I have been reading about the worsening housing/rental market, COL and worrying inflation figures as a whole. Seeing lots of talk about this mythical “bubble”- people saying things like “the bubble is about to pop”, and “welcome to the bubble” blahblahblah **BUBBLE**. Seems like this is a common term/knowledge in economics but I don’t fully understand… please eli5 🙂
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“Bubble” is a term for a growing trend that seems out of proportion and likely to fail. It’s meant as a metaphor for the fragility of an actual bubble, and how easily it breaks, leaving nothing behind.
In the case of the housing bubble (most well known recent case) in 2008, home prices rose dramatically high, outpacing the reality of supply and backing of actual value. When it “burst” aka everyone realized what was happening and panic sold their positions, many, many people lost jobs and homes, leaving devastation.
Bubbles are really common, there was the internet bubble in the 90s/early 2000s, the recent tech start up bubble in the 2010s etc….most of the time there’s a minor dip and nothing major happens.
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