Author: Thomas G. Thibodeau
Publication: Encyclopedia of Housing 2nd Edition (2012)
Many places across the globe experienced house price bubbles during the first seven years of this century. A May 2003 article in The Economist titled Castles in Hot Air identified “six countries where houses appear to be overvalued (America, Britain, Australia, Ireland, the Netherlands and Spain).” Four years later, The Economist’s depiction of house price bubbles proved to be true in a number of cities across the globe. This article first defines house price bubbles. It then illustrates house price bubbles using price indices for selected cities in the United States over the 2000 through 2010 period. The article then examines some literature that attempts to identify bubbles and finally explores some of the underlying causes of these house price fluctuations.