Real Estate Bubble
A Real Estate Bubble is an Economic Bubble based on the real estate market.
- AKA: Land Boom.
- Context:
- It can (typically) be followed by a Real Estate Bubble Burst.
- Example(s):
- Counter-Example(s):
- See: Real Estate, Real Estate Appraisal, Schools of Economic Thought, Financial Crisis of 2007–2012.
References
2017
- (Wikipedia, 2017) ⇒ https://en.wikipedia.org/wiki/Real_estate_bubble Retrieved:2017-2-13.
- 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, typically following a land boom. A land boom is the rapid increase in the market price of real property such as housing until they reach unsustainable levels and then decline in a bubble.
The questions of whether real estate bubbles can be identified and prevented, and whether they have broader macroeconomic significance are answered differently by schools of economic thought, as detailed below. The financial crisis of 2007–08 was related to the bursting of real estate bubbles which had begun during the 2000s around the world. [1] Bubbles in housing markets are more critical than stock market bubbles. Historically, equity price busts occur on average every 13 years, lasts for 2.5 years, and result in about 4 percent loss in GDP. Housing price busts are less frequent, but last nearly twice as long and lead to output losses that are twice as large (IMF World Economic Outlook, 2003). A recent laboratory experimental study [2] also shows that, compared to financial markets, real estate markets involve longer boom and bust periods.
- 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, typically following a land boom. A land boom is the rapid increase in the market price of real property such as housing until they reach unsustainable levels and then decline in a bubble.
- ↑ Michael Simkovic, "Competition and Crisis in Mortgage Securitization"
- ↑ Ikromov, Nuridding and Abdullah Yavas, 2012a, Asset Characteristics and Boom and Bust Periods: An Experimental Study, Real Estate Economics, 40, 508–535.
2017
- http://www.latimes.com/opinion/op-ed/la-oe-barnett-nature-alternative-facts-20170210-story.html
- QUOTE: ... Industry-paid scientists and eastern newsmen fed by railroad PR men both hyped the rainy headlines and fueled the nation’s first land boom.
Regardless of alternative facts, fake news or scientific censorship, nature tells the truth. Of course Powell was right, and the hype dangerously wrong. When typical dry years returned in the 1880s, conditions forced thousands of farmers to abandon their land. Between 1888 and 1892, half the population of western Kansas and Nebraska retreated east. ...
... In the 1910s and 1920s, another land boom spread across the Plains, luring a new generation of farmers unaware of the previous century’s drought disaster. Tractors that could rip through thick native grasslands replaced the old plows. Bullish news stories on generous rainfall, war-inflated wheat prices and farm subsidies helped bring tens of thousands of settlers. When wheat prices collapsed, farmers with large mortgage payments responded by tearing up even more of the grasses that had evolved over thousands of years to hold the Earth together in dry times.