There seems to be more and more talk of a housing bubble. Really? Personally, I think the term "Bubble" is overused. Markets go up and markets go down. It's a cyclical thing. The last housing "Bubble" was created by loose credit, shifty bank investment instruments and consumer emotion as well as a hand from Congress. We had an 11-year anomaly of skyrocketing Real Estate prices from 1995 to 2006. Buyers bid up prices like hungry piranha.
I decided to Google the term "Housing Bubble" to see what would 'pop-up'. INVESTOPEDIA http://www.investopedia.com defines it this way.
DEFINITION of 'Housing Bubble'
A run-up in housing prices fueled by demand, speculation and the belief that recent history is an infallible forecast of the future. Housing bubbles usually start with an increase in demand (a shift to the right in the demand curve), in the face of limited supply which takes a relatively long period of time to replenish and increase. Speculators enter the market, believing that profits can be made through short-term buying and selling. This further drives demand. At some point, demand decreases (a shift to the left in the demand curve), or stagnates at the same time supply increases, resulting in a sharp drop in prices - and the bubble bursts.
I'm curious to know what the Active Rain Community thinks about what some are calling a new housing bubble forming.
Comments(8)