What is a housing bubble?

A housing bubble, or real estate bubble, is a run-up in housing prices fueled by demand, speculation, and exuberant spending to the point of collapse. Housing bubbles usually start with an increase in demand, in the face of limited supply, which takes a relatively extended period to replenish and increase.

What caused the 2008 housing bubble?

The housing bubble that popped in 2008 was a culmination of several bad practices in the housing market that took place over several years. Mortgage-backed securities: Mortgage-backed securities (MBS) were a type of investments that grouped together mortgages and sold them to investors on the secondary market.

Why did the tech bubble burst?

Like the housing bubble, the tech bubble that happened between 1995 and 2000 was driven by speculation. Investors were funneling money into up-and-coming tech companies, pushing valuations into the stratosphere. The bubble eventually burst as investors realized valuation estimates were way off the mark, causing a flurry of panic selling.

How does speculative investing affect a housing bubble?

Speculative investing. As housing bubbles develop, speculative investing in housing increases. Large companies, along with small individual investors, attempt to capitalize on rising prices by buying up existing inventory. This, of course, tends to inflate the bubble. Media coverage.