What typically happens to the real estate market when there is an oversupply of properties?

When there is an oversupply of properties in the real estate market, it typically leads to a decrease in prices. This phenomenon occurs because an excess amount of available properties creates competition among sellers, driving them to lower their prices in order to attract buyers.

In a situation where supply exceeds demand, buyers have more options, allowing them to be more selective and negotiate better deals. The imbalance between supply and demand compels sellers to adjust their pricing strategies, often resulting in price reductions to ensure their properties are sold in a timely manner. Thus, the overall market tends to experience downward pressure on prices, making "Prices decrease" the correct understanding in relation to an oversupply scenario.