Certified Residential Appraiser Practice Exam

Which of the following is an example of governmental forces in real estate?

1. Employment trends

2. Health codes

3. Mortgage credits

4. Rental prices

The correct answer is: Health codes

The reasoning behind selecting health codes as an example of governmental forces in real estate lies in the regulatory nature of health codes and their direct impact on property use and development. Health codes are established by government authorities to ensure public health and safety standards are met, particularly within residential and commercial properties. These codes can dictate various aspects, such as sanitation practices, building materials, occupancy limits, and more. When properties are developed, renovated, or maintained, compliance with health codes is a legal requirement, and failure to comply can lead to fines, legal actions, or even property condemnation. Therefore, health codes significantly influence property values, the desirability of locations, and how different types of properties can be used, creating a clear link between governmental forces and the real estate market. In contrast, other options, while they may affect real estate indirectly, do not represent governmental forces. Employment trends relate to economic conditions and the job market, mortgage credits involve financial considerations, and rental prices are primarily a function of market demand and supply dynamics rather than direct government regulation.