Explanation should include

factors that have an influence on listing and selling prices
housing shortages, energy efficiency, interest rates, and economic conditions
the influence of local conditions (e.g., zoning/planning)
new vs. aging properties (cycle of a neighborhood)
highest/best use of property
effects related to building supplies (e.g., prices may rise after a natural disaster)
availability of labor.

DPOR correlations: 18VAC135-20-400. 1 (Economy and social impact of real estate); 18VAC135-20-400. 2 (Real estate market and analysis)

Process/Skill Questions:

What is supply and demand? How does the law of supply and demand affect the housing market?
What are some factors that affect the sales price of a home?
What are some factors that affect supply? What are some factors that affect demand?
What are the four stages of the cycle of a neighborhood?
How do factors such as the state of the economy, interest rates, real income, and changes in the size of the population affect the real estate market?
How does housing supply relative to demand affect market price?