What does the term "supply and demand" refer to in real estate?

The term "supply and demand" in real estate fundamentally refers to the balance between property listings and buyer interest. This concept is crucial in determining property values and influences market conditions. When there is a high supply of properties (more listings) and relatively lower demand from buyers, prices tend to decrease. Conversely, when demand exceeds supply (more buyers interested than there are properties available), prices generally increase.

Understanding this balance is essential for real estate professionals, as it helps them make informed decisions about pricing strategies, marketing approaches, and timing for transactions. It also means that changes in either supply or demand can significantly affect the overall market.

In contrast, other options focus on aspects like average selling prices, availability of rental properties, or development trends, which do not directly encompass the core concept of supply and demand as it relates to the balance between listings and buyer interest. These aspects may be influenced by supply and demand, but they are not the definition of that term in real estate context.