
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