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What is a housing bubble?

A housing bubble or real estate bubble happens when the market price of residential real estate sharply rises. This will happen when demand for homes exceeds the actual supply. The initial rise creates the expectation of future rises. That expectation attracts speculators who invest in the market, hoping to profit from the rising prices.

Is the US housing market in a bubble?

Len Kiefer, deputy chief economist at Freddie Mac, doesn’t believe the U.S. housing market is in a bubble. “A bubble has three defining characteristics: price growth is driven by speculation, bubbles are fueled by credit expansion, bubbles pop,” Kiefer says.

Is a housing bubble brewing in 2022?

The Federal Reserve Bank of Dallas identified signs of a “brewing U.S. housing bubble ” in a 2022 report. Though the sharp increase in home prices doesn’t indicate a bubble, the report found, there are other fundamental factors to consider.

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