Certified Apartment Portfolio Supervisor (CAPS) Practice Exam - Module 2

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Prepare for the CAPS Exam with a comprehensive study of Module 2. Utilize our practice resources filled with flashcards, multiple choice questions, and thorough explanations to ensure your success!

Each practice test/flash card set has 50 randomly selected questions from a bank of over 500. You'll get a new set of questions each time!

Practice this question and more.

What is likely to happen if the average market rate for rentals increases?

Occupancy rates may increase
Gross potential rent will decrease
Turnover rates will drop
Vacancy rates may rise if rents become too high

The correct answer is: Vacancy rates may rise if rents become too high

When the average market rate for rentals increases significantly, it can lead to higher vacancy rates if the new rent prices exceed what potential tenants can afford or are willing to pay. As rental rates rise, some current tenants may seek more affordable housing alternatives, and prospective renters may also decline to rent at the higher prices, leading to an imbalance between supply and demand. If rents become too steep, this can discourage new tenants from moving in, which can ultimately increase the number of vacant units. Therefore, higher rental costs can precipitate a situation where the supply of rental units outpaces tenant demand, resulting in elevated vacancy rates within the apartment portfolio.