Which of the following describes a recession in real estate?

A recession in real estate is characterized by a gradual decline in sales and prices. This period typically arises when there is a decrease in demand for properties due to various economic factors, such as increased unemployment, rising interest rates, or market saturation. During such a decline, sellers may be compelled to lower their prices to attract buyers, which can further exacerbate the downturn in the market.

The trend of declining sales indicates that fewer transactions are occurring, while falling prices reflect the reduced value placed on properties in this economic climate. Collectively, these elements paint a clear picture of a recession where the real estate market is struggling to maintain stability.

In contrast, a sudden spike in property sales suggests a booming market rather than a recession, and a steady increase in rental rates typically indicates a healthy or growing market, as demand for rental properties often rises with price stability or growth. Significant investment inflow usually reflects investor confidence and a thriving market, not a recession.