Property Valuation
In South Dakota, which factor would most likely cause a DECREASE in cap rates (resulting in higher property values at the same NOI)?
ARising interest rates
BIncreased perceived risk of the investment
CStrong investor demand and improved market conditions✓ Correct
DDeclining rental rates in the market
Explanation
When investor demand is strong and the market is perceived as lower risk (favorable conditions), investors accept lower cap rates (lower required returns), which increases property values for the same NOI level.
Related South Dakota Property Valuation Questions
- In South Dakota, the appraiser's final opinion of value in a residential appraisal typically gives the most weight to:
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