Question

Allen and Lewis are friends who each recently purchased real estate. Allen purchased a patio home in a small town an hour from the city, while Lewis purchased a condo in a really hot area near the city center. Although they paid similar amounts for their properties, Lewis’ condo is worth much more two years later. Which economic characteristic does this demonstrate?

Answer 1

Answer:

area preference

Explanation:

The mantra to real estate success is "location, location, location". This basically refers to area preference or situs, which means that people like some places more than others. Since real estate cannot be moved, the place where a house (or any other building) is located greatly determines its value. E.g. a beach front condo in South Beach is worth more than a physically similar condo in Jacksonville.

Answer 2

Answer: Area preference.

Explanation:

According to the question although the initial value of both Allen and Lewis property were similar, the siting of Lewis' condo makes it more valuable than Allen's, because it is closer to the city center. Therefore the economic characteristic at play in the question is that of area of preference, that's what separate the value of both properties.