What typically happens during the Recovery phase of the market cycle?

During the Recovery phase of the market cycle, demand begins to grow, leading to stabilization in prices. This phase is characterized by an improvement in economic conditions after a downturn. As the economy recovers, there is increased consumer and business confidence, which prompts both residential and commercial investment.

One notable feature is that as demand increases, vacancy rates start to decrease as properties become occupied more quickly. This uptick in demand often leads to a stabilization of prices after they may have fallen during the previous recession phase. Developers may also begin to cautiously respond to the changing market by planning new projects, but this is typically gradual as they assess the sustained demand.

In contrast, the other options present scenarios that do not accurately reflect the dynamics of the Recovery phase. For example, an environment where prices and construction decrease indicates a decline, not recovery. Similarly, high vacancy rates at their peak and supply exceeding demand would reflect a market struggling rather than recovering. Therefore, the correct understanding of the Recovery phase focuses on the growth of demand and stabilization of prices, which aligns with the essence of positive market shifts during this period.