The housing bubble simply means that there’s an increase in demand but a decrease in supply. In this case, fewer houses are available compared to the number of people looking to buy.
What happens during a housing bubble?
House prices increase significantly when a housing bubble occurs. The home that you thought was reasonably priced is now priced noticeably higher.
Why does a housing bubble happen?
There are a few things that tend to ignite a housing bubble. Though, all aspects will play a role in making the housing bubble happen.
- Increase in economic activity.
- Population increases significantly.
- Low interest rates to make homes buying attractive to home buyers.
- Higher risk taking as a borrower.