What is the definition of "supply and demand" in real estate?

The definition of "supply and demand" in real estate refers to the availability of a good and the desire for it. In this context, the "supply" represents the number of properties available for sale in the market, while "demand" reflects the number of potential buyers interested in purchasing those properties. The interaction between supply and demand is fundamental to understanding real estate market dynamics. When demand exceeds supply, prices tend to rise, indicating a seller's market. Conversely, when supply exceeds demand, prices typically fall, leading to a buyer's market.

This core principle is crucial for real estate brokers and investors as it affects pricing strategies, market analysis, and investment decisions. By understanding the equilibrium between supply and demand, real estate professionals can better predict market trends, set appropriate listing prices, and advise their clients effectively.