Final answer:
The market reaches a point of oversupply when real estate supply growth outpaces demand growth, resulting in excess supply and potentially lower prices.
Step-by-step explanation:
When real estate supply growth begins to exceed demand growth, the market is reaching a point of oversupply. In economic terms, this means that the quantity of real estate available exceeds the quantity that buyers are willing to purchase at the current market price. This phenomenon can be explained using supply and demand curves, as seen in rent control scenarios. Without price ceilings, an increase in demand shifts the demand curve rightwards, leading to a new equilibrium with a higher price and quantity. However, if supply starts to grow faster than this new demand, the quantity supplied exceeds the quantity demanded, causing excess supply or oversupply. This could ultimately lead to a reduction in prices as suppliers attempt to sell off the excess real estate.