If absorption is good, which of the following is likely tooccur? (Select all that apply.)...

If absorption is good, which of the following is likely to occur? (Select all that apply.)

A. Reduced Rental Rates

B. Increased Pricing

C. Concessions

Expert Solution

Answer -

B) Increase pricing.

Absorption Rate is the rate by which a house is sold in a particular market at a given period. When the real estate market has a good absorption rate, the available houses would be sold very quickly, which favors the sellers. On the other hand, when when the absorption rate is poor, the houses would not be sold quickly which leads to have greater supply rate than the demand rate, which favors the buyers as they can have many options. So this option is correct.

There is no such connection between absorption rate and rental rates as people would anyway rent their houses with changes in the absorption rate. Concessions would not be given to the buyers as high absorption rate means houses would be sold anyhow despite its increase in pricing.

keosha answered 2 years ago

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