Final answer:
An oversupply of condominiums in a retirement area often results from ignoring the economic principle of opportunity cost, leading to excessive supply and potential declines in housing quality.
Step-by-step explanation:
An over supply of condominiums built in a retirement area is often the result of not paying attention to the principle of opportunity cost. This economic principle suggests that every choice comes with the cost of forgoing the next best alternative. When developers overlook this principle, they may build too many condominiums without considering whether there is sufficient demand to justify the investment.
As a result, when the housing market adjusts to these conditions, the excessive supply can lead to a decline in condo values and can also impact the quality of housing as maintenance and essential services are reduced. This ties back to the broader understanding that actions like price ceilings have unintended consequences, such as converting rental apartments to condos, and an over supply could be linked to similar market distortions.