Property Valuation
What is 'absorption rate' and how is it calculated for the Nevada housing market?
AThe rate at which Nevada absorbs water from monsoon rains
BThe rate at which available housing inventory is sold or leased in a given period — calculated as the number of units sold per month divided by total active inventory; used to measure market conditions (buyer's vs. seller's market)✓ Correct
CA Nevada tax rate applied to new construction absorption costs
DThe rate at which new home construction is permitted in Nevada counties
Explanation
Absorption rate = Units sold per month ÷ Total active units available. A rate of 6-8 months inventory is considered balanced; below 6 months is a seller's market; above 8 months is a buyer's market.
People Also Study
Related Nevada Questions
- What are cap rate trends in Nevada's commercial real estate market indicating when cap rates compress (decrease)?Property Valuation
- What is the absorption rate in Nevada real estate market analysis?Property Valuation
- A Nevada property has 8 units renting at $1,350/month each. The vacancy rate is 6%, expenses are $32,000/year. If it sells at a 5.5% cap rate, what is the approximate sale price?Real Estate Math
- A Nevada property is assessed at 35% of its $600,000 market value. The tax rate is $3.50 per $100. What is the annual property tax?Real Estate Math
- A Nevada duplex generates $2,200/month per unit. With a vacancy rate of 8% and a GRM of 105 (monthly), what is the indicated value?Real Estate Math
- A Nevada apartment complex has 20 units, each renting at $950/month. Vacancy is 5%. Annual operating expenses are $90,000. What is the NOI?Real Estate Math
- In Nevada's Las Vegas market, what external obsolescence might affect a residential property's value?Property Valuation
- What is a jumbo loan in the context of Nevada's Las Vegas real estate market?Finance
Key Terms to Know
Capitalization Rate (Cap Rate)
A rate used to estimate the value of income-producing property, calculated as Net Operating Income divided by property value.
Comparable Sales (Comps)Recently sold properties similar in size, condition, and location used by appraisers and agents to estimate a property's market value.
Adjustable-Rate Mortgage (ARM)A mortgage with an interest rate that changes periodically based on a financial index, usually after an initial fixed-rate period.
Debt-to-Income Ratio (DTI)A lender's measure of a borrower's monthly debt obligations relative to their gross monthly income, used to evaluate loan eligibility.
Study This Topic
Practice More Nevada Real Estate Questions
1,500+ questions covering all exam topics. Start free — no signup required.
Take the Free Nevada Quiz →