In a housing or real estate bubble, home prices inflate because of overly optimistic speculation that they'll keep rising. When people can't afford to keep up, the bubble bursts. Demand for homes decreases, while supply goes up and home prices drastically drop.
Today, certain markets across America are seeing home prices go up so quickly that people are starting to worry about another bubble. So where do we stand?
From 2000 to 2006, home prices were skyrocketing. Why? It was fueled by overly-optimistic speculation on real estate, careless lending standards and very low mortgage rates. At the height of the bubble, homes were overvalued by 39%.
For the entire article go to: http://finance.yahoo.com/blogs/just-explain-it/signs-of-a-housing-bubble-205544130.html
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