What is the effect on prices when there are fewer properties on the market due to scarcity?

When there are fewer properties available on the market, scarcity creates a situation where demand outstrips supply. This imbalance leads to increased competition among potential buyers for the limited number of properties. As buyers are willing to pay more to secure a property in a competitive market, the prices naturally rise.

In economic terms, when the availability of a good—in this case, real estate—diminishes while demand remains steady or increases, the market typically responds with higher prices. This is a fundamental principle of supply and demand. The lack of options forces buyers to consider paying more than they might in a more saturated market, thus pushing prices upward.