Humber/Ontario Real Estate Course 1 Exam Practice

When few homes are available in the market, prices rise, and demand continues, this scenario is best described as:

1. A seller's market.

2. A buyer's market.

3. A balanced market.

4. A weak market.

5. An inflated market.

6. A speculative market.

The correct answer is: A seller's market.

The situation described, where there are few homes available and prices are rising due to continued demand, is best characterized as a seller's market. In a seller's market, the supply of homes is limited while demand from buyers remains high, leading to competition among buyers and often resulting in increased home prices. This dynamic empowers sellers, as they have more control over pricing and can expect to receive offers that may exceed their asking prices. In contrast, a buyer's market would occur when there is an oversupply of homes for sale, leading to lower prices and giving buyers an advantage in negotiations. A balanced market represents a scenario where supply and demand are about equal, resulting in stable prices. A weak market would indicate a downturn where sellers struggle to find buyers, often leading to declining prices. An inflated market suggests that prices are artificially high, possibly unsupported by demand, while a speculative market typically involves buyers purchasing properties in anticipation of future price increases, often without regard to current demand.