Unlike the stock market, where most people understand and accept the risk that prices may fall, most people who buy a house don't ever think that the value of their home will ever decrease.
The housing market, like other assets, is susceptible to unsustainable gains, and bubbles are formed over time even though many people feel it is a sure bet for growth. That's because of the large transaction costs associated with purchasing a home, not to mention the carrying costs of owning and maintaining a home discourage speculative behavior. However, housing markets do go through periods of irrational exuberance.
This article will help to explain real estate cycles, triggers that cause them, and why consumers should be cognizant of the forces at play…
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