Before turning to the details of the housing bubble, we will first try to understand what is an economic bubble. An
economic bubble is an economic phenomenon in which the trade of a
certain good or usefulness, whether tangible or not, is carried out at
an accelerated pace and in a price inflated by unit. Although
there is much debate about the reason for the appearance of these
bubbles, and most agree that there is a lack of certainty,
predictability and the speculative factor behind its occurrence, a
careful look at the pattern and timing of various economic bubbles would
reveal that usually appear in moments in which the excess of money in
circulation in an economy in particular.
The reason behind this excess money in circulation can be inflation, low interest rates, etc despite the different schools of economic thought differ in their opinion about the exact impact of economic bubbles, one thing is certain, that nothing good has reached most of them - always there has been negative impacts both of these bubblesthe degree of negativity which vary in each case, but nothing good has come out of an economic bubble. Now that we are in the flow, we'll get to the details of the real estate bubble and what it does, followed by a brief look at a couple of global examples of the real estate bubble.
Bubble ~ by lifting the veil
A
variant of the economic bubble, property bubbles roots are specific
periods of inflated values of real estate, including houses, plots and
similar homes real estate property. The main
characteristic of a bubble of real estate, or any economic bubble for
the case, is that each valuation boom is followed by a rapid succession
of falling prices once the inflated value reaches amazing and
unsustainable levels versus the relative levels of income and other
economic factors. This period of immersion or
consistent deflation of prices after overcoming the zenith of
sustainability is known as the bursting of the bubble. Most
of the time, the emergence or early stages of a bubble is difficult to
discern, and it is not until the prices of the goods in question have
crossed the boundaries of gullible people to come to suspect her as
being a bubble. As such, their appearance cannot be avoided and in general, the only thing that can be done is to clean once it's broken.
But
he is not considered a major problem so far, the housing bubble has led
to a number of serious situations of the world economy in recent times.
More traditional economic thinkers argue that
these bubbles occur as a balancing act - are used to adjust the excesses
in the economy and restore a more or less stable power to absorb the
additional money that pervades the economy and the threat of rampant
inflation. These are the cyclical conditions
that, many experts believe, can be approached through the formulation
and implementation of counter-cyclical monetary and fiscal policies as
progressive taxation (fiscal policy). Read the Buzzle article in monetary policy with fiscal policy to learn more about this topic.
The most prominent feature of a property bubble roots are believed to be speculative or credit-oriented nature. Most of the buyers of properties resort to loans and mortgages to acquire the domain of these properties. In
order to obtain the maximum benefits in the course of an assets bubble
commercial real estate, builders from embarking on the construction of
numerous buildings, sometimes unnecessarily. This
gives rise to a situation of misallocation of resources as part of the
capital, resources and efforts go when not to waste so many properties
are taken as they are built. Comes a period of
supply exceeding demand, after which, in order to dispose of the
remaining property, prices start to go down drastically. This has often led to serious economic crisis which lasted long and hit a large part of the global economy.
Global instances of field field bubble
As
mentioned above, there have been very few prominent cases of the
housing bubble that began from one corner of the world, but that hit
many Nations in its course. The following is a list of some most important global cases of the real estate bubble.
United States housing bubble (2007-present)
Assets Japanese bubble price (1986-1991)
Australian housing bubble (1986-present)
Chinese real estate bubble (2005-present)
Indian real estate bubble (2005-present)
Lebanese real estate bubble (2005-present)
Irish property bubble (2000-2006)
Bubble
