Please, would someone clarify this question:

Recently in City X, developers have stopped buying land, contractors have found themselves going without work for longer periods, and banks have issued fewer mortgages. There must be fewer new residents moving to City X than there were previously.

Which of the following indicates a flaw in the reasoning above?

A This year several housing blocks have gone on the market after being held up for months by legal red tape. (Answer)
(A) CORRECT. This suggests that there might be another reason for the decline in home construction: the supply of available housing has been increased through the release of many previously built homes. Therefore, the reasoning in the argument is flawed.
B The average size of a new home has increased significantly over the past several years.
C Re-sales of condominiums have increased over the past six months.
D The cost of materials such as lumber and cement has decreased over the past year.
E Sales of other big-ticket items, such as automobiles and boats, has remained steady over the past year.

The answer doesn't make sense to me. While it might explain why developers have stopped buying land, and contractors have less work, it does nothing to explain why there are less mortgages. If people simply started buying up these newly accessible homes, why haven't they purchased mortgages to do so?

The solution further states that choice C is wrong, because the question focuses on "new homes." But, nowhere in the question does it state that new homes are the sole focus. Personally, I thought the focus was on the new residents moving in, and I think that the implicit idea there is that the new residents are not all moving into newly constructed homes. Following that reasoning since condominiums are replacing sales of newly constructed homes, and condominiums are probably cheaper than from the ground-up built homes, it would explain away the mortgages.

one small tip on gmat from my side - never ever try to find out the perfect correct answer. the gmat only expects us to find out the best possible answer among the 5 options n move on. Please give equal weightage to all the answer options before deciding on one.



Answer Option A - there is a possibility that a high number of people have already mortgage their property to buy these so called several housing blocks that have gone on the market after being held up for months by legal red tape.
hence A explains all the possibilties & also highlights the flaw.



Thanks!

Kylo, I'm not exactly sure what you're saying; the GMAT doesn't expect us to find the perfect answer out of five, just the best one out of five? That sounds a bit contradictory to me.

How people can purchase mortgages on houses not yet on the market, and why anyone would do so, I don't really understand. Furthermore, the people moving in did not commission these houses to be built, since they are going on the market, which means that mortgage origination rates are not explained by this answer. I again refer to my previous question and ask why is C wrong or at least why is A right?

u can take the case of this qsn. here both A n C sound correct. but i feel its just that A is a bit better.



Thanks!

guest is right about the ambiguous link in the question of the lack of mortgages being issued by the banks and new houses appearing on the market. option A discounts the possibility of new residents moving into city X taking out mortgages to buy the said new houses.however the first two instances ie new land not being acquired and contractors being out of work,are vividly dealt with by option A.no other option choices explaing even these two,hence option A is the best choice.now regarding optionC,GUEST unnecessarily makes an assumption that appartments in condominiums are relatively cheaper or atleast considers this possibility.on the contrary,it could be that such appartments are even costlier,requiring new residents to seek mortgages. the whole question is focussed on the inherent flaw in the reasoning in the question that since such circumstances prevail,indicating a lack of demand,new residents did not move into the city X.we can challenge this argument by pointing out a circumstance in which new residets did move in but the demand for NEW house was not generated.this is pointed out best by option A as it states that fresh construction of houses was not required since certain already available housing blocks were made available to the public. to me the issue stands resolved.

grammarian,

Thanks for the detailed response. And, while I agree that I may have made an unnecessary assumption, answer choice A, by not dealing with mortgages, requires the unnecessary, and less-logical, I would think, assumption that the newly released housing blocks do not require mortgages. On the other hand, in the case of answer choice C I believe that assumption to be more logical, since condominiums may be bought in expensive as well as cheap areas, allowing for them to act as substitutes to houses of all prices. So I'm still confused by the question. Am I really missing something?

bump

still awaiting official clarification...

phewwwwwwww!!!!!!!!!
cant think of any more new ideas for this question.



Thanks!

Sorry for the long wait on a reply here. We were updating forums, etc.

This is a very tricky problem! However, I believe A is still very correct. Here's why: we are not simply asked to "weaken the conclusion" (that fewer residents are moving in), but to indicate a flaw in the reasoning. Because the reasoning is built on three premises, discounting two of them DOES in fact indicate such a flaw. This makes A the right choice for the specific question as it is asked.

As to: "Why not C?": C tells us that condos are being RE-sold. This means that the original occupants will need a place to live as well. In fact, this could occur without any new residents moving in whatsoever. This makes C perfectly in line with the argument laid out above. But what about the mortgages, you ask? Doesn't C show that there are more mortgages being issued? And doesn't that conflict with the reasoning above? Not really. The argument states that banks have issued fewer mortgages as a premise, something that we could verify, aka a fact. So we are to take that as true. If the condo re-sales require some new mortgages, but overall mortgages have dropped, then this would indicate that there are fewer sales occurring elsewhere in this economy. Again, this is in line with the reasoning in the argument.