PSI Oklahoma Real Estate Practice Test

What economic condition occurs when many homes become vacant due to a major employer relocating?

1. Market saturation

2. Incipient economic obsolescence

3. Incurable economic obsolescence

4. Functional obsolescence

The correct answer is: Incurable economic obsolescence

The situation described involves homes becoming vacant due to a major employer relocating, which typically results in a decline in property values and an oversupply of housing in the market. This phenomenon is best classified as incurable economic obsolescence. Incurable economic obsolescence refers to a decline in property value caused by external factors that property owners cannot control or remedy. The relocation of a major employer often leads to job losses and a decrease in the local population, making it difficult for homeowners to sell their properties, which can lead to increased vacancies and reduced demand for housing. This type of economic change is external to the properties themselves and cannot be adjusted or repaired by the property owners, thereby categorizing it as incurable obsolescence. In contrast, other economic conditions outlined in the options refer to different aspects of property value decline. Market saturation occurs when there is an oversupply of homes in a market relative to demand, but it does not specifically refer to the impact of external economic shifts such as an employer relocation. Incipient economic obsolescence indicates a decline that is anticipated to happen but is not yet fully realized, and functional obsolescence relates to problems within the property itself (e.g., outdated design or features) rather than external economic factors