This demonstrates the economic theory that the supply relationship is a factor of time. Suppliers do not always react quickly to a change in demand or price, but eventually they must. The article suggests that demand will decline 3.5% next year, but that median home prices will still increase by 5%.
Suppliers are beginning to react to falling demand through a decline in price increases and incentives which are really indirect price decreases. That's why this is referred to as a "cooling off" period in the article which mentions that some condo buyers are being offered a car to make a purchase of a condo. The use of incentives may be viewed by the suppliers as a way to mask the fact that prices are falling. They are trying to hide the fact that market power has switched away from sellers to buyers. This change in power will only motivate potential buyers to negotiate a price that is far lower than the published price. And, suppliers may be hoping that demand will pick up. If it does, it's easier to take away the incentives than to adjust prices.
Buyers expect that prices will fall further as demand decreases. Therefore, according to the article, they are now delaying their purchases or at least avoiding over-priced...
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