Table of Content
- What’s real estate bubble?
- How does it form?
- Why government can’t stop bubble from forming?
- How does real estate bubble burst?
- When does it burst?
- Why does it burst?
- What are the consequences of Real Estate Bubble?
- Who gets affected in housing price collapse?
- How to prevent bubble from happening?
- The Biggest Reason for Bubble to Burst
- Why Can’t Bubble be Stopped from Forming?
- How to Protect Yourself?
- When Will it Burst This Time?
- Signs of Bubble
1Real Estate Bubble
Real Estate bubble is one of the scariest event the world faces. It wipes out people life long earnings and put them into bankruptcy. What people fail to realize is that financial crisis, real estate bubbles, recessions and depressions are not a natural event. We all, collectively, create them and we all suffer from our own acts.
However, not everybody suffers from bubbles. Studies have shown that rich people usually get richer, while poor and average people usually go bankrupt, mostly, because they don’t understand how real estate bubbles are formed and how it could be prevented. That’s why it is crucial to understand what real estate bubble is, how our acts causes it to occur.
On this website, I wrote more than 12 articles (and writing more) with youtube explanations in each and every step so that you can understand it. I have covered all kinds of topics but in this one, I investigate into the basics about what and why real estate bubbles are formed and what makes it burst. So, let’s begin.
What is Real Estate Bubble?
Real estate bubble is an event where housing price grow rapidly due to a credit supply and property demand. With low interest rates, available credit supply and rising property price, the price rises up unsustainably that the economist call a bubble.
It’s called a bubble because the high price of housing is due to the over injected of credit supply and has debt at it’s basis. It’s unsustainable because the debt and interest rate so high that, eventually, people will not be able to afford to pay mortgage.
it attracts people to buy more. The rapid buying induces more demand, which in turn induces higher property price.
As more people see the increase in price, they enter the market to buy more properties hoping to earn profit. All of this is possible because of load and credit supply, which, as you will see in my writings, causes debt. And debt is the prime reason for
People use loans from banks and trap themselves in high and long term debts on high interest rates. At the same time, their buying acts make property price soaring high. This goes on to a point where it is not sustainable anymore and the price collapse drops markedly. The collapsing of housing price is called Real Estate Bubble Burst. In this article, we provide in depth and easy-to-understand