how does an economic bubble\speculative bubble work?
In: 12
Imagine there is a high demand for houses, and prices start to rise a bit.
You notice a trend, buy a house, wait for a year, then sell it at a higher price. Everybody notices there is an opportunity to earn some easy money, and more people start doing the same. Prices start to skyrocket, more and more houses are being built, and more people buys and sells houses just to earn money
But many of those houses are empty, because in reality, there are not that many people who need a house. The value of a house is no longer determined by the needs of the people who might inhabit it, but the perceived benefit of buying it then selling it later.
Latest Answers