Define “supply and demand” in the context of real estate markets.

In the context of real estate markets, supply and demand are fundamental concepts that illustrate how the availability of properties interacts with the market's desire for them. Supply refers to the amount of property that is available for sale or lease at a given time. This includes both existing properties and new constructions that may be entering the market. Demand, on the other hand, describes the desire of buyers or renters to acquire properties at various price levels. A higher demand can lead to increased prices, while a greater supply, particularly within a certain market segment, can lead to lower prices.

Understanding this relationship is crucial for appraisers, as they must accurately assess the economic factors impacting property values. An imbalance between supply and demand can have significant implications for pricing and market stability. For instance, if demand exceeds available supply, it typically results in competition among buyers, driving prices up. Conversely, if there is an oversupply relative to demand, it may lead to price reductions and a more favorable buying environment.

Thus, the definition that outlines supply as the amount of property available and demand as the desire for property encapsulates the essence of how these two variables interact within the real estate market.