Definition of "Scarcity"

Tracy Hatchell real estate agent
Tracy Hatchell, Real Estate Agent Re/Max Coast & Island

Inadequate supply of real estate in a particular area will result in a favorable demand supply relationship resulting in price increases for the property. This benefits the current owners of the property. An example was the explosive growth in Orlando, Florida, causing property value to skyrocket in selected areas.

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Comments for Scarcity

Rochelle Rochelle said:

how does scarcity apply to property in different price ranges?

Aug 03, 2020  12:13:34

Real Estate Agent

Hello, Rochelle! Scarcity applies in any area regardless of the price ranges. There are just a few conditions that need to be met. If the demand is higher than the supply of homes, this will drive the prices up regardless of whether you have a neighborhood with a median home value of $250,000 or $600,000. In a seller's market the supply is low and the demand is high, therefore the pricing power is in the seller's hands. Buyers will compete with each other and in many cases, a bidding war might start and the highest offer wins.

Aug 07, 2020  08:53:40
Domingos Teixeira Domingos Teixeira said:

What means inadequate supply in a real estate

Apr 13, 2018  06:50:26

Real Estate Agent

Hey, Domingos
thanks for reaching out!

The whole real estate industry moves according to its supply-and-demand of properties. An inadequate supply can mean two things: (a) the Real Estate Market is lacking in supply; meaning there are not a lot of houses or land available to sell while there is a lot of demand from people for houses or land - the so-called Seller's Market -  and (b) the real estate market has a lot in supply  with a bunch of houses and land for sale - AKA Buyer's Market - but underwhelming pool of people in need of those. In both cases, there is an inadequate supply (and demand; it depends on your point of view - like that old glass half-full/half-empty discussion) as the key of this game is balance.

Hope we helped and you keep enjoying our site!

Apr 13, 2018  10:40:19


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