What Is a Housing Bubble?

Finance
#1

A housing bubble, also known as a real estate bubble, is a rapid rise in house prices fuelled by demand, speculation, and reckless expenditure that eventually bursts. Housing bubbles are often characterized by a surge in demand in the face of constrained supply that takes a long time to refill and increase. Speculators pump money into the market, driving demand even higher. Demand falls or stagnates at some point as supply rises, resulting in a dramatic drop in prices—and the bubble bursts.

#2

A housing bubble, or real estate bubble, is a run-up in housing prices fuelled by demand, speculation, and exuberant spending to the point of collapse. Housing bubbles usually start with an increase in demand, in the face of limited supply, which takes a relatively extended period to replenish and increase. Speculators pour money into the market, further driving up demand. At some point, demand decreases or stagnates at the same time supply increases, resulting in a sharp drop in prices and the bubble bursts.

  • A housing bubble a sustained but temporary condition of over-valued prices and rampant speculation in housing markets.

  • The U.S. experienced a major housing bubble in the 2000s caused by inflows of money into housing markets, loose lending conditions, and government policy to promote home-ownership.