Thursday, January 19, 2006


A Definition of the Bubble


Just recently became aware that my favorite web resource of all time, Wikipedia, has defined the housing bubble:
'US housing bubble' refers to a belief that there is a economic bubble in real estate in the United States. This follows the stock market bubble in the 1990s which was called, among other things, the dot-com bubble. 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 increases in the valuations of real property such as housing until they reach unsustainable levels relative to incomes and other economic indicators, followed by decreases 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 to identify except in hindsight, after the crash.

— The Boy in the Big Housing Bubble