Read: What Homes Will Be Worth in Your State by the End of 2021 What remains is a landscape of people trapped in houses that are now worth far less than the amount of money they borrowed to pay for them, their equity negative, their mortgages underwater. Eventually, buyers give up, demand craters and prices plummet back to Earth - that’s when the bubble bursts. That’s blood in the water for speculators, who then flood the market with more money as they try to cash in on the trend. As inventories fall, desperate buyers start spending even more money on houses that by this point are selling well above market value.
It all starts when demand for housing increases and supply starts to dwindle, a dynamic that can only lead to rising prices. What Is a Housing Bubble?Ī “bubble” forms when an already hot housing market - like the one America has been experiencing for months - becomes inflated with artificially and unsustainably high prices. In fact, there’s talk that the country is in one right now - or quickly moving in that direction. Vote: Should You Buy a Home During a Housing Bubble? Take Our Pollīut things don’t have to get that bad for housing bubbles to form. The economy buckled under the weight of a credit crisis, mortgage crisis, banking crisis, employment crisis and housing crisis. The financial markets lost 30% of their value as foreclosure signs sprung up on front lawns across the country. In 2008, a housing bubble that had been inflating since 2004 inhaled its last breath and finally popped - and what a pop it was.
0 kommentar(er)
