What does "market saturation" refer to?

Market saturation occurs when there is an imbalance in the housing market where the supply of homes available for sale surpasses the demand from buyers. This situation can lead to various consequences, such as prolonged listings, decreased home values, and heightened competition among sellers to attract buyers. In essence, when more homes are on the market than there are buyers seeking them, it creates a saturated market, which can affect pricing strategies for sellers and the overall dynamics of the real estate market.

The other choices describe different market conditions. For instance, a situation where demand exceeds supply would indicate a seller's market, often leading to higher prices. Stabilization of property prices relates to a balanced market where supply and demand are in equilibrium. An increase in property values due to low inventory suggests a market where limited supply fuels higher prices, quite the opposite of what occurs during market saturation.