Housing bubbles can arise from _____.

Question

Quizplus · Accepted Answer

Housing bubbles are characterized by an increase in demand for housing which is fueled by excess loanable funds. When there is an abundance of loanable funds or easy access to credit, people can borrow more money to purchase houses or invest in the housing market. As a result, they bid up the price of houses, increasing demand and causing a housing price bubble. High interest rates and low money supply tend to decrease demand for housing, while expansionary fiscal policy can stimulate demand for housing but is not a direct cause of housing bubbles.

Housing Bubbles Can Arise from _____