Real Estate Council of Alberta Fundamentals Practice Exam

What elements make land considered 'scarce' in real estate?

1. High demand and limited supply

2. Accessible transportation options

3. Proximity to urban centers

4. Recreational facilities

The correct answer is: High demand and limited supply

Land is considered 'scarce' in real estate mainly due to the interplay between high demand and limited supply. When there is a significant need for land—often driven by factors like population growth, economic development, or a shift in market dynamics—paired with a finite amount of land available for use, scarcity becomes apparent. This principle is grounded in basic economic concepts where the value of land increases as its availability decreases, creating a situation where buyers compete for the limited parcels of land. While elements like accessible transportation options, proximity to urban centers, and recreational facilities can influence the desirability and price of land, they do not inherently define its scarcity. These factors may enhance the attractiveness of a location but do not dictate the overall supply of land available. Scarcity is fundamentally tied to the relationship between how much land is there and how much people want it, making high demand and limited supply the core elements that characterize land as scarce.