Define “overbuilding” in the context of real estate market dynamics.

Overbuilding refers to a situation in the real estate market where there is more supply of properties than there is demand for those properties. This imbalance typically occurs during a period of rapid development or construction when developers produce new properties at a rate that outpaces the actual need for additional space or housing in a specific area. As a result, the market becomes saturated with homes, commercial spaces, or other types of real estate.

When overbuilding happens, it can lead to various negative consequences for the real estate market, including declining property values, increased vacancy rates, and potential financial distress for developers and investors. Understanding the dynamics of overbuilding is crucial for appraisers and real estate professionals, as it impacts property valuations, market stability, and the overall economic health of a region. Ultimately, recognizing an excess supply in relation to demand is key to forecasting future trends and making informed decisions in real estate investment and development.