A housing bubble occurs when the prices of real estate or housing rise at an increasing rate because of increased demand and lack of adequate supply. This may also occur when there is emotional buying in the markets.
Once this rise in price is realized by the market players, the bubble tends to rise further as more buyers enter the market. However, investors and speculators are aware that the prices would eventually come down as the property market gets overvalued. Thus, this phenomenon was given the name of a “bubble” as it is eventually expected to burst.
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