Certified Residential Appraiser Practice Exam

Which of the following factors fall under economic forces in real estate?

1. Zoning laws and health codes

2. Employment and wage levels

3. Land use regulations

4. Building codes and easements

The correct answer is: Employment and wage levels

Economic forces in real estate primarily refer to factors that influence the financial aspects of property values, market demand, and overall economic conditions. Among the choices provided, employment and wage levels are significant indicators of economic health that directly impact the real estate market. When employment rates are high and wages are increasing, individuals and families generally have more disposable income, which can lead to increased demand for housing. This increased demand can subsequently drive up property values in the area. In contrast, the other factors listed—zoning laws, land use regulations, building codes, and easements—are more related to legal and regulatory aspects of real estate rather than economic conditions. While these can influence the way properties are developed and used, they don't directly pertain to economic forces that affect the broader market dynamics in the same way that employment and wage levels do. This distinction highlights why the employment and wage levels are categorized correctly under economic forces.