Humber/Ontario Real Estate Course 1 Exam Practice

In real estate, a 'seller's market' is characterized by:

1. High demand with limited supply, resulting in rising prices.

2. Excess supply with stabilizing prices.

3. Balanced supply to demand ratio, leading to steady prices.

4. A significant drop in housing prices.

5. Investors pulling out of the market.

6. New market entrants increasing competition.

The correct answer is: High demand with limited supply, resulting in rising prices.

The correct answer indicates that in a 'seller's market,' there is high demand for properties while the supply is limited. This scenario often leads to rising prices as buyers compete for fewer available homes. In such a market, sellers can command higher prices, and properties tend to sell quickly, sometimes even above asking price due to multiple offers. The other choices reflect different market conditions. Excess supply with stabilizing prices points to a buyer's market, where more homes are available than there are buyers, preventing prices from rising significantly. A balanced supply to demand ratio suggests equilibrium, which typically leads to steady prices without significant fluctuation. A significant drop in housing prices indicates a distressed market, often characterized by economic downturns or other adverse conditions. Investors pulling out of the market usually signifies a lack of confidence or broader economic issues affecting demand. Lastly, the arrival of new entrants in the market can create short-term competition but does not define the overall character of a seller's market. In summary, the defining feature of a seller's market is that the high demand coupled with limited supply drives up properties' prices, making the first choice the most accurate representation.