In Colorado, the 'housing price-to-income ratio' is an important indicator for real estate markets because:
Why B. It measures housing affordability — when this ratio rises significantly (homes become much more expensive relative to incomes), it can signal market risk and reduced buyer pools Is Correct
Answer B: B. It measures housing affordability — when this ratio rises significantly (homes become much more expensive relative to incomes), it can signal market risk and reduced buyer pools
Exam Tip: Finance
Finance questions often involve calculations. Master the T-bar method, understand the difference between conventional and government-backed loans, and know key ratios like LTV and DTI.
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Key Terms to Know
A lender's measure of a borrower's monthly debt obligations relative to their gross monthly income, used to evaluate loan eligibility.
Loan-to-Value Ratio (LTV)The ratio of a mortgage loan amount to the appraised value or purchase price of a property, expressed as a percentage.
Private Mortgage Insurance (PMI)Insurance required by lenders on conventional loans with less than 20% down payment, protecting the lender — not the borrower — against default.
Option ContractA contract giving the buyer the right, but not the obligation, to purchase a property at a specified price within a specified time period.
Math Concepts
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