What is a common consequence of low liquidity in a real estate market?

Low liquidity in a real estate market typically leads to longer time on the market for properties. When liquidity is low, there are fewer potential buyers actively seeking to purchase real estate. This reduced demand means that properties may take longer to sell, as sellers have a smaller pool of interested buyers, leading to extended listing times.

In a low liquidity environment, the limited number of transactions can also create a sense of uncertainty among buyers and sellers, resulting in more cautious behavior. Buyers may take their time in making offers or may choose to wait for more favorable conditions, which exacerbates the length of time properties remain available for sale.

Longer times on the market can also lead to price adjustments, as sellers may lower their asking prices in response to the lack of offers, but this process does not cause rapid price changes. Instead, it reinforces the slow-moving nature of transactions in a low liquidity market.