Question

Which of the following is not true in regard to housing costs based on supply and demand?

a) A 7-8 months' supply creates a buyers' market where the number of homes for sale exceeds the demand. Home depreciation follows.
b) A 1-4 months' supply creates a sellers' market and home appreciation is positive.
c) A 5-6 months' supply creates a balanced market. During this period, homes appreciate at a rate a little greater than inflation.
d) A 10-12 months' supply creates a buyers' market where the number of homes for sale exceeds the demand. Home appreciation follows.

Answer 1

The correct answer is d) A 10-12 months' supply creates a buyers' market where the number of homes for sale exceeds the demand. Home appreciation follows.

Step-by-step explanation:

The correct answer is d) A 10-12 months' supply creates a buyers' market where the number of homes for sale exceeds the demand. Home appreciation follows.

In a buyers' market, there is an oversupply of homes, resulting in lower demand and decreased home prices. Therefore, home appreciation would not follow in this scenario.

For example, if there are 10-12 months' of housing supply and few buyers, sellers may have to lower their asking prices to attract more buyers, leading to a depreciation of home values.