Rapidly rising housing prices are the incentive that banks have to give large loans to households with relatively little income.
Temporary periods of months or years are termed housing bubbles which are characterized by high demand and low supply above fundamentals. A variety of factors are affecting these bubbles including rising economic prosperity, low-interest rates, and easy access to credits.
The supply of houses goes down and the demand goes up when there are more buyers than sellers, making houses harder to buy and more expensive. It is not only the number of houses available but how much money is available to buy them and whenever households with little income face economic issues, banks should provide loans as per incentive for rising housing prices.
Prices for existing homes are getting back to earth. Prices are high stubbornly in the existing home market because of quite a low supply. The builders start helping, construction acceleration, but it has changed suddenly.
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