Question 28

A home with an unobstructed view is often sold at a higher price than those with limited views due to the principle of scarcity.

Scarcity in real estate refers to the limited availability of certain desirable features, such as unobstructed views, which can significantly enhance a property's value. When a feature is scarce, it becomes more sought after, leading to higher prices.

A) Fixity

Fixity refers to the permanence of land and improvements, indicating that real estate is immobile and cannot be moved. This concept does not apply to the scenario of pricing based on views, as it does not address the desirability or value derived from the view itself.

B) Scarcity

Scarcity is the correct answer because it highlights how limited availability of homes with unobstructed views increases their value. When a desirable feature is not widely available, it becomes more valuable, as buyers are willing to pay a premium for such properties.

C) Indestructibility

Indestructibility relates to the idea that land cannot be destroyed and remains over time, regardless of changes to the buildings on it. This concept does not influence the pricing dynamics associated with views, making it an incorrect choice in this context.

D) Setback value

Setback value pertains to the potential worth added to a property based on the distance it is set back from a street or property line. While it relates to property layout, it does not explain why unobstructed views would result in higher prices, thus making it irrelevant to the question.

Conclusion

The concept of scarcity directly explains why homes with unobstructed views command higher prices, as their limited availability increases demand among buyers. Other options, such as fixity, indestructibility, and setback value, do not pertain to the valuation influenced by views, confirming that scarcity is the essential principle at play in this scenario.