Real Estate & Housing Bubble News

A real estate bubble or property bubble (or housing bubble for residential markets) is a type of economic bubble that occurs periodically in local or global real estate markets. It is characterized by rapid speculative increases in the valuations of real property such as housing until they reach unsustainable levels relative to incomes and other economic elements, followed by decreases (also known as a house price crash or a market correction) that can result in many owners holding negative equity (a mortgage debt higher than the value of the property). Just like any type of economic bubble, it is difficult for many to identify except in hindsight, after the crash.


The United States housing bubble is the actual or hypothesized economic bubble in many parts of the U.S. housing market since 2001, especially in populous areas such as California, Florida, the BosWash megalopolis, and the southwest markets. A real estate bubble is a type of economic bubble that occurs periodically in local or global real estate markets. Based upon the unprecedented rise in house prices since 2001, many economists believe that there is a housing bubble in these and other parts of the U.S. caused by historically low interest rates and a mania for purchasing houses; they argue that this bubble is related to the stock market or dot-com bubble of the 1990s. Other economists argue that recent price increases can be explained by limited supply and increased demand due to immigration and demographic forces.


A housing bubble is characterized by rapid increases in the valuations of real property such as housing until unsustainable levels are reached relative to incomes, price-to-rent ratios, and other economic indicators of affordability. This in turn is followed by decreases in home prices that can result in many owners holding negative equity, a mortgage debt higher than the value of the property. Bubbles may only be definitively identified in hindsight, after a market correction.[2] The impact of booming home valuations on the U.S. economy since the 20012002 recession is an important factor in the recovery because a large component of consumer spending came from the related refinancing boom, which simultaneously allowed people to reduce their monthly mortgage payments with lower interest rates and withdraw equity from their homes as values increased.[3] As the once-booming U.S. housing market softened in 20052006, economists debated whether this is a 'soft' or 'hard' landing and the impact this slowing will have on consumer confidence and on the overall economy.

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