Property Valuation
In Texas, a 'cap rate compression' refers to which market condition?
AFalling property values and rising cap rates
BFalling cap rates accompanied by rising property values, indicating investor confidence and demand✓ Correct
CEqual supply and demand in the market
DTCEQ limiting development density
Explanation
Cap rate compression occurs when investors accept lower returns (lower cap rates) for the same income, which causes property values to rise. It typically reflects high demand, low interest rates, and investor confidence in a market. Compression is considered a positive indicator for property values in commercial real estate.
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