What economic characteristic is used to explain the principle of supply and demand?

The principle of supply and demand is fundamentally linked to the economic characteristic of scarcity. Scarcity refers to the limited availability of resources compared to the unlimited wants of individuals. In real estate, when a property is scarce or there are limited options available on the market, demand tends to increase. Conversely, if there is an abundance of properties for sale, the competition diminishes, leading to a decrease in demand.

Understanding scarcity is crucial in real estate because it affects pricing and market conditions. When properties are scarce in a desirable area, prices often rise due to increased competition among buyers. This interplay between supply, demand, and scarcity helps explain how market dynamics function and is essential for real estate professionals in making informed decisions.

In contrast, abundance indicates an oversupply, which would typically lead to reduced prices. Utility relates to the usefulness of a property, while price elasticity measures how sensitive the demand for a product is to changes in price, but they do not encapsulate the essential concept of supply and demand in the same way that scarcity does.