Question 48

A home with an unobstructed view is often sold at a higher price due to scarcity.

Scarcity refers to the limited availability of desirable attributes, such as unobstructed views in real estate. When a feature is scarce, it tends to increase the value of the property, as buyers are willing to pay more for homes that offer these unique characteristics.

A) Fixity

Fixity describes the permanence of land and improvements, indicating that they cannot be moved. While fixity is an important economic characteristic of real estate, it does not directly relate to the valuation of properties based on their views. Therefore, this option is incorrect.

B) Scarcity

Scarcity is the correct answer as it explains how limited availability of unobstructed views can drive up property prices. In markets where views are desirable but few properties offer them, buyers are willing to pay a premium, illustrating the economic principle of scarcity.

C) Indestructibility

Indestructibility refers to the intrinsic permanence of land, meaning it cannot be destroyed. While this characteristic is significant in real estate, it does not account for the fluctuating values assigned to properties based on their views. Thus, this option does not apply.

D) Setback value

Setback value involves the potential for future development or improvements on a property, typically relating to zoning regulations. This concept does not pertain to the valuation of properties based on the quality of views and is therefore not relevant to the scenario described.

Conclusion

Scarcity effectively explains why homes with unobstructed views command higher prices, as they are limited in supply and highly sought after. The other options, while relevant to real estate economics, do not accurately capture the relationship between property views and market value, making them incorrect in this context.