Which statement is true regarding the risks associated with investing in real estate?

When it comes to investing in real estate, one key risk to consider is the influence of local economic conditions. This statement is accurate because the health of an area's economy can significantly impact property values and demand. For instance, if a local economy is thriving, with job growth and rising incomes, the demand for housing often increases, leading to higher property values. Conversely, if a local economy is struggling, it may result in decreased demand for real estate, declining property values, and potential challenges in selling or renting properties.

Understanding the relationship between local economic conditions and real estate is crucial for investors. Factors such as employment rates, population growth, and local infrastructure can all play a role in determining the value and viability of real estate investments. Therefore, it is important for investors to conduct thorough research on the economic health of the area in which they are investing to gauge potential risks and rewards.