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Prospect Financial Group

Housing Bubbles: what's the deal?

Friday, May 27, 2016 - Article by: Prospect Financial Group - Prospect Home Finance - Message

What is it?

A housing bubble forms when demand for housing goes up by an unnatural amount, and is then followed by a large increase in supply. However, what goes up must come down, and demand will eventually come back to an ordinary number. Supply cannot come down as fast as demand does, and the housing bubble will burst at this point. Too many houses, and no one to buy them. This drives down prices to the point where home values crash and people can no longer pay their mortgages.

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